Performance management: what's the point?

Written by
Changeboard Team

19 Mar 2015

19 Mar 2015 • by Changeboard Team

What the workforce say about it

Virtually all organisations have some sort of performance management process in place, yet the facts are clear: 90% say their process is a waste of time and resources, and 86% are thinking about changing it, or have already made a recent change. The message is dramatic: performance management isn’t delivering the improvements in performance that businesses want. For many, it is simply a tick-box challenge.

The facts have implications: companies report discredited performance management systems leading to retention of poorer performers and attrition of high performers whose aspirations within the business are evidently not being met. But what aspects of the performance management process are deemed to be of little merit, and where can the system sit in terms of developing and retaining high performers?

Empowering your workforce

Performance management systems are a major focus for many businesses today, because it is the programme most closely linked to engagement and an improved bottom line. Each part of the system, from learning and development, to the performance review and reward, is integrated and linked for the purpose of continuous organisational effectiveness. At least that’s the aim. Done well, performance management is a powerful tool for retention and increased productivity. Done badly, the system implodes, damaging the one programme with employees as its focus and performance as its goal.

We only need to look at how our everyday lives have changed to understand why performance management approaches are not fit for purpose. Take booking a flight. Once, a small number of agents would book flights on behalf of millions of travellers. Now, individuals do it themselves. They search for the best deal, book their flights, and check in online. Empowering an employee to manage his or her own career within a realistic set of options for advancement should arguably be no different to this. Yet performance management systems and processes remain largely unadapted for new ways of working and higher expectations.

Environments and working cultures are now unrecognisable from the corporate industrial workplaces for which performance management regimes were originally designed decades ago. By 2016, 80% of the workforce will be millennials. And they have a new way of looking at the world. 

How can performance management work?

Where do the issues lie? Performance reviews consistently come under a barrage of fire with ratings and rankings also a susceptible target. Research shows that those employees who do well under traditional performance management processes aren’t necessarily the employees having the greatest impact on the organisation.

Evidently organisational impact comes in other shapes and forms, such as collaborative working, knowledge sharing and networking yet often performance is defined by what is easy to measure rather than what 'makes the difference’. But are the issues inherent in the processes used or how they are implemented? What are the characteristics of an effective performance management system? Does a perfect system exist? The evidence would say that done well, performance management has a direct link to the bottom line.

A few companies are at the forefront of change. These organisations are abandoning their despised administrative processes entirely, in favour of new ways of connecting their employees’ performance with the organisation. Others are more progressive, studying the impact of performance management on their business, and looking at changing what the process looks like. In common – the understanding that systems need to be future-facing, simple, relevant to the business context and focused on the employee. 

Our research

Our hypothesis will mirror the one cited by a barrage of articles on the topic – that performance management is dead in its current form; that the process is disconnected and should be abandoned. We will discuss the mix of issues causing this disconnect and the impact on the organisation, as well as the characteristics and practices that are proving effective for others.

Our research will focus on three areas:

  • Traditional performance management approaches – why things need to change 
  • Getting back to basics – what value is there to be gained from performance management?
  • Ways forward in a world that is changing, uncertain and ambiguous – what are the new keys to success?

This research will be useful for anyone who is looking to implement or refresh a performance management system, and will be equally beneficial for those on the brink of eliminating a system perceived to offer little or no value to the organisation.


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