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How to Reinvigorate Performance Management

By Melissa J. Anderson

When it comes to talent management, it seems that the majority of HR professionals are turning their noses at performance reviews. In a recent Wall Street Journal article, reporter Rachel Emma Silverman pointed to several studies revealing that HR professionals and managers take little pleasure in the review process.

For example, according to a 2010 study by Sibson Consulting Inc. and WorldatWork, 60% of HR professionals would grade their performance review system a C or below. Another study, she says, “more than 600 employee-feedback studies found that two-thirds of appraisals had zero or even negative effects on employee performance after the feedback was given.”

As a result, she pointed out, several companies are giving up on performance reviews altogether. But as the adage goes, “if you can’t measure it, you can’t manage it.” How can companies address problems with performance reviews, while still making sure talent is on task, creating value, and growing for the good of the company?

Managing Reviews to Increase Performance

One way to sidestep the review system is to outsource. For firms that use performance reviews primarily as a means to determine compensation, working with a consultant may be useful. Silverman discusses a Wisconsin company that has done away with the review system in favor of an “informal appraisal system,” management training, and a salary consultant to determine how much employees should be making.

But that may not be appropriate for every company – particularly for companies and firms in the professional services industries where performance is highly personal and less quantifiable than in, for instance, the retail or manufacturing sectors.

In a recent ERE blog post, Dr. John Sullivan discusses the importance of non-monetary motivation – the kind that employees get from performance appraisals. He writes:

“Unfortunately, the compensation function focuses almost exclusively on ‘expensive’ salary, benefits, and bonuses … even though a significant percentage of employee motivation comes from … recognition, praise, and feedback. Talent management should develop non-monetary motivation tools for managers that are easy to use and that produce measurable results. They should also target key employees and server them in order to identify ‘how to best manage and motivate me’ plans.”

By creating more individualized performance appraisals, managers can better appeal to the personal motivations of their team members. Plus an individualized performance appraisal could boost engagement in employees who find value in a two-way management conversation.

Dr. Sullivan also points out that measuring managers’ performance is key to getting better performance out of all team members. He explains:

“Research by Google has shown that in most cases, an employee’s or a team’s manager is the single-highest impact factor on the hiring, retention, innovation, productivity, and the development of employees. Yet most organizations have no formal program for identifying weak managers.”

He suggests that by focusing specifically on the management performance of managers, companies can ensure that all team members’ performance is being appraised appropriately and actively.

Using Technology for Performance Management

Last month, the customer relationship management software and cloud computing company Salesforce revealed it is acquiring talent management platform Rypple and launching a new product called Successforce – its entrance into human capital management software.

According to TechCrunch, “Rypple replaces the traditional performance review with a more social and collaborative approach.”

The software applies “gamification” techniques, like enabling team members to earn “badges” and display “skills earned.”

TechCrunch’s Leena Rao interviewed Salesforce Executive Vice President John Wookey, who believes that talent management will become vastly more social. She wrote:

“There’s been a focus on the social enterprise but this also needs to work within the organization internally, and this has to has to begin with a company’s people and talent,’ he [Wookey] explains. ‘It’s not just about human capital management, it’s about how to use concept of social enterprise to effectively manage people. This is the next step in enabling the social enterprise.’”

Is a game-based social technique the best way to manage talent? It may provide a means to level the playing field for diverse talent, individuals who previously may have flown under the radar to senior executives tasked with handing out promotions. While the “badge” system may seem hokey to some, it does provide a means to visualize and display stores of knowledge, achievements, and skills acquired. That would make it more difficult for managers to simply promote the talent that “fits in” or “looks like them.” By providing a social and visual representation of who’s really performing, promotion may become more transparent, fair, and truly meritocratic.

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