Have you wondered why several major companies like Adobe, Juniper, and Gap are deciding to forgo the traditional performance appraisal process? Lately, the question that is on everyone's mind; Are traditional performance appraisals still a viable approach to performance management? Many in today’s organizations don’t think so, and the majority are reporting that they are not getting what they need from annual performance appraisals. In a recent Forbes article, Donna Morris of Adobe shared statistics from Mercer’s 2013 Global Performance Management Survey. “Only 3% of organizations say their performance management system delivers exceptional value, while almost half 48% say their overall approach to performance management needs work (Morris, 2014).” There are several reasons that the time has come to rethink performance management, and specifically the annual performance review process. In part, the need for change mirrors the changing environment. The workplace looks very different from when the traditional performance appraisal process arrived on the scene 60 years ago.
Why Looking Back No Longer Works
In the early 1950s, change was not at the accelerated pace that it is today. Supervisors oversaw the work of a different workforce, one that was heavily engaged in manufacturing. Today a full 70% of employees are knowledge workers and service providers, according to Josh Bersin of Bersin by Deloitte. “These are people who become more productive and valuable over time…so the more we coach and develop them, the more productive and happy they become (Bersin, 2013).” He further asserts that the changing workforce, in part, creates the need to move from competitive evaluation to coaching and development. Not only is the nature of work impacting performance management, so too are employee’s expectations. A key consideration is the impact of Millennials, and what they want and need to be successful at work. The sheer number of Millennials in the workplace demands attention, as they tip the scales in 2015 and become the majority in the workplace (U.S. Bureau of Labor Statistics). And this trend will continue, with Millennials projected to represent 75% of the workplace by 2025.
There is a considerable impact on performance management as the Millennial generation, or those born between the years 1981-1996, represent a larger percentage of the workforce. In a recent Forbes article, Karl Moore who is a professor at the Desautels Faculty, McGill University & an Associate Fellow at Green Templeton College, Oxford University, says that “Millennials want feedback. They want it now and they want it consistently, or they’ll simply leave. Giving Millennials feedback is a very different game from what we knew in the past. The reality is that feedback has moved from an annual performance review to an everyday occurrence, or at least it should be. Worse yet, too many managers have not come to grips with the concept of Millennial feedback (Moore, 2014).”
The Challenges We Face
There are several factors that challenge cultures, and those who manage, to come to grips with feedback. Below are a few of the more common reasons organizations are struggling to fully embrace coaching and feedback:
- Failed attempts at change because of unrealistic expectations regarding the change effort required to shift to a culture of coaching and feedback.
- Unable to sell the cost of the change initiative due to the difficulty of quantifying that over time, the value outweighs the cost.
- Time challenges that are both real and perceived as managers struggle to deliver consistent and frequent feedback and coaching to the entire team. Often, the allotted time for feedback and coaching is spent on problem performers.
- Coaching initiatives lose steam because of lukewarm results because managers have not developed the skills and confidence needed to effectively coach and deliver feedback that has a meaningful impact.
While the obstacles are real, so too is the potential reward. Those who are able to shift the culture to support frequent and effective feedback will be the winners on many fronts. One of those fronts is employee engagement.
Defining the Opportunity
In Gallup’s report, the State of the American Workplace, the well-known employee engagement researcher states that roughly “30% of American employees are engaged at work, while the rest are not engaged (50%), or actively disengaged (20%).” As a subset of this statistical data, Gallup further evaluates engagement statistics related to feedback, and has uncovered some interesting and meaningful correlations. Globally the “managers who give little or no feedback only engage about 2% of their team and 40% of their employees report they are actively disengaged.” Gallup estimates that the cost of disengagement is $450-$550 billion a year (Gallup, 2013). The cost associated with managers who are not providing consistent feedback is becoming increasingly too high a price to pay.
Developing managers who are both consistent and effective at providing coaching and feedback is an opportunity for most organizations. To take full advantage of what’s possible, the entire culture must intentionally shift, as all managers reimagine, reinvent, and retool what they believe and what they do regarding performance management. Some will roll their eyes, not believing that they need to pay careful attention, because the terms coaching and feedback are familiar. Guard yourself against this way of thinking, and carefully consider if you fully own the vernacular and if you are a practicing student of this unique dialect that facilitates deeper meaning and engagement at work. In the future, nothing less than full participation will be enough.
There is a future calling managers to change the way they lead, and it will change the way organizations practice performance management. Those who answer the call will hold themselves and others accountable for collaboration and partnering, emotional intelligence, leveraging conflict and chaos, and mindfulness and presence. These leadership competencies will create an environment where trust can flourish; and this skill-set will be integrated into the landscape of coaching and feedback. In the future, coaching and feedback will stop being a task that leaders do, and instead become who they are, in any given moment.
If you believe it’s time for a change and want to learn more, read Part 2 of this blog: Why Meaningful Work Matters.
If you are interested in becoming a performance driven organization that’s able to balance a drive for results with caring and connected leadership; redefining coaching and feedback may be an opportunity worth considering. Schedule a free consultation today and learn how to use Cycles of Transformation to grow your team.
Deb Siverson is an author and president of Xponents, Inc. Her book, “The Cycle of Transformation: Igniting Organizational Change through the Leader Coach”, encourages transparent and emotionally-connected conversations at work. Her company’s focus is to bring out the best in people by recognizing and aligning unique talent, values, and purpose.