Why you should have the guts to drop performance ratings (or at least think about it)

Big, successful organisations, across the globe, are dropping performance ratings. It’s on the agenda, and it’s on the increase!

YES, really!

And their experience shows that it is something we should all consider in some form or another.

Take a moment now to allow your fight/flight centre to calm down, because it’s pretty hard to imagine, isn’t it?

Just imagine your employees NOT wasting 3 months of the year in pain and anxiety worrying about your rating, how it will affect your pay, dreading ‘that’ conversation (both manager AND employee), and feeling like crap when you are told that what you produced over the last 12 months – through sweat, tears, late nights and weekends – didn’t cut the mustard!

Just imagine your employees NOT spending a month or two distracted on Seek.com.au deciding whether it’s time to look for somewhere new to work where they will appreciate you more.

And just imagine your employees NOT having to keep all the useful information about that client to themselves, so that they could have a competitive advantage at review time.

I just can’t imagine it, can you? So what is driving this shift?

Well, when you look at it, in many organisations, the performance management system fails to improve performance. A big oops!

There seem to be three major drivers for this recent change:

  • Organisations are getting a poor ROI on the time and energy invested in their performance management processes i.e. people aren’t getting better at their jobs at the rate that is needed, despite the time allocated to doing that;
  • There seems to be a misalignment between the PM system and their actual business objectives, desired values and desired culture i.e. it’s driving the wrong behavior, and
  • PM systems are just ‘noise’ in the already busy system i.e., people don’t like them and see them as just another distraction.

Studies show that in the six months following a performance review discussion, the highest performers (15% of the workforce) experience a slight dip in engagement in the two months following, but frighteningly, the average performers (85% of the workforce) experience a significant drop in engagement for around 6 months, and 2% of the lower performers never recover that engagement with the organisation.

And neuroscience provides us with the evidence to support this disengagement.

Not good.

Now obviously, it’s not as simple as deciding one day that you’ll drop the whole idea and go free-form. The focus in making such a change rests on the desire of organisation to:

  • Increase the actual performance of individuals and keep them engaged with their work;
  • Develop and leverage the potential of employees and managers working from a ‘growth-mindset’;
  • Taking away the wasted energy and feelings of inadequacy that inevitably result from the way our PM systems are designed.
  • There are many and varied ways that the pioneering organisations are working through this, but the ROI seems to be there.

Maybe it’s time to at least start the conversation. Maybe it’s time for a revolution in terms of performance management, rather than investing in an evolution of an already flawed system?

Over to you

What return is your organization getting on it’s performance management process? Does it warrant a different conversation?

If you’d like to understand more about how to raise the intelligence of your teams, I’d love you to make contact on michelle@michelleloch.com, schedule a free 30 minute discovery session with me, or attend one of my upcoming events.

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