A recent survey conducted by Deloitte found that 58% of the executives questioned “believe that their current performance management approach drives neither employee engagement nor high performance.”
As a result, many are re-evaluating their methods of evaluating performance of employees and are looking into tools like SuccessFactors performance management to help them improve the way their business handles their employees.
The researchers drew three conclusions:
- Today’s widespread ranking- and ratings-based performance management is damaging employee engagement, alienating high performers, and costing managers valuable time.
- Only 8 percent of companies report that their performance management process drives high levels of value, while 58 percent said it is not an effective use of time.
- Leading organizations are scrapping the annual evaluation cycle and replacing it with ongoing feedback and coaching designed to promote continuous employee development.
Another study in the Journal of Applied Psychology found that although “it is implicitly assumed that the ratings measure the performance of the ratee, most of what is being measured by the ratings is the unique rating tendencies of the rater. Thus ratings reveal more about the rater than they do about the ratee.
Meanwhile, the Harvard Business Review reviewed the literature of performance reviews and concluded too many evaluation methodologies attempted to synthesize complicated human behavior into a single metric.
“Surely, however, a better understanding comes from conversations – with your team leader about how you’re doing, or between leaders as they consider your compensation or your career. And these conversations are best served not by a single data point but by many. If we want to do our best to tell you where you stand, we must capture as much of your diversity as we can and then talk about it.”