Kudos to Deloitte for making a concerted effort to develop a fair, efficient, and useful performance management system for its 65,000 employees. In a blog post for Harvard Business Review titled Reinventing Performance Management, Marcus Buckingham and Ashley Goodall describe Deloitte’s evolving system. They write:

This is where we are today: We’ve defined three objectives at the root of performance management—to recognize, see, and fuel performance. We have three interlocking rituals to support them—the annual compensation decision, the quarterly or per-project performance snapshot, and the weekly check-in. And we’ve shifted from a batched focus on the past to a continual focus on the future, through regular evaluations and frequent check-ins. 

To me, the key to their performance improvement will be the weekly check-in. This is where team leaders talk to team members about past performance, goals for future performance, and what can be done to be successful. This conversation, as I have written in a previous post, is an essential aspect of any leader’s role. As the authors say, “…check-ins are not in addition to the work of a team leader; they are the work of a team leader.”

Also, Deloitte has designed a potentially efficient way to measure performance over time. They intend to ask team leaders four questions at the end of each project or at least once a quarter. The questions are:

1. Given what I know of this person’s performance, and if it were my money, I would award this person the highest possible compensation increase and bonus [measures overall performance and unique value to the organization on a five-point scale from “strongly agree” to “strongly disagree”].

2. Given what I know of this person’s performance, I would always want him or her on my team [measures ability to work well with others on the same five-point scale].

3. This person is at risk for low performance [identifies problems that might harm the customer or the team on a yes-or-no basis].

4. This person is ready for promotion today [measures potential on a yes-or-no basis].

It remains to be seen whether these questions will “fuel” performance in the long-run. Given research that shows manager ratings of employees are more about the person doing the rating than the person Rating-24184__180being rated, Deloitte is trying to make the ratings more objective. However, it still requires rating by managers who are affected by their own attitudes and biases. If this process results in more conversation between team leaders and team members about learning and improving performance, then it will have served its purpose.

What concerns me most about Deloitte’s new performance management system is the apparent lack of alignment between wanting to be strength-based and using variable compensation. A system that rewards the performance of some and not others can be a disincentive for learning and performance improvement. In a strength-based system, everyone is recognized for what they contribute and for what they can become. A variable compensation system is a good way to control behavior but not necessarily a good way to encourage learning and improvement.

I want to be clear. I admire Deloitte’s intent and the willingness to experiment and use evidence to improve their performance management system and I am very curious to hear about results and impact on the organization. My concern is that the recognition and reward aspects of the system will negate the learning that can be achieved from leader feedback aspects of the system. We’ll see.

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