Traditional performance management fails to match new digital workplace ⁰

Performance management plays a key role in  helping organisations measure how effectively their employees are contributing to business objectives. Yet despite 94 percent of workforce leaders in a global survey believing performance management improves business performance, only 39 percent of them think their current practices help to achieve their organisation’s business objectives. This isn’t just the employers’ view, within the workforce, 89 percent of people believe their performance would significantly improve if changes were made. The main reason for this credibility gap is the impact digital technologies are having on the nature of both work and the workforce. In the Accenture Strategy report, Is Performance Management Performing? – 92 percent of respondents report that work is faster, more networked and collaborative, and demands ever-evolving skills. This means that organisations need to innovate to keep pace.

In fact, the study finds that 77 percent of business leaders and employees believe that a personalized performance management approach should be mandatory to meet the needs of the workforce of the future. However, only one third of organizations (34 percent) have moved away from more traditional annual performance management.

The majority of respondents are positive about the potential impact of performance tracking technology, although leaders are consistently more optimistic than employees. Sixty-eight percent of leaders and 53 percent of employees are comfortable with technology tracking their performance at work. Furthermore, 78 percent of leaders and 64 percent of employees say performance tracking technologies will change the future of performance management for the better.

On a personal level, almost two thirds (65 percent) of employees do not believe performance ratings accurately and objectively reflect their performance, and 58 percent of them say that the use of ratings creates a negative experience for everyone except the few at the top. However, dropping current approaches entirely may not be the answer. The vast majority of both leaders (92 percent) and employees (89 percent) believe traditional rankings and ratings should have some role in determining rewards in the future.

“As the workforce becomes more diverse, organizations need to treat their employees as individually as they treat their customers,” said Deborah Brecher, managing director, Accenture Strategy. “Performance management needs to be radically modernized to suit the needs of the workforce of the future.”

There is a widespread desire for transparency. Seventy-nine percent of leaders (and 69 percent of employees) accept that making performance management transparent to employees is expected and necessary in this era of open information sharing. However, only 32 percent of leaders and 27 percent of employees indicate that they have experienced an increase in the openness of performance management.

The report also shows that employees at larger organizations are less satisfied with performance management than peers at smaller organizations. Additionally, smaller organizations report more changes to performance management practices over the past five years and are more eager to see further change (85 percent versus 66 percent). Smaller organizations are also more likely to be using crowdsourced feedback and experimenting with new technologies.

Accenture Strategy’s recommendations for organizations that want to improve their performance management approaches include:

• Help supervisors provide constructive conversations and real-time coaching. Conversations must be forward looking and focused on building strengths rather than correcting weaknesses.
• Embrace simplicity and transparency. In place of time-consuming competency assessments, and ratings and rankings, modern performance management must be simple in order to improve organizational agility.
• Personalize performance management across the workforce. Organizations are increasingly customizing coaching and feedback, the goal-setting process and types of rewards and compensation based on the needs of each individual employee or segments of the workforce.
• Clearly define high performance. High numbers of workers feel performance management does not accurately identify high-potential employees. Organizations need to radically rethink the very definition of high performance by taking into account collaborative work, the ability to quickly learn new skills, as well as cultural criteria they want to encourage.

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