90% of organizations anticipate their industries will be disrupted by digital trends, according to a recent survey conducted by MIT and Deloitte.
During the second half of a two-part webinar series featuring Josh Bersin, Principal and Founder at Bersin by Deloitte, Deloitte Consulting LLP, we discussed how and why industry leading enterprises are facing rapid rates of change in performance management structure. In addition to a demographic upheaval, with millennials making up more than half the workforce, companies are seeing an increase in the role technology plays in business models —what Bersin calls a digital revolution.
Constant mobility and change in the workplace means we also have to change the way we handle performance management. “In this digital revolution, people are given the power and authority to do more things, so we have to give them tools and support systems that not only engage them, but also help them improve performance over time,” says Bersin.
Even though companies want to figure out how to operate in a digital way, only 35-40% of them believe they are close to being ready. In the webinar, Bersin introduces seven approaches to performance management to help you keep up with today’s digital revolution:
1. Set Up-to-Date, Transparent, Ambitious Goals. Say good bye to annually set goals and hello to quarterly ones…and increased operational excellence. According to Bersin, employees should ensure their goals are relevant to what’s going on in their organization at least every quarter. He adds that goals should be transparent across the company to help maximize accountability and collaboration. All goals should be ambitious: “Get a man on the moon” instead of “Get a man to the gym.” According to Don Sull, Senior Lecturer at MIT Sloan School of Management, companies that create ambitious goals get 50-80% more output than those that don’t.
2. Check in Regularly & Frequently. Just like getting check-ups at the doctor, it’s important for check-ins between employees and managers to occur regularly and often. In these conversations, managers should review their employees’ progress and goals. Employees should have the freedom to tell managers what they’re working on and ask for help when necessary.
3. Give Open & Continuous Feedback. Bersin says the world of feedback and the world of performance management have merged. Feedback should go both ways: 80% of millennials want to be able to give performance appraisals to their managers. According to Bersin, if employees give managers feedback, it opens opportunities to improve performance for the entire organization, not just individuals.
4. Promote Continuous Learning. For companies to compete in a digital way, they must have management structures that invest in learning. Millennial employees believe that development is the number one driver in their performance, says Bersin. Leadership must provide employees with the information, tools and content needed for them to learn new skills.
5. Update Your Performance Reviews. Performance reviews aren’t leaving, but annual reviews should. Organizations aren’t abandoning performance reviews altogether, but they are instilling more frequent feedback as the norm instead of sticking to one annual review. According to Bersin, performance reviews should be driven by much more data than goals generated 12 months ago. Instead, it should be an ongoing conversation between a manager and an employee that ensures everyone is accountable and on track to reaching their objectives.
6. Untie Compensation from Individual Goal Achievements. 51% of performance ratings are not based on an employee’s performance, says Bersin. Instead, they’re based exclusively on a manager’s judgment. The modern, agile approach to determining compensation is looking at variety of factors and asking questions like: how are they contributing to the company? What is their relationship with customers? What is their potential for growth?
7. Support Ongoing Development. According to Bersin, everyone wants to take on new roles, projects and functions. What we don’t want is a structure that prevents people from moving to new assignments and roles in an agile, facilitative way. It’s important for leaders to have discussions with employees to discuss their desired assignments and asses their skills.
As the traditional workforce continues to evolve digitally, so does the need for new management best practices. You can listen to the full webinar recording here.