HCI Uncovers Best Practices for Agile Performance Management in Latest Talent Pulse Research
Organization Explores Shortcomings of Traditional Performance Review Methods, Offers New Model to Enhance the Process
NEW YORK (October 7, 2015) – The Human Capital Institute (HCI), the global institution for strategic talent management, today announced the release of its latest Talent Pulse, a quarterly research eBook addressing the biggest trends and challenges of talent management. In this fourth-quarter edition, “No Review, No Problem: Making Talent Decisions without Ratings,” the research addresses the challenges companies face in conducting performance reviews and offers a new best practice approach focused on feedback, coaching, goal setting and manager and employee relationships.
Though most companies implement performance review processes, these programs don’t always deliver as promised in terms of elevating the performance of the entire workforce. All too often, the results of these reviews are not accurate, due to unintentional biases or differences in perception, and the negative feedback often discussed in reviews can be harmful to employee morale and job satisfaction. Moreover, the typical annual performance review does little to actually improve performance or induce positive behavioral change. At the same time, the entire performance review process can be unpleasant for both manager and employee, further impacting its effectiveness in bringing about positive change.
In “No Review, No Problem: Making Talent Decisions without Ratings,” HCI explores the current state of performance reviews, based on the responses of more than 400 HR, L&D and executive management leaders, to better understand where current processes fall short. The report also presents HCI’s new model to make performance reviews more effective. Through the Agile Performance Management (APM) model, companies can shift the focus from the broken, annual evaluation and rankings approach to provide continuous feedback and development. As the research shows, companies that have adopted this approach saw positive results such as improved employee performance and engagement and elevated satisfaction in the entire performance management process.
Other key findings of the research include:
- Outdated processes, inaccurate results: Most organizations rely on a performance review process in which individuals are rated against their own objectives and salary raises and bonuses are tied to those appraisals. At the same time, only slightly more than half (54 percent) of organizations calibrate the results of their appraisals for fairness and consistency across functions and managers.
- Doing away with ratings: More companies recognize that employee ratings don’t help in improving performance, and most respondents don’t trust ratings to be accurate. A small number of organizations (12 percent) have already removed ratings or rankings from the review process, and another 26 percent are currently exploring doing so.
- New ways to make decisions: For organizations that removed ratings, the most popular ways to make compensation decisions are based on company performance, benchmarked employee performance against established goals and manager’s discretion.
- Improving performance reviews: Companies that have transitioned to HCI’s Agile Performance Management model report stronger financial performance and higher satisfaction with the system, and that employee-manager conversations about performance and development occur more frequently.
“It is clear that the standard performance review process is broken, failing to provide the motivation and engagement necessary to truly elevate workforce performance,” said Carl Rhodes, HCI’s chief executive officer. “But this doesn’t mean that companies must completely do away with performance reviews. It simply requires that organizations move beyond the traditional yearly evaluation process and toward providing continuous feedback and development to ensure employees are consistently working to the best of their abilities. As our latest Talent Pulse research suggests, rethinking the performance review process to make it more collaborative, social and faster will lead to an improved performance management strategy.”
HCI has made “No Review, No Problem: Making Talent Decisions without Ratings” available for download at: http://www.hci.org/hr-research/no-review-no-problem-making-talent-decisions-without-ratings-and-rankings.
About Human Capital Institute (HCI)
HCI is the global association for strategic talent management and new economy leadership, and a clearinghouse for best practices and new ideas. Our network of expert practitioners, Fortune 1000 and Global 2000 corporations, government agencies, global consultants and business schools contribute a stream of constantly evolving information, the best of which is organized, analyzed and shared with members through HCI communities, research, education and events. For more information, please visit www.hci.org.