Five mould-breaking performance management strategies every boss should know about

04 June 2015 -

Performance management has never been higher on the agenda, and major innovations are reshaping the field for the better

Jermaine Haughton

Can performance management come from within rather than being imposed upon a staff base? In the experience of supermarket chain Waitrose, absolutely. This week, the brand revealed the stellar success it had achieved with a “collaborative innovation” tool designed to encourage workers to come up with ideas for improving the company’s processes. Powered by Wazoku’s Idea Spotlight cloud platform, the Waitrose Partner Ideas scheme has now tackled a host of in-store quibbles related to temporary pricing tickets, and the formatting and management of receipts – making an estimated £100,000 of savings.

Combining performance management with employee engagement, the programme has been hailed by Waitrose operational improvement manager Stuart Eames as a dramatic step change. “The success of our Partner Ideas scheme goes to show that sometimes the truly great innovations can be as simple as making small changes to the tasks you do every day, rather than the big ideas which transform everything,” he said. Eames added that the brand has had “more ideas submitted from just six stores in the first six weeks” of using the software than it had “in the last six months across the whole of Waitrose” with a previous scheme.

Make no mistake, performance and productivity have never been higher on the management and leadership agenda – and not every company is having as positive a time of it as Waitrose. Far from it, in fact: according to a new CIPD poll of more than 2,200 employees, only 44% have been set clear performance objectives since the start of the year, while a fifth felt their performance was only explained in the wider context of the organisation. Meanwhile, 18% said that their managers gave them no feedback whatsoever.

In the same week, hard-hitting research unveiled in CMI’s National Management Salary Survey showed that in the past year, almost half (45%) of managers who were classed as “not meeting expectations” still pocketed bonuses, starting at around £8,900 – but climbing as high as £44,700. Given this peak of interest in the art of performance management, here is how five, radically innovative approaches to the field have played out in some of the world’s biggest firms…

1. Red Hat: real-time feedback and peer review

The open-source software firm’s managers are required to give staff routine and regular feedback on their strengths and weaknesses throughout the course of the year, before a larger and more comprehensive annual review, which looks back at their achievements, and what they can do to improve in the following months. Furthermore, the company judges staff on how much influence and respect they have from their colleagues – making employees accountable to their peers, as well as to management. (Source)

2. Deloitte: the “People-centered” system

Currently in the process of abandoning the traditional annual-review and performance-rating system, the “Big Four” auditor has announced plans to introduce a more career-focussed review scheme, which involves much more frequent discussions between staff and their line managers, aiming to boost staff performance at a constant momentum. Deloitte UK head of HR Stevan Rolls told HR magazine: “We want to move away from a bureaucratic approach, moving away from talking about people to talking to people.” (Source)

3. Netflix: the “Keeper Test”

In a somewhat more ruthless approach, managers at the on-demand video streaming company are regularly encouraged to assess which employees they would fight hardest for to keep from leaving Netflix, on the proviso they then release the other staff on generous severance packages. Netflix has also determined that when it adds a new top performer to the team, the often-expensive process costs less than the cost of stagnation. Employee reviews chalked up on Glassdoor suggest the move is sharply divisive, with around half supporting it, while the other are more sceptical. (Source)

4. Adobe: the “Check-in system”

With the aim of spurring employees to set their own expectations, engage in regular staff critiques and create a plan for career growth and development, Adobe’s check-in system provides a consistent, two-way conversation between staff and managers, designed to build unity, confidence and trust throughout the workforce. The process makes a stark contrast to the firm’s previous, formulaic staff performance system, which had the traditional trappings of review forms, rankings, and calibration sessions. (Source)

5. Microsoft: scrapping the hated “stack ranking” system

One of Steve Ballmer’s last major moves as Microsoft chief executive was to oust the firm’s reviled stack-ranking system, which effectively pitted colleagues against each other, and was roundly blamed for the tech giant’s stagnation in the past 10 years. Critics of the system – such as Vanity Fair contributing Editor Kurt Eichenwald – claim that it spawned a cannibalistic culture, as workers fought to be placed in the top performer category, as opposed to the average or poorly performing brackets. Following Ballmer’s intervention, Microsoft adopted a more collaborative internal approach, focusing staff reviews on teamwork and leadership qualities. (Source)

HOWEVER…

There’s always one that goes backwards rather than forwards...

Yahoo: stack ranking returns from the grave

In one of her early efforts to return Yahoo to its past glories, controversial CEO Marissa Mayer introduced Quarterly Performance Reviews that were widely reported to have a striking similarity to the stack ranking system binned by the firm’s Microsoft rivals. “QPRs” require managers to rate their staff’s ability to meet goals on a scale of one (“misses”) to five (“greatly exceeds”), with a percentage of staff required to be in the bottom category. According to journalist and author Nicholas Carlson, the move has “hurt teamwork” and led to “demotivated workers”, as well as “miserable” managers, who feel under pressure to hand out low grades to average-performing staff. (Source)

Click here for full details of CMI’s National Management Salary Survey.