Why performance management matters

by | Sep 28, 2016 | Blog

Our Head of Talent Nadine Smart sets the scene for upcoming Cirrus research

Why performance management matters? Performance management is a pertinent issue for pretty much every organisation today. At Cirrus, we work with a wide range of clients, and the majority of them have either changed their approach to performance management over the past year or two, or are currently exploring how to improve it. For many, the change is part of an overall business transformation.

As part of Cirrus and Ipsos MORI’s Leadership Connections 2016 research, C-suite leaders from major UK organisations were asked where HR teams contributed most to the business. In their opinion, the top HR contribution areas were talent attraction for 55% and performance management for 46%. When we discussed this finding with a wide range of HR, talent and L&D professionals, many felt this represented a great opportunity for them to influence the culture of their organisations. There was an overwhelming desire to move away from traditional performance management systems towards a more holistic approach to improving individual and organisational performance.  We thought it would be very interesting to explore this further, which is why we decided to carry out some more qualitative research into the topic of performance management.

Other recently published research has of course drawn attention to this area. Business researcher Josh Bersin estimates that about 70% of multinational companies are scrapping the annual evaluation cycle and replacing it with ongoing feedback and coaching designed to promote continuous employee development. In other recent Deloitte research, more than half the executives questioned (58%) believe that their current performance management approach drives neither employee engagement nor high performance, and only 8% of companies reported that their performance management process resulted in high levels of value. An article in the current issue of Harvard Business Review observes that, ‘The biggest limitation of annual reviews – and the main reason more and more companies are dropping them – is this: With their heavy emphasis on financial rewards and punishments and their end-of-year structure, they hold people accountable for past behaviour at the expense of improving current performance and grooming talent for the future, both of which are critical for organisations’ long-term survival. In contrast, regular conversations about performance and development change the focus to building the workforce your organisation needs to be competitive both today and years from now.’

Most of the challenges organisations highlight are the same issues I have seen many grapple with in my own experience of working with clients in this area for over two decades. What’s interesting is some of the ways organisations are choosing to address these challenges. Our Cirrus research, based on in-depth interviews with HR, talent and L&D leaders from leading organisations, will be published on Thursday 13 October. We’ll also discuss it at an open webinar on Tuesday 22 November. If you’d like to know more, please get in touch – we’d love to hear from you. You can also tweet @CirrusConnect using the hashtag #PerformanceManagement.

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