HBR Insights: “The Performance Management Revolution”
Recently, Harvard Business Review (HBR) published an in-depth article on the revolution of performance management. We’ve summed up some of the most important insights on how performance management is changing, what you can do to stay ahead, and what it means for using a goal setting framework like OKRs.
Here are your key takeaways from the HBR article:
It’s long overdue.
The problems with outdated yearly performance reviews certainly aren’t news. Specifically, HBR cites Deloitte’s 1.8 million-hour investment to prepare for them, as well as the claim that they’re a “last-century practice”. The biggest problem, however, is that they only hold employees accountable for past performance, instead of focusing on the future.
It’s here to stay.
The HBR article provides a detailed history of performance management and describes the shifts from development to accountability then back to development again. Yet, despite perennial shifts in management tactics, HBR suspects the new wave of performance management will be here to stay, because it’s being driven by business needs–specifically, the need to engage and develop talent through ongoing feedback–not HR.
Top 3 reasons to embrace it.
- To develop your talent: Ongoing, specific feedback is the tool managers can use to develop talent. Employees are motivated by development opportunities, and managers can help refine strengths through consistent coaching.
- To stay agile: Businesses aren’t operating on annual cycles anymore, so performance management shouldn’t, either. Frequent check-ins allow teams to stay agile by boosting clarity and focus on priorities.
- To support teamwork: Forced ranking encouraged unhealthy competition, not teamwork. By using modern-day performance management, teams can work collaboratively on goals.
Goal alignment is critical.
HBR notes that aligning individual objectives with company goals is essential. The author asks how the two can be coordinated, and the answer is simple: through OKR goal setting. This powerful framework takes corporate priorities and cascades them down for organizational alignment, clarity, and company-wide focus on what matters most.
Feedback is essential to success.
To master the performance management revolution, you also need ongoing feedback. Without it, you won’t be able to give underperformers a chance to improve, which is critical to avoiding legal trouble. Likewise, you won’t successfully engage top talent, because employees need recognition and a direct line of sight into how their work impacts company priorities to stay committed.
For it to work, you’ll need to communicate with your people regularly, giving them specific, actionable feedback on their performance. You can support this ongoing feedback loop through tools like weekly one-on-one meetings and pulse surveys, and ensure your check-ins are covering progress on OKRs.