Consulting firm Deloitte works with many organizations toimprove their business practices. Recently, the firm looked at itsown internal processes and determined that its performancemanagement system needed some new life. With over 65,000 employeesto rate, the goal was to make the process faster, continuous, andsimpler. After gathering information on its current practice andinvestigating the science behind performance evaluation, Deloittecame up with a revolutionary way forward.
The current practice was a traditional method of cascadingobjectives from the organizational strategic level down to theindividual contributor level. Managers would rate each employee atthe end of a rating period based on how well he or she met thoseobjectives. However, annual goal-setting did not coincide withbusiness operations schedules, and the process consumed nearly 2million hours a year. Since Deloitte is in the business ofimproving efficiencies and productivities for clients, it only madesense to radically change its own performance managementsystem.
The science behind evaluations shows that ratings are oftenaffected by unconscious rater biases and perceptions rather thanfactual performance outcomes. Deloitte’s employees often work inteams, and individuals believe that they are able to use theirskills and strengths effectively at work. The firm’s new approachasks team leaders to specify what future actions they plan to takeregarding each member of the team. This shift in thinkingrecognizes that raters’ assessments of performance may beinaccurate, but the way they plan to work with someone in thefuture says more about that individual’s actual performance.
Team leaders now report their future-oriented intentions, fromendorsing that they would like to keep the individual on their teamto recommending that the individual poses a performance risk thatmight endanger client relationships or team performance. Since anessential component of performance management is to facilitateimprovements in performance, team leaders now check in with eachteam member once a week to review project status and priorities,provide feedback on recently completed work, and provide any neededcourse corrections. This frequent communication is initiated by theteam member rather than the leader. In this way, each individualtakes ownership of their performance and seeks out feedback andinput on their performance. Deloitte has moved away from assigningeach employee a single performance rating score in favor of ongoingfeedback.
Questions
What is your overall opinion of Deloitte’s new approachto performance management? What type of training would yourecommend for managers, team leaders, and team members beforeswitching to a system like this?
What actions should be taken if an employee is ranked asa potential performance risk? How would compensation decisions bemade without a performance score for each employee?
