Reinventing Performance Management - How to do it right
V P H C M S T R A T E G Y & I P
A T B A M B O O H R
M O D E R N C O M P E N S A T I O N
E V A N G E L I S T A T P A Y S C A L E
The Law of Inertia
We tend to be carried forward
in life by the inertia of our past.
of performance reviews end up
decreasing employee performance
- Psychological Bulletin
of executives believe their current
program doesn’t result in performance
or engagement. – Deloitte
70% of companies are now
reconsidering their performance
strategy. – Bersin
of companies surveyed think
performance reviews are worth their
time - Deloitte
of HR executives say yearly
evaluations are useful. – Deloitte
of workers are dissatisfied with their
perfpormance reviews. – Deloitte80%
of employees with highest performance
scores aren’t actually the highest
performers - CEB
-5% improvement in performance is
all managers believe will be
generated in the process. - CEB
“Performance appraisals are perhaps the most
reviled standard practice in all of management”
Wharton School of Management
“Why we love to hate HR” HBR
It’s time to blow up HR and build something new
Why we love to hate HR
What will it take to fix HR
It’s time to split HR
HR faces a crisis of credibility in the boardroom
HR is our “favorite corporate punching bag”
A crisis of credibility
“You rate me on ‘Marcus makes decisions quickly’ and
your rating reveals simply whether I make decisions
more quickly than you do.
If you rate me on ‘Marcus is a good listener’ and we learn
only whether I am a better listener than you.
All of these questions are akin to you rating me on
height. Whether you perceive me as short or tall,
depends on how short or tall you are."
Idiosyncratic Rater Effect
Harvard Business Review
• Random measurement error
• Interpretation error
• Idiosyncratic rater effect
• Recency Bias
• Confirmation Bias
• Faulty memory syndrome
• Quantification of past behaviors is
• We tend to let it stand for more than
• Negative psychological impact
(defensive and demotivating)
• Too many variables
• Too often rater is unqualified
(doesn’t understand job)
• Shown to decrease morale
• Found to create infighting
• Leads to “gaming” and politics
• Too subjective
• Too infrequent
• Too much focus on past, not
enough on future
• Too costly
• Takes too much time
• Too despised
“When asked what would shake up the HR world most in
2016, 44% of companies said shifting from traditional
performance reviews in favor of real-time feedback”
—2016 BambooHR Comp Best Practices Report
Performance Review Process
Annual performance reviews
were eating up a ton of time.
And it wasn’t giving the
business return for that time.
Stopped doing annual review “in
favor of regular check-ins allowed
Adobe to have a lightweight
process that served—rather than
distracted from—people doing
their best work.”
CEO Pierre Nanterme said that
sharing only once a year what
you think of your employees
“doesn’t make any sense.”
Performance is an on-going
activity, and people want to
know if they’re doing things right
on an on-going basis. It should
be “instant performance
Accenture “plans to implement a
more fluid system that would
allow for immediate employee
feedback on an ongoing basis.”
Removed stacked rankings, firing
the bottom 10 percent each year
(10 years ago). They’re now
removing performance reviews
completely because it “leads to a
tendency for HR to focus
excessively on process over
outcomes.” And doesn’t make
sense for their current workforce,
who want feedback more
“frequent, faster, mobile-enabled.”
They’re transitioning from bell-
curve management to focusing on
their people who are more
motivated by connection,
inspiration and developing people
70% of companies are now
Ask Simple Questions
1. Given what I know of this person’s performance, and if it were
my money, I would award this person the highest possible
compensation increase and bonus
[measures overall performance and unique value to the organization on a fiv
e-point scale from “Strongly agree” to “strongly disagree”].
2. Given what I know of this person’s performance, I would always
want him or her on my team
[measures ability to work well with others on the five-point scale].
3. This person is at risk for low performance
[identifies problems that might harm the customer or the team on a
4. This person is ready for promotion today
[measures potential on a yes-or-no basis].
Performance Questions Now Asked By Deloitte
Ask Simple Questions
1. If Allison got a job offer elsewhere I would
a. Do everything I could to keep Allison. We’d be in trouble!
b. Convince Allison to stay. Allison would be difficult to replace
c. Need to think about it. Allison does a decent job.
d. Wish Allison well. I’ll be able to find a better replacement anyway
e. Be relieved. It’s not likely to work out anyway.
2. How engaged is Allison at work?
a. High engagement and a great attitude.
b. Good engagement and a mostly positive attitude.
c. Medium engagement and an okay attitude.
d. Low engagement and is burned out.
e. No engagement and is checked out.
3. What are some things Allison does well?
4. How could Allison improve?
Performance Questions Now Asked in BambooHR
• Passes to sporting events
• Catered lunches for winning teams
• Days off after big deadlines
• Choice of work assignment
• Development opportunities
• Lunch with the CEO
• Remote work
It’s not a best practice
if it’s not best for
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