Reference no: EM132940823

Deloitte's Approach to Performance Management Pays Off

As a business consulting firm serving many of the world's leading companies, Deloitte has been well aware of managers complaints about performance management systems: they're too slow, they don't promote employee engagement, and the connection to business results is hard to find. Deloitte's HR leaders had to admit that those criticisms might apply to the firm's own performance management process. Objectives were set for each employee at the beginning of the year. Managers rated employee performance every time a project ended and then used the data to arrive at ratings for each employee at the end of the year. Finally, managers discussed the results in calibration meetings. Employees liked the fairness of the approach, but the year long time line made the process hard to use for employee development. Furthermore, the managers were rating employees' skills, which are difficult to observe, so the ratings varied according to who was evaluating the employees.

The HR team set out to design an approach better suited to today's fast-paced business environment. They started by applying some of the firm's own research about the conditions most common on its highest-performing teams. Most notably, teams performed best when employees said they had a chance to use their strengths each day. Based on this, the HR team determined that it needed a system that would help its people use their strengths while also providing a Source of reliable data about performance.

For the performance ratings, the HR team identified Question managers could answer reliably: four questions about their plans for the person-specifically, using a scale rate how strongly they want to reward the employee, how much they want the person on their team in the future, whether person is at risk for low performance, and whether the person is ready for promotion. Managers answer these questions at the end of each project or at least quarterly. The data yield a "performance snapshot" rather than a rating. That snapshot helps Deloitte identify candidates who need particular kinds of responses, such as development opportunities or clarification of job responsibilities. Managers can review snapshots over time or for their team as a whole to interpret any patterns in the data.

Along with the process of creating performance snapshots each year, Deloitte's managers are expected to check in with each employee on their team frequently, say, every week or two. The check-ins are meant to be focused on the future an opportunity to set goals and priorities, provide feedback about recent work, and address any needs for change. As Deloitte rolls out the new approach, its people are reporting enthusiasm for the new focus on their goals and strengths.

Questions

1. What changes did Deloitte make in the kinds of data it collects? What are some pros and cons of the changes?

2. Based on the information given, how well does the new system meet each of the criteria for effective performance management (strategic, valid, reliable, acceptable, and specific)?