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Why is the traditional performance management system getting binned by the organizations?

5 March, 2022
5 mins

If there is one thing the managers and employees of your organization dread, it’s the rigid performance management approach involving annual reviews. Theoretically, performance management should happen every now and then. Think of it this way, if Cristiano Ronaldo was playing in a way his manager didn’t like, would he wait until the end of the season to give him his feedback? Absolutely not, right? The logic says that they should address the problem immediately to ensure that Ronaldo works efficiently to achieve the desired results. Keep reading further to know why it’s the time you too should ditch the traditional performance management system for a more agile one. 

traditional performance management system

Source: Pexels

You’ve heard about it on every podcast and read about it on every website – the traditional performance system has been a slow death for the organizations since the past years. More and more organizations are coming to the conclusion that the extremely rigid performance approach is a large cause of low engagement and high turnover in their organization. 

In a traditional performance approach, there’s typically a formal meeting that happens once or twice a year. You sit down with your employees and evaluate their progress, strengths, weaknesses and tell them about your expectations for the upcoming year – followed by a quick question for feedback towards the end. The reality is, this format just doesn’t; work! Your employees actually want and thrive on constructive feedback and recognition, not just from their managers but clients and peers as well. The fact is, they would prefer to get it more often. In fact, ditching the traditional performance management system for a more agile system will help your organization in boosting productivity and retention

Fortunately, there’s a huge wave of companies – small and large, that are on a spree of redefining their performance management approach from the ground up. From ditching the annual reviews altogether, to implementing a more agile performance management program, organizations are trailblazing the new path in performance management across all industries. It is estimated that about 70% of the multi-national organizations are moving away from the outdated performance management approach. Unsurprisingly, technology firms like Microsoft, Adobe, and Dell have been paving the way since the past decade. Multiple professional services firms including PwC, Accenture, and Deloitte have joined this mass movement. 

The verdict is in: Traditional performance reviews don’t work anymore

Study after study has proven that the traditional performance approach is a relic that needs to be kicked to the curb sooner rather than later. These reviews are typically focused on your employee’s progress and are intended to set expectations for moving forward but more often hat not, they come too little, too late. There are numerous reasons due to which this approach doesn’t stand a chance in today’s modern era:

1. The changing nature of work

The traditional performance management system doesn’t take into account how the work “gets done today”. Just think about it, who even sets a 12-month goal anymore? Employees now want goal cycles of one month or even one week. The nature of the work has changed – organizations function in teams more than ever and many employees are involved in multiple teams that are often scattered around the world. Only a handful of the managers have an accurate idea about their team member’s performance when that employee is involved in many teams, often doing work the manager doesn’t see or even understand. In short, the traditional performance approach delivered once annually is not just relevant to the ways the organizations work anymore. 

2. Lack of efficiency

It is no surprise that one of the biggest drawbacks of the traditional performance approach is that it’s way too time-consuming. A study was found the average manner spends about 210 hours (almost 5 weeks) doing appraisals each year. Yet in spite of this, 90% of the human resource managers believe that the traditional approach does not generate accurate information. Would you want your managers to evaluate the performance of your employees based on inaccurate data? Why would you and your employees want to work with a performance management tool that is inaccurate and inefficient? Thanks to the agile performance management program, organizations no longer have to deal with such an inefficient approach. 

3. Employees are forced to wait for too long for the feedback

Traditional reviews generally happen once annually or twice a year at stretch. Employees generally have to wait for 6 months or more under the traditional structure – even when the universal fact suggests that employees feel regular check-ins are more fruitful for them. Waiting too long to get a performance review will demotivate your employees to a huge extent. This also leaves room for the common errors to go unnoticed. Not just this, but waiting for multiple months for the check-in can have your employee looking elsewhere for recognition. Would you want your employees to do that? We certainly think that you would not. So agile performance management tool is the way to go! 

4. Gaps in communication

The majority of the leaders and employees believe that the lack of communication is the root cause of failure in the organization not achieving its objectives. The traditional approach particularly causes enormous gaps in communication. Since it utilizes a hierarchical relationship between the manager and the employee, the discussions usually end up revolving around the strength and weaknesses of the employee. Gaps in communication can impede or stop organizational success in its track, while a more collaborative approach will resolve this issue and bridge the gaps in the communication of the organizational teams. Having an approach that facilitates smooth and effective communication will help you in boosting the productivity and engagement of your employees

5. The need to develop the employees faster

By binning the traditional performance management approach organizations are able to develop the people faster across the board. This happens because of more regular dialogues, as they tend to be more honest and open when neither party has to worry about justifying a rating towards the end of the year. Wen Deloitte analyzed their process, they found that employees and managers spend heps on time on this approach. The main concern was that much of this time was spent talking about the rating themselves. When the organization bin this rating setting approach, the conversations shift from justifying past performance to thinking about development and growth. The result is better employee development – which is a win-win for all. 

Evidently, the days of the traditional performance management system are a thing of the past now. It’s about time you too implement an agile performance management system in your organization. Don’t keep waiting and contact us right away!