Why the Individual Misses Out

We commend Deloitte for experimenting with new performance management practices that move away from single digits and forced rankings.  While a comfortable practice in many organizations is to utilize a numeric scoring system, objectifying people into a number tends to be dehumanizing. Deloitte’s new system incorporates a very practical approach with weekly check-ins and standard assessment tools.

At Pariveda Solutions, a management consulting firm specializing in improving the performance of our clients, we are in the twelfth year of innovating employee development. We place the highest value on developing our employees to their fullest individual potentials. We have accelerated career growth by 30% compared with other best in class management consulting firms, and our people consistently engage at higher levels (top 15 percent) reflected through independent survey benchmarks.

Performance management should be continually evaluated to produce intended results and align with the organization’s objectives. For Deloitte, spending almost 31 hours a year per employee on performance management seemed inefficient. We average 24 to 26 hours per year per employee. We value effectiveness (return on invested human capital) over efficiency (hours per employee) as a measure of performance management system health. Employees are not airline passengers to impose less legroom, extract more baggage fees, or charge for peanuts in the name of efficiency and profit. Shouldn’t the primary criteria for effectiveness be accelerating the individual’s development? From this, so many good things flow for an organization and its people.

Variable compensation has not been scientifically proven as a means of improving future performance; as it rewards past performance, not current, demonstrated or future potential. Variable compensation tends to minimize human development. Variable reward systems are retrospective of the past relative to others’ comparative performance, rather than prospective of the individual’s future potential competing only against self to improve.

Humans are complex beings. Reducing assessments to questions answered with Likert (1-5) or binary (yes/no) scales may seem necessary to process thousands of employees, but rarely turn out well for the individual. Open-ended questions elicit open-ended responses, and these are the basis of insightful conversations. Since inception, we have asked the same two binary questions as Deloitte within the context of strengths and areas for improvement.  However, we use words, not numbers, for constructive dialogue about the individual’s career aspirations and possibilities.

Performance management should be transparent to be truly effective. Transparency means complete disclosure of current and future role expectations and how the individual performs relative to those expectations. We openly share our expectations of roles and mentor how to move to the next level with each and every one of our people, from the newly-hired college graduate to the most senior executive. We have no banding, no ranking, no numbers, no variable compensation and thus no glass ceiling on our peoples’ achievement. We have grown steadily over our 11 years, growing from a startup to placing in the top 1% of revenue in our industry because we accelerate individual career development.

We frequently share our knowledge and experience with like-minded people who seek to improve their organization’s employees.  Sharing nurtures our strongest desire that others will have the opportunity to grow to their fullest potentials and accelerate their career growth.

 http://hbr.org/2015/04/reinventing-performance-management

Bruce Ballengee, CEO Pariveda Solutions

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