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We thank Robin Cohen, Johnson & Johnson; Michelle Donovan, Google; Warren Thune, CEB; and Paul Yost, Seattle Pacific University, for reviewing drafts of this article.
Performance Management Can Be Fixed
Performance management (PM) is profoundly broken. It is universally disliked by managers and employees alike, it is seen as having little value, and it has failed to meet its intended goal of improving performance. The negative affect toward PM is at an all-time high, as reflected in the representative statistics shown below (Corporate Leadership Council, 2004, 2012).
*. Among managers, 95% are dissatisfied with their PM systems.
*. Among employees, 59% feel PM reviews are not worth the time invested; 56% said they do not receive feedback on what to improve.
*. Almost 90% of human resources (HR) heads report that their PM systems do not yield accurate information.
Organizations are taking a hard look at their PM systems and experimenting with new approaches. For example, Adobe eliminated its PM reviews (Garr, 2013). Cargill abandoned ratings and reduced its formal system steps. Microsoft recently announced that it was eliminating forced-rank ratings, and General Electric has made similar reforms (Bass & Green, 2013). There is a consensus that PM is broken, but given a long history of failed attempts to fix it (Pulakos & O'Leary, 2011), the looming question is this: What exactly should organizations do? This article presents a promising five-step PM reform process, along with examples and results from our experience implementing this approach.
What Should Organizations Do and Not Do to Fix PM?
For over 50 years, we have repeatedly attempted to address dissatisfaction and disappointing PM results (e.g., lack of differentiation among employees) by tweaking PM systems. These attempts to fix PM have led to vicious cycles of reinventing PM processes only to achieve disappointing results and then reinventing these processes again and again (Pulakos, Mueller Hanson, O'Leary, & Meyrowitz, 2012). Pulakos and O'Leary (2011) have argued that, over time, formal PM systems have become increasingly bureaucratic and disconnected from the day-to-day activities they were initially designed to promote, such as communicating clear expectations, setting objectives, and providing quality feedback. Contributing to PM's bureaucratic and administrative emphases are implementations of...