In my career of 30 years I have had maybe four formal performance reviews. For one reason or another my bosses have never been very keen on rating me formally, using the performance review form (that was usually designed by me). Looking for old reviews in my archives, I found a short note written to me by one of my first bosses. It said: “Tom, when we sit together and discuss your performance and salary increase, it never works very well. I behave too much like a boss, and you always think you should get more. Therefore this short note. Your performance is excellent, but, as you know, in our system this means a salary increase of maximum x%. As we are HR, I cannot give you more. Happy new year”. He was a good boss, though, and in my view I had good insight in what I needed to do and what I could do better.

In most organizations the performance management and review process is agony. Employees are not particularly looking forward to the annual discussion, and neither do bosses. There are a couple of reasons. One of them (see The future of HR, part 1: Is HR reinforcing the status quo?) is that the performance managent processes as currently practiced were designed in the post second world war period when management was invented. Even then it did not work well, but if you view your organization as a group of people that need to be told what to do, you need such a process.
It is time to start working on Performance Management 2.0. What should be taken into account in the design process?

1. We should focus on the strengths of people, not on their development areas. Today most performance reviews focus on weaknesses, not strengths. You are good, but ….. Nobody likes to be criticized, everybody likes recognition for what they have done well. Feedback should help good people to become even better.
2. The process should not be dependent on the quality of the person who gives the feedback. Today the feedback is often given by bosses who are not very good in coaching their people to higher performance. So we need multiple channels.
3. We should not strive for one size fits all. Different people have different needs. For myself: during my working live I have been very able to learn and improve myself without a lot of steering and feedback from my bosses (and they luckily knew that). There are others with different preferences, and we should be able to adapt the performance management process to their needs.
4. The speed needs to be increased. We should let go of the year as the basis for the performance management cycle. Why one year? In the past this might have worked, but the pace has increased enormously. The performance management process should be more real time. Frequent positive feedback can help to drive performance to higher levels.
5. We should take into account that the ‘workforce’ is changing. The diversity has increased. There are people full time employed with the plan to have their career in the company. Others want to work with you a couple of years to get valuable experience and then move on. Others prefer to be self-employed, and work for you on a free lance basis. Others work for suppliers and are temporarily involved in a project. There are interns, volunteers etc. etc. The classical performance management process is designed for full time employees, of whom we hope (when they perform well) that they will stay in the organization. The other groups need to be empowered as well, and they alo want to develop en benefit from guidance and feed back that can make them better.
6. We need more transparency. Today there is a lot of secrecy. Goals of individuals are not shared. The performance appraisals  are documented and than buried in the personal files of people. What is emerging (and needed) is more transparency. Goal alignment is a lot easier if people and teams can share each others goals. It will be easier for good project managers to staff their projects, if their 360 rating can be seen on-line.
7. The process needs to be fun as well. Gen Y and the generations to come are grown up with games and social media. Instant feed back is the norm. You get points, badges, you are #1 on the leader board, you have 100+ friends and the photograph you posted got 12 likes! The performance management process is ready for gamification and this will help a lot to make the process more fun, but also more valuable. Also social media can be very effective. Lees calvinistic, more fun.
8. Less focus on individuals, more focus on teams. Today the basic building stones of the performance management process are individuals. Performance Management 2.0 needs to focus more on teams. How are teams performing? How can we make teams better? What strengths are we missing in our team? Are our team goals clear?
9. Experiment! Big organizations often want one global consistent approach. This hinders progress and innovation. We need experiments to test new approaches. Some parts of the organization are more advanced than others, and more open to HR innovations.

Performance Management 2.0 is in the making. Most of the ingredients are there, but what is lacking is an integral holistic approach. HR should take the lead.

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