The Performance Improvement Blog

Performance Management at Deloitte

Kudos to Deloitte for making a concerted effort to develop a fair, efficient, and useful performance management system for its 65,000 employees. In a blog post for Harvard Business Review titled Reinventing Performance Management, Marcus Buckingham and Ashley Goodall describe Deloitte’s evolving system. They write:

This is where we are today: We’ve defined three objectives at the root of performance management—to recognize, see, and fuel performance. We have three interlocking rituals to support them—the annual compensation decision, the quarterly or per-project performance snapshot, and the weekly check-in. And we’ve shifted from a batched focus on the past to a continual focus on the future, through regular evaluations and frequent check-ins. 

To me, the key to their performance improvement will be the weekly check-in. This is where team leaders talk to team members about past performance, goals for future performance, and what can be done to be successful. This conversation, as I have written in a previous post, is an essential aspect of any leader’s role. As the authors say, “…check-ins are not in addition to the work of a team leader; they are the work of a team leader.”

Also, Deloitte has designed a potentially efficient way to measure performance over time. They intend to ask team leaders four questions at the end of each project or at least once a quarter. The questions are:

1. Given what I know of this person’s performance, and if it were my money, I would award this person the highest possible compensation increase and bonus [measures overall performance and unique value to the organization on a five-point scale from “strongly agree” to “strongly disagree”].

2. Given what I know of this person’s performance, I would always want him or her on my team [measures ability to work well with others on the same five-point scale].

3. This person is at risk for low performance [identifies problems that might harm the customer or the team on a yes-or-no basis].

4. This person is ready for promotion today [measures potential on a yes-or-no basis].

It remains to be seen whether these questions will “fuel” performance in the long-run. Given research that shows manager ratings of employees are more about the person doing the rating than the person being rated, Deloitte is trying to make the ratings more objective. However, it still requires rating by managers who are affected by their own attitudes and biases. If this process results in more conversation between team leaders and team members about learning and improving performance, then it will have served its purpose.

What concerns me most about Deloitte’s new performance management system is the apparent lack of alignment between wanting to be strength-based and using variable compensation. A system that rewards the performance of some and not others can be a disincentive for learning and performance improvement. In a strength-based system, everyone is recognized for what they contribute and for what they can become. A variable compensation system is a good way to control behavior but not necessarily a good way to encourage learning and improvement.

I want to be clear. I admire Deloitte’s intent and the willingness to experiment and use evidence to improve their performance management system and I am very curious to hear about results and impact on the organization. My concern is that the recognition and reward aspects of the system will negate the learning that can be achieved from leader feedback aspects of the system. We’ll see.

Colleges Need a Learning Culture

The academy faces extinction unless it learns how to learn. Like the dinosaurs, the amazing thing about higher education institutions is not extinction but that they lasted so long. The ivory tower is only now beginning to crumble after nearly 200 years.

Higher Education institutions have resisted change, and for good reason. Their reputation and rewards have come from keeping traditions, maintaining academic disciplines, supporting an insular campus environment, and hiring people exactly like themselves. Faculty, students, and employers depend on degree programs and course offerings that look the same from year to year.

Some exceptions exist but these institutions have only tinkered around the edges change: shortening or lengthening academic terms; eliminating grades and tests; creating interdisciplinary programs; giving credit for life experience; or adding online courses and degrees. Those are relatively modest improvements to a system that is fundamentally the same as a nineteenth century German education.

Now, like many for-profit and non-profit organizations, colleges and universities are facing extraordinary pressure from competition that is global, well-funded, and very attractive to learners of all ages. In order to compete with these “schools”, change at the margins will not be enough; colleges and universities need transformation.

In their recently published book, titled Leading Innovation and Change, 
Larry Smith and Al Blixt write:

The forces of change are multidirectional and inescapable, especially if you are in a leadership position. An increasingly complex, digital, and diverse world is emerging. It is a world that is shaking the foundations, values, guiding principles, mores, and customs as well as the very existence of many institutions of higher learning. New subjects are being taught in new ways to new types of students. Funding is shrinking, and accountability is becoming relentless. New technologies have altered the workplace, and there are increased demands for change in how student affairs professionals prepare students for post-college success. In this new world, those who adapt to new realities will survive and thrive. Those institutions that endure may look very different from the ones we have known.

In a chapter I wrote for this book, I argue that the future success of colleges and universities must come from creating a learning culture. I call into question the notion that colleges and universities are, by virtue of being educational institutions, bastions of organizational learning. They know how to teach but they don’t necessarily know how to learn as organizations.

To be successful in the years ahead, these institutions need to learn how to continually improve, innovate, and compete for students, resources, inventions, and ideas.  They need to continually adapt to a rapidly changing global educational environment. They need to continually learn how to incorporate new technology into teaching, research, and administration. They need to develop capabilities in leadership, teamwork, decision-making, and communication. They need to learn how to plan for an unknown future. All of this will require breaching the barriers of academic tradition and creating a new organizational culture. 

Employee Learning Should Be About Change, Not Continuity

In their post titled, There’s No Such Thing as Corporate DNA, Hans-Paul Bürkner, Vincent Chin, and Ranu Dayal challenge the popular notion that successful organizations have unchanging values and set ways of doing things that are passed on from one generation of employees to the next. It is common for companies to say that their mission and values are in their DNA. This used to sound good from a marketing perspective but makes no sense today. The authors make the case that organizations should no longer claim stability, that constancy in this era of rapid change is not a virtue. They argue that the sustainability of a company is built on change, not continuity.

They write:

In our globalizing world, market shares are shifting fast. Companies that were hardly known ten years ago—often, but not always, from emerging markets—have become not only global challengers but also market leaders in their own right. And once-great companies have slumped, disappearing either into bankruptcy or into the hands of successful rivals. Why? Because for too long, old stalwarts have clung to their company’s so-called DNA when radical change—evolution with a capital “R”—was called for. They tried to protect their heritage when new approaches were required. They emphasized continuity when discontinuity was necessary.

Examples abound. Apple, Ford Motor, and GE have made dramatic pivots on their march from success to success. Companies like Radio Shack, Blackberry, Bethlehem Steel, United States Postal Service, and Sears have faltered badly because, in part, they desperately stayed the course. Colleges and universities cling to their academic traditions at all cost and hospitals adhere to the medical model in the face of stiff economic, political, and social pressure to change. All of these organizations behave as if organizational DNA is determining their future.

Same can be said for employee learning. Companies act as if formal training programs are in the genes of the organization. They seem to believe that having courses, workshops, and seminars that pass on the values and norms dating back to company founders, is pre-determined. This traditional training culture perpetuates stability and consistency at the expense of innovation and change. This event-based, just-in-case, buns-on-seats approach to learning does not give employees the learning agility they need to respond to new information, new technology, new goals, and new competitors.

What is needed in this fast-paced, global, high tech environment is less reliance on formal training programs and more emphasis on just-in-time learning, learning from experience, and co-creation of knowledge. People need to learn what they need to know when and where they need it. They need to learn from the successes and failures of their teams. They need to learn how to learn from each other. Organizations need to learn fast and learn how to change fast. They need a learning culture!

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