Adapting Performance Management to Drive Performance in Contemporary Organizations

March 9, 2015

Adapting Performance Management to Drive Performance in Contemporary Organizations

Traditional Performance Management was born out of the Industrial Age. Knowledge Workers of today are more educated than ever before and have a very different relationship at work. These smart and competent employees want to be inspired, and they want to have an impact. Not only have employees changed, but so too have organizations. Today's companies operate more in matrixed-structures, in collaborative work teams, globally, and in a fast-paced, constantly changing environment.

Listed below are 10 faulty assumptions of performance management for today's organization, as well as suggestions for how to rethink our approach to performance management.


Assumptions of Traditional PM Processes

Ways to Rethink Our Approach to PM

1. Setting goals once a year is an effective way to manager your business.

1. Businesses today move at the speed of light. O.K., not really, but agility is critical for success today. Research shows that organizations that review and readjust goals more often to meet changing business needs have higher performance compared to organizations that review goals less frequently.

2. Employees should set goals independently of one another.

2. While this was true in the Industrial Age, in today's companies employees collaborate more often than not. They either work in teams or on cross-functional projects. Setting goals independently is simply out of synch with the way we work today.

3. The same manager will be in place for the entire year.

3. How many managers did you had last year? Restructuring happens frequently in today's organizations. We need a process that does not rely on the sole input of one person.

4. The manager has more functional expertise than the direct report.

4. As manager's move along in their career, it is their breadth of experience that is more critical than their depth in one technical area. Particularly in the U.S., deep specialization has become a hallmark of early career journeys. So why do we think that managers are always the best judge of how an employee is contributing? Perhaps peers would have a better perspective?

5. Each employee reports to one manager.

5. Matrixed business structures are more and more common in organizations today. This introduces a huge amount of complexity regarding who completes the performance review for an employee. How does your review process take into account multiple-perspectives?

6. Annual or semi-annual pats on the back or performance adjustments are sufficient to motivate and retain top talent.

6. We all know by now that Millennials want ongoing feedback to keep themselves on track and assured that their efforts are well-invested. This is a generation that is used to getting information when they want it; their life has always included the internet, and they expect immediate access to information as a matter of course. And, let's face it, employees of any age are constantly making a stay/leave decision because they have other opportunities. As our economy continues its recovery, more opportunities will become available. How frequently they are recognized for their work, or getting information about how to have a greater impact, will drive their motivation and desire to stay with the organization.

7. Employees only care what their managers think about their performance.

7. By 2020 50% of our employees will be Millennials. That number jumps to 75% by 2030. So the mindset of the Millennial employee is critical to rethinking performance management. This generation does not automatically value feedback from people because of their positional authority. They value feedback from those they respect. So this assumption can go either way, and it is most likely that there are people other than an employee's manager whose opinion they respect the most.

8. Their manager is reflecting on their performance all year long (and taking notes).

8. Yeah, right! Let's face it, your manager is not taking notes about your performance and the only things they can remember are either what you did most recently or a really big mistake you made.

9. We need to “manage†the performance of knowledge workers.

9. Really? Doesn't this sound demeaning today? How about we need to “inspire†employees to help them to achieve their full potential? We need to help employees understand how the work they are doing contributes to the success of the company and we need to coach them on how to continuously improve their performance for greater impact.

10. Employees trust that the process is fair.

10. Do today's performance ratings really lead to significantly different outcomes for employees based on their performance? Not when merit increases are averaging 3-5%. Is a person's rating a true reflection of their individual performance or is it muddied by factors such as: (1) Where are they in their pay range? (2) Whose turn is it to get a big increase? (3) Are ratings restricted to a specific performance distribution? (4) How did the company perform overall? Perhaps there are other political factors that impact your process.


What other traditional performance management assumptions need to be changed in light of how business operates today? I have my own proposed solutions to these issues, but what are your ideas for rethinking our approach to performance management?

The Authors: 

Edie L. Goldberg, Ph.D. is president, of E. L. Goldberg & Associates and chair of the board of HR People + Strategy. She can be reached at