case study how deloitte reinvented their performance management

How Deloitte Reinvented Their Performance Management

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This article on performance management was originally published on business.com .

Deloitte is the largest professional services network in the world in both revenue and number of professionals. In 2013–14, they earned a record of $34.2 billion USD in revenue. So, when one of the biggest companies in the world takes on reinventing performance management, they do it with a bang.

Marcus Buckingham and Ashley Goodall described the process and findings of the large-scale Deloitte  performance management survey in the Harvard Business Review . We also examine how Deloitte changed their approach to performance management. In addition, we review the practical takeaways from Deloitte’s case study. The goal is to reexamine our own performance management system and how we can change it.

Old vs. new approach to performance management

Deloitte found that their current approach to performance management, annual 360 feedback, was wasting a shocking 2 million hours per year. Even more significant, they realized that their system wasn’t engaging employees at all. Performance levels were also dropping drastically. In an effort to combat this, Deloitte built something much more nimble, real-time, and individualized. They wanted something that was focused on fueling performance in the present rather than assessing it in the past.

First, let’s look at how Deloitte needed to change. You will find some of your own problems there. You should identify any issues. This is the first step to towards a useful solution.

With 360 feedback, goals were set once a year and reviewed once a year. The problem with this approach is that annual goals are too “batched” for real-time situations and a lot of time is wasted on performance ratings. Instead, this time should be spent on talking to people about their performance and careers consistently.

[Tweet “Insight: “Shift your performance evaluation focus from the past to the future””]

Their next realization was that assessing someone’s skills is always subjective.  The process says much more about the evaluator instead of the person being evaluated. This is called an idiosyncratic rater effect.

The discovery left Deloitte puzzled. They knew that in order to get the best feedback, it needs to come from a team leader. But how do you deal with the idiosyncratic rater effect?

[Tweet “Insight: “Ratings reveal more about the rater than they do about the ratee.””]

Before deciding how to deal with biased assessments, let’s take a look at another insight Deloitte discovered. They used the Gallup 1.4 million employee study to see what the similarities are between high and low performing teams .

The most powerful characteristic was that the high-performing team members felt they were doing their best to accomplish meaningful goals. On that basis, Deloitte identified 60 high-performing teams from their own ranks. Using these teams, they conducted a six-item survey to find out what their own high-performing teams had in common.

Insight: The most powerful commonality between Deloitte’s highest performing teams was the belief that “I have the chance to use my strengths every day.”

When the results came back, the most common trend was that their own high performing team members felt that they had the chance to use their strengths every day.

So, what can we learn from these results?

Deloitte set out a clear goal: “We want to spend more time helping people use their strengths.”

So, for a quick recap: Deloitte was able to recognize the strengths in performance. The concern came with evaluating it. They also now knew that the best insight comes from the immediate team leader, but how can they do provide it without the idiosyncratic effect getting in the way? That’s the million (or even a billion) dollar question.

Insight: “The key is that people rate other people skills inconsistently, but they are highly consistent when rating their own”

We also know that everyone rates other peoples’ skills inconsistently. To combat thisDeloitte did not ask team members what they think of each team member. Instead, they asked team leaders to rate their own future actions regarding each team member.

Here are the statements Deloitte asked leaders to select about an employee in order to overcome the idiosyncratic effect:

• 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 – this measures overall performance and unique value.
• Given what I know of this person’s performance, I would always want him or her on my team – this measures ability to work well with others
• This person is at risk for low performance – this identifies problems that might harm the customer or the team on a yes-or-no basis
• This person is ready for promotion today – this measures potential on a yes-or-no basis

[Tweet “Insight: In effect, they are asking what the team leaders would do, not what they think.”]

This evaluation is called “process performance snapshot.” The big difference is that it evaluates performance in real-time. Now they had the system to measure the performance. The question next became – how can we improve it?

Suggestions to reinvent performance management

One factor stood out the most from Deloitte case study – frequency. Deloitte points out that the optimal frequency of these new performance reviews should be weekly . They also suggest that the best way to ensure frequency is to have regular check-ins about near-time work initiated by team members.

Deloitte performance is also getting impact from a consumer technology platform that is designed to be simple, quick and above all, engaging. People tend to be interested in themselves – their own insights, achievements, and impact, so they believe that employing such a method would engage an employee around their own performance in a way they had not done before.

We’ve sorted the reviewing, so what about the reviews? Most team members are rated on a single number, but Deloitte began to wonder if that was the easiest way of viewing personal performance.

Deloitte hasn’t found the answer yet. From our perspective, team members should get a weekly progress report where there are 4 different indicators that correlate into the weekly score. The weekly score takes into account the individual’s happiness, progress, overdue Plans, and Problems. We don’t know if this is what Deloitte might be looking for, but it is definitely a step forward in the right direction.

To conclude, Deloitte realized that traditional, once-a-year, 360-reviews were inefficient. They also do not give a transparent view of the current working situation. It is time to reinvent the performance management process . Ask your team leaders to assess their team members through statements that describe what they do, not what they think.

Employee performance snapshots should be regular and weekly. The technology should be designed to be simple, quick, and above all, engaging to use.

And if you’re looking for a world leading software tool to implement this try Team Compass for free.

How Deloitte Reinvented Its Performance Management Process

The Performance Management Revolution

In a public survey Deloitte published back in 2014, as many as 58 percent of the executives questioned their traditional performance management approach because it wasn’t driving employee engagement or high performance. How could the consensus be so negative when companies put so much effort into the process? Deloitte tallied the number of hours that the organization spent internally on performance management and found shocking results: Completing forms, conducting meetings and setting up ratings systems consumed a staggering 2 million hours annually. It was clear they could improve. But how?

What is the purpose of performance management?

To build the future model , they started with a seemingly simple question: What is the purpose of performance management at Deloitte? After conducting focus groups, Deloitte identified three primary purposes for their performance management:

To see , recognize and fuel performance.

The first purpose is to actually “see” the performance of their employees

Deloitte created “performance snapshots” that administrators conduct on a frequent basis, normally after every single project or at least once per quarter. Here the facilitators ask team leaders to answer four future-focused statements about each team member:

1. “ Given what I know of this person’s performance, and if it were my money, would I award this person the highest possible compensation increase and bonus?” — This question measures an employee’s 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, would I always want him or her on my team?” — This point assesses a staff member’s ability to work well with others, and leaders rate each person on the same five-point scale. 3. “ Is this person at risk for low performance?” — This topic identifies problems that might harm the customer or the team, and supervisors report answers on a yes-or-no basis. 4. “ Is this person ready for a promotion today?” — This subject measures each employee’s potential with a “yes” or “no” answer.

Deloitte deems this new line of questioning as much more effective because team leaders describe what they would do with each team member in the future rather than what they think of that individual.

The second purpose is to “recognize” performance

Deloitte measures how each employee performs against business-metric goals and what activities they did that contributed to the community. In conjunction with this information, the continuous data from the frequent performance snapshots yields a much more accurate picture of employee performance. This smarter assessment system allows for more intelligent compensations, promotions and decisions.

The final purpose is to “fuel” performance through frequent check-ins

Here team members and team leaders meet one-on-one to explore real-time feedback and expectations for the near-term work. These discussions help them understand the top priorities for what’s coming next using a “ strengths lens ” of how each employee will contribute to these team goals given their unique skills and strengths. They also discuss how the team leader will create opportunities for employees to do that.

The check-ins are not additional work for team leaders. Instead, they’re an integral part of how team members achieve goals together. The frequency determines how effective those conversations are in terms of aligning how employees and managers will deliver on goals. Within Deloitte, check-ins happen on a weekly or bi-weekly basis. Director of Leader Development at Deloitte Ashley Goodall stressed in a Harvard Business Review article :

“If you want people to talk about how to do their best work in the near future, they need to talk often. So far, we have found in our testing a direct and measurable correlation between the frequency of these conversations and the engagement of team members. Very frequent check-ins, we might say radically frequent check-ins, are a team leader’s killer app.”

Adding the pieces together

Deloitte defined three purposes for performance management: to see, recognize and fuel performance. They have three interlocking rituals to support them: the quarterly or per-project performance snapshot, the annual compensation decision and the weekly check-ins. As a result, they’ve shifted from focusing on the past to focusing on the future. They fundamentally changed the notion that performance management is “ that thing you take time off from the work to do. ” It is now part of how their people get their work done.

Deloitte has successfully adopted an approach relying on continuous, real-time feedback and focusing on collaboration, coaching and development. If you’re interested in transforming your process in a similar fashion, contact us for our continuous performance management application that enables frequent, real-time feedback to boost performance and engagement within your organization.

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Deloitte: how we are reimagining performance management.

According to a recent Deloitte survey, 58% of executives believe that their current performance management processes neither drive employee engagement nor high performance . In this article from April’s Harvard Business Review , the firm outlines how it is redesigning its own internal performance management process to focus on assessing future potential, rather than evaluating past performance.

Deloitte’s existing performance management system, which is used to evaluate 65,000 people, focuses on an annual score produced for each individual, based on their strengths and weaknesses in delivering projects throughout the year. In evaluating this system, they found that focusing on a year-end review was too formulaic and, to their surprise, they discovered that they spent close to two million hours per year on performance management .

This fascinating article explains why Deloitte is moving away from assessing individuals’ skills and moving towards real-time feedback. It presents an interesting debate about how best to appraise high performing executives, and describes their new “performance snapshot” which, they say, allows them more time to spend actioning the findings of their performance management, rather than measuring them.

This article was originally published on HBR.org

As the World Revolves We Evolve at JIMS

A New Approach to Performance Management at Deloitte

Dr Preeti Singh

Assistant Professor

Jagannath International Management School

Last five years have depicted radical change in the way performance of employees was evaluated and recognized. In current scenarios, after an initial experimentation, continuous performance management practices were deployed on larger scale.  Although every organisation do not have robust processes in sink but new practices adopted by organisation have certainly standardised the procedures.

New models as adopted by organisations in regard of performance management practices at workplace include agile goal management, continuous feedback, check in and new model. The radical redesign of performance management has gained new momentum: 79 percent executive’s rate performance management at high priority, which was 71 percent three years ago, a rise in 8% observed in year 2022

The research statistics shows that ability of companies to implement performance management has improved to great extent in 2022. Studies shows that the organizations are 10 percent more capable than they were in 2015, and majority organisations are focusing on training leaders for the implementation of latest developmental management approaches.

The new performance practices have glorified great impact on the multinational companies. 90 percent of companies redesigned their performance management practices and have seen improvements in employee engagement .  96 percent of employees say that the existing processes are simpler than they were before, and 83 percent say that they see the quality of conversations between employees and managers going up.

The performance management (PM) revolution has taken new heights. Companies and industries are revaluating different aspect of their programs, starting from goal-setting and evaluation to incentives and rewards.

Organizations are aligning new changes to both business strategy and the ongoing transformation of work. Different software tools proved that performance management are understood and working well.

Companies like GE, Google, IBM; CISCO has brought radical transformation in performance management system prevailing in the company. The below case is the case of performance management system in Deloitte.

Rob Massey, Deloitte Tax LLP described performance management system that he used for first 12 years at his services to Deloitte as “An investment of 1.8 million hours across the firm that didn’t fit our business needs anymore.” Massey quoted that “Once a year, we looked back at what people did and then created a label for it.”  A new approach to performance management at Deloitte is altogether needed in current scenario.

At Deloitte Massey then engaged the workforce in new way of assessment and managing people performance which was then implemented on 2000 employees. The new method of assessment and management of employees proved to be successful and it rolled out across entire 70,000-person organization in eventual years.

The key elements in performance management system are:

• Check-in time of employees
• Frequent conversations between team leaders and team members in regard of the work
•  Performance snapshots
•  Reliable and frequent assessment of individual performance;
• Pulse surveys helps in assessing performance of teams.

This powerful innovation combine two dimensions of human behaviour like viz

• How to make workforce motivated and engaging? Primary way out for motivated workforce is to have conversation with other.
• To help people and the business, how assessments could be used to analyse individual performance.

Massey quoted in concern of his strategy, “Today we’re very forward-looking. It’s about strengths and real-time communication”.

The new system for performance appraisal is analogy focussing conversations. Conversation was considered biggest leap in reinventing Deloitte performance management system. Massey considered that numbers and words are equally powerful.  We need to let our people, their managers, and their counsellors tell the rest.

Inspite of moving from data altogether, the system at Delloitte have been made more digital. Delloitte make use of different tools that bring together perspectives from different people, tools could be used to manage people element of business in real time. This help in identifying the requisite conversations that can assist people in understanding how they can grow and advance.

One employee of Deloitte shared that check ins, flexible and transparent system positively impact he performance system in the organisation. Employees also talked about their current performance and challenges they faced in their assignments help in developing their skills.    The new system of performance management developed the following:

1)      Tracking Organizational Goals: Organisation goals to be well shared with the employees of the organisation. Organisations that have clear and concise goal duely shared with team scored amongst top 25% of business outcomes.

2)      Regular Feedback: old performance management practices focus on good or bad performance of employees. Delloitte redefined performance management as putting more emphasis on development of team and potential leaders. The idea of performance appraisal has been transformed from a pure directive to developmental initiative so that employees and supervisors can work together to meet organisational goals.

3)      Employee Leadership Development: Deloitte has changed their performance management . The transformation is to a developmental tool instead of a benchmarking device. The workforce needs a performance management system which is adaptive to their needs while maintaining company performance goals .

 Best practices for performance management are changing, and it’s time you caught up.

“Erica Bank  is Deloitte’s performance management leader. She designs and implements talent management strategies, processes, and technologies. She provides strategic direction on the management and continuous improvement of current performance management processes, and has been a key leader in the firm’s performance management reinvention. She can be reached at [email protected]”.

#jims #jimsdelhi #managementcollegeindelhi #pgdmcollegesindelhi #mbacollegesindelhi #toppgdmCollegesindelhi #topbschoolsindelhi

For more information visit: https://www.jagannath.org/

JIMS Kalkaji

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