Human Resources

Reframing the Evaluation of Performance

September 27, 2017

Reframing the Performance Evaluation

A few years ago, Deloitte Services LP was prompted to examine its performance management system. As part of this effort, the company counted how many hours it was spending on performance evaluations (2 million hours a year for 65,000 employees), investigated research on the science of ratings, and conducted an internal study of its highest performing teams.

Two million hours was deemed a ridiculous amount of time for what Deloitte learned was assessment largely based on subjective criteria. A study conducted in 2000 of nearly 4,500 managers rated on specific skill sets by two bosses, two peers, and two subordinates – a standard evaluation procedure in many businesses – revealed that 62% of the ratings varied according to who was doing the rating. True performance accounted for only 21% of the variance. In other words, an employee in the position of rating a colleague’s skills is confounded by their personal value system and what they deem is important.

Deloitte was further informed by a comprehensive Gallup survey that examined 50,000 high- and lower-performing teams from 192 organizations. It discovered that high-performing teams were driven more by aspirations rather than capabilities. Those companies whose team members strongly agreed with the statement “At work, I have the opportunity to do what I do best every day,” were 44% more likely to earn high customer satisfaction scores, 50% more likely to have low employee turnover, and 38% more likely to be productive.

Finally, Deloitte sought to discover what its own teams valued. Three criteria best described a high performing team:

  • An inspiring company mission
  • Team members committed to doing quality work
  • Team members using their strengths every day

A redesigned performance evaluation focused on strengths. Rather than examining an employee’s skills, Deloitte tested asking team leaders about their own future actions with respect to that team member. At the close of a project, or every quarter for longer projects, four questions were posed (with answers selected on a five-point scale):

  1. Would I award this person the highest possible salary increase and bonus?
  2. Would I always want this person on my team?
  3. Is this person at risk for low performance?
  4. Is this person ready for promotion today?

Maybe it’s time for us to consider a performance evaluation makeover.

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