Three Ways Performance Management Is Getting Interesting

Cost-Effective Calibration

A supervisor with a handful of subordinates is not in a position to make valid judgments about how subordinates are performing compared to others in the firm. As a result, it has become commonplace to “calibrate” ratings across large groups, typically of 50 to 100 employees. This is done in meetings with supervisors and managers in a department or unit. Supervisors propose a rating for each subordinate, which the calibration group accepts or modifies. No ratings or consequences are announced to employees until the supervisor ratings have been reviewed systematically in a calibration session. Managers typically find that the process gives them a deeper understanding of the strengths and weaknesses their talent pool.

However, calibration sessions can be time-consuming and emotionally difficult; one manager calls them “gladiator combat.” Therefore, companies are experimenting with the process. For example, some calibration sessions focus on every employee, others only on those who may be in the top and bottom categories. Employees may be told nothing before the calibration session begins, or may receive a preview of their supervisor’s position. A few companies do calibration quarterly or semi-annually, while most do it annually in conjunction with the annual appraisal process. Some companies use calibration to determine performance ratings while leaving supervisors to determine final consequences (pay, promotion, dismissal, etc.); other companies use calibration to determine consequences. Best practices are not yet clear.

Crowd-Sourced Feedback

Perhaps the most innovative trend in performance management is the incorporation of real-time peer feedback. This makes use of “crowd-sourced feedback” that is built into on-line recognition systems such as those from Globoforce, Achievers, and Work.com. These systems create the social media version of “360 degree feedback” systems, permitting employees to recognize each other any time, in their own words, over any computer or mobile device. Globoforce advocates recognition systems in which 70% to 80% of employees give and receive feedback every year. The beauty of the online systems is that supervisors can tap into the database of comments and review all feedback given to a subordinate in the prior year. This helps the supervisor recall the employee’s accomplishments and rounds out the picture of how well the employee performed.

We are planning to conduct the first academic research on crowd-sourced feedback systems. These systems raise many important questions. How widely and how often is such feedback provided, given the goal of continuous, real-time feedback? Do the recipients accept the feedback as valid and meaningful? How do they react to peer feedback, both when it is consistent with feedback from the formal appraisal process and when it is not? Do these systems create the “culture of recognition” that they intend, and if so what are the consequences for organizations? What are the effects on team perception and performance?

Performance management is here to stay, but it is getting more interesting. Companies are experimenting with various ways of making it more valid, fairer, more useful and more cost-effective.

Gerald Ledford, Ph.D., is senior research scientist at the Center for Effective Organizations (CEO), Marshall School of Business, University of Southern California. He is an authority on human capital issues, with over 30 years of experience as a researcher and consultant. He received a Ph.D. and M.A. in psychology from the University of Michigan. Gerry has authored over 100 articles and 10 books. He can be reached at gledford@marshall.usc.edu.