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.

Reinventing Performance Management at Deloitte

Wed Jan 13 2016

Deloitte didn’t originally set out to reinvent performance management. Really. When we got started, that was not our intent. The work was a natural outgrowth of other work we were doing in talent development, but has become foundational to how we are reshaping our culture as we grow our next generation of leaders.

It was 2011, and we had just cut the ribbon on the doors to Deloitte University—our 100-acre learning facility nicknamed “The Leadership Center.” This brick-and-mortar investment created a call to action for our talent development organization to redefine our strategy and to ensure that what we were doing inside all of Deloitte’s walls was driving the engagement and performance of our people and teams.

Like many strategy refreshes, ours began with research. We looked at external studies on high performance and development, and we conducted our own empirical study on the characteristics of high-performing teams at Deloitte. We were overwhelmed by one of our findings: performance, retention, and client satisfaction are strongly predicted by our people’s beliefs they are playing to their strengths.

This study was based on long-term research by Gallup, who studied 1.4 million individuals in high-performing teams across 192 organizations. Ours explored conditions on more than 60 high-performing Deloitte teams, comparing them to a baseline that included approximately 2,000 employees. It also reinforced our belief in strengths-based development—this notion that each of us can best contribute, grow, and differentiate our firm when we focus on our strengths.

So we asked ourselves what we were doing to deliver strengths-based development at Deloitte, and what might be getting in its way. We saw lots of bright spots, and we also began to see that our approach to performance management was no longer the best design for Deloitte’s emerging needs. What we saw in the research, as well as what we knew about how our business was evolving, called to question whether the process and philosophy we had relied on for years would be enough to propel the next generation of performance at Deloitte.

Setting Our Objectives

To build our future model, we started with another seemingly simple question: What is the purpose of performance management at Deloitte? This is one of those questions that if you ask several people you might get several answers. And we did just that. We conducted focus groups across the firm, and, from that feedback—and crystalized three primary purposes for performance management.

Many said performance management should enable us to RECOGNIZE performance . The system should drive annual activities that allow intelligent compensation, promotion, and low-performer management decisions.

But our people wanted more. Next, we heard that performance management should enable us to really SEE performance —to generate a rich stream of information that gives business leaders a view into the performance of their organizations. How does performance trend differently in different organizations? Who are our best performers? Who needs improvement? And what can individual leaders do to influence them all?

Which gets us to our final objective: FUEL performance . The purpose of a system to manage performance should be to create more of it—performance, that is. We’re all in business which, whether for profit or for purpose, has a bottom line that’s driven by the performance of our people. So we had to find a way to drive this in real time, on the teams, where the work happens, every day.

Fueling Performance

From emerging research, we know that an effective way to drive performance is through conversations. So, we created “check-ins”: frequent, future-focused conversations about the work. Here, team members and team leaders meet 1:1 to explore real-time feedback and expectations for the near-term work. It’s how they align on priorities for what’s coming next, and they do that with a strengths lens. They discuss how the individual will deliver on these priorities given their unique skills and strengths, and how the team leader will create opportunities for them to do that.

We called them frequent, but we didn’t mandate a frequency. We left this up to business leaders to communicate as they saw fit. Today, the majority of our people are doing them either weekly or biweekly.

We also didn’t require anyone to document anything going into or coming out of a check-in. We didn’t want anything to stand in the way of the conversation.

We stressed that the logistics of check-ins are not as important as making them a habit. The tone, nature and content of a check-in should evolve over time, differing from person to person, engagement to engagement, project phase to project phase, and week to week. There was no heavy training or how-to guides. To launch check-ins we did just two things:

We gave people prompts to spark conversations.

We began sending out a simple weekly email with a Yes/No voting button and one question: “Did you have a check-in conversation with your team leader this week?”

What’s interesting, though, is that we didn’t use this data to monitor compliance, follow up with those who weren’t doing them, or reward those who were. We just looked at it on aggregate to understand organization-wide check-in behavior and its impact.

Our people who were used to heavy investments twice per year were now expected to shift that time to the location where the work—the performance—was happening in real time. We changed the notion that performance management is that thing you take time off from the work to do. Currently, check-ins are part of how our people get their work done.

Seeing Performance

Moving away from ratings didn’t mean we’d stop capturing performance data. For us, it just meant we’d now capture a different type of data. We designed several components that enable us to see the performance of our people and teams. I’ll focus here on just one: the Performance Snapshot.

Fundamentally, a performance management system needs a way to evaluate performance. What’s more, we know intuitively that the person with the most first-hand knowledge of someone’s performance is his or her team leader. So, the Performance Snapshot is a vehicle for the team leader to capture his or her assessment about each team member’s performance, at a moment in time.

Snapshots are timely , completed at the end of a project, phase, or at least quarterly—allowing team leaders to capture their judgement of performance as close as possible to when it occurs. By the end of the year, there are numerous snapshots completed for each person so that the work our people do ALL year is captured.

Snapshots are research-based . Rather than ask leaders to rate the skills of others, we’ve crafted questions that ask them to rate their own intended future actions. This approach counteracts the idiosyncratic rater effect, which research has shown distorts ratings because the main variable is the evaluator. Leaders in the new system make decisions based on what they know about a team member’s performance instead of what they think of the person.

Snapshots are easy . Our Performance Snapshots use four questions, answered on a Likert-type scale; no more paragraphs to write. We’ve even given folks mobile access to make these as simple as possible for our on-the-go workforce, to enable an ongoing flow of data throughout the year.

Recognizing Performance

So now that we’ve got all this data, what do we do with it? In short, the data is aggregated, and reviewed quarterly to give business leaders a holistic view of performance in their organizations. Every quarter HR sits down with individual business leaders to review a scatterplot that plots Performance Snapshot results.

Now, this isn’t the only thing they look at. They also can see who has been flagged at-risk for low performance, or who has been identified by at least one team leader as ready for promotion. They also look at important business measures per person, like revenue.

We ask our business leaders to integrate all of this data to make their own judgements to drive key talent decisions. See that’s the thing that makes this different from a single summative rating. In real life there are lots of things we know about people. When you review a job application, or follow a baseball player, or evaluate your latest lab results, you consume and integrate several data points to make a set of decisions about how to act.

With this design, we’re trying to bring that nuanced presentation of a person to Talent Management. Now, there are lots of things we know about you: we know what your local team leaders thought they might do based on what they observed of your performance, and we also know how you’ve performed against your business metric goals, the activities through which you’ve contributed to the community, and more. We ask our leaders to take all of it into account when making decisions. Our task in HR is to find a consumable way to present it. And the task of the leaders is to make intelligent decisions with it.

So that’s our model. Built on three objectives, with several components, that operate independently, but also reinforce one another to create an ecosystem of performance. I’ve only covered two features here, but it also includes:

Team Pulse survey that provides team leaders with insights about the engagement of their teams to drive team conversations around how to increase it

low -performer management approach that, due to the timeliness of the Snapshots, generates more real-time attention for those at risk

talent reviews in which panels of leaders plan investments in the career development of select talent segments

career coach who helps employees discover their strengths, find more ways to play to them, explore performance trends across experiences, and develop their careers.

What’s Next for Performance Management?

Deloitte has been at this for two years, and we now have data that indicates the design is having a positive impact. Our approach has evolved over the various pilots, and it will likely continue to evolve as we expand and learn. We’ve pursued a measured testing and implementation approach, rather than a big bang.

When we completed the first iteration of the design two years ago, we didn’t go to leadership and ask for a vote. All we asked for was permission to test the model—first in small populations, and then bigger ones. We used it with 2,000 people, then 7,000 people, then 40,000 people, and now more are opting-in, business by business.

Next up, Deloitte will begin looking past implementation and toward optimization. This shifts our efforts beyond “what is the process?” to “How do I optimize my role inside the model?’ How do i position team members, team leaders, coaches, and business leaders to take best advantage of the tools included in this model to do their jobs better? Optimization puts a focus on creating a new generation, with a new strengths mindset, and new skills and insights to fuel the performance and engagement of their people and teams.

Finally, let’s not forget what this approach has done for our talent professionals. This work is not just changing how our people and their leaders operate, but also how HR enables them. The integrated nature of this design is breaking down silos between previously distinct HR disciplines of performance management, talent management, leadership development, and employee engagement by generating a new set of analytics that we can consume about our people and teams that integrates them all. This work demands sophistication from all of us, but also creates amazing opportunity to deliver ongoing insights that will change the way our leaders think about leadership.

So, no, Deloitte did not originally set out to reinvent performance management. But we’re awfully glad we’ve started.

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Reinventing Performance Management at Deloitte (A)

F. Gino , Paul I. Green , Bradley R. Staats
Published 4 June 2018

12 Citations

Scrapping the bell curve: a practitioner’s review of reinvented performance management system, performance management and employee outcomes: what performance management processes drive improvement of employee performance, moving beyond initial success: promoting innovation in small businesses through high-performance work practices, the trinity of resilient organisation: aligning performance management with organisational culture and strategy formation, the application of strategy map in the balanced scorecard implementation: a case of a public organization, learning agility in context: engineers’ perceptions of psychologically safe climate on performance.

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Thriving, surviving and performing in late career: a mixed-method study of pathways to successful aging in organizations, the revelation research of huawei performance management mode to china’s private enterprises, digital feedback for digital work affordances and constraints of a feedback app at insurcorp, related papers.

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Reinventing Performance Management at Deloitte (B) By: Francesca Gino, Paul Green, Jr. and Bradley Staats

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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

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The Performance Management Revolution

Peter Cappelli

case study how deloitte reinvented their performance management

Hated by bosses and subordinates alike, traditional performance appraisals have been abandoned by more than a third of U.S. companies. The annual review’s biggest limitation, the authors argue, is its emphasis on holding employees accountable for what they did last year, at the expense of improving performance now and in the future. That’s why many organizations are moving to more-frequent, development-focused conversations between managers and employees.

The authors explain how performance management has evolved over the decades and why current thinking has shifted: (1) Today’s tight labor market creates pressure to keep employees happy and groom them for advancement. (2) The rapidly changing business environment requires agility, which argues for regular check-ins with employees. (3) Prioritizing improvement over accountability promotes teamwork.

Some companies worry that going numberless may make it harder to align individual and organizational goals, award merit raises, identify poor performers, and counter claims of discrimination—though traditional appraisals haven’t solved those problems, either. Other firms are trying hybrid approaches—for example, giving employees performance ratings on multiple dimensions, coupled with regular development feedback.

The focus is shifting from accountability to learning.

Idea in Brief

The problem.

By emphasizing individual accountability for past results, traditional appraisals give short shrift to improving current performance and developing talent for the future. That can hinder long-term competitiveness.

The Solution

To better support employee development, many organizations are dropping or radically changing their annual review systems in favor of giving people less formal, more frequent feedback that follows the natural cycle of work.

The Outlook

This shift isn’t just a fad—real business needs are driving it. Support at the top is critical, though. Some firms that have struggled to go entirely without ratings are trying a “third way”: assigning multiple ratings several times a year to encourage employees’ growth.

When Brian Jensen told his audience of HR executives that Colorcon wasn’t bothering with annual reviews anymore, they were appalled. This was in 2002, during his tenure as the drugmaker’s head of global human resources. In his presentation at the Wharton School, Jensen explained that Colorcon had found a more effective way of reinforcing desired behaviors and managing performance: Supervisors were giving people instant feedback, tying it to individuals’ own goals, and handing out small weekly bonuses to employees they saw doing good things.

Peter Cappelli is the George W. Taylor Professor of Management at the Wharton School and the director of its Center for Human Resources. He is the author of several books, including Our Least Important Asset: Why the Relentless Focus on Finance and Accounting Is Bad for Business and Employees (Oxford University Press, 2023).
AT Anna Tavis is a clinical associate professor of human capital management at New York University and the Perspectives editor at People + Strategy, a journal for HR executives.

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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