Why We Need to Change Performance Management to Talent Development

Photo by istockphoto
Photo by istockphoto

Performance management. Let’s think about that for a minute. When you Google the word “management,” here is what you get:

  • The process of dealing with or controlling things or people;
  • The responsibility for and control of a company or similar organization.

It’s all about control. A logical person might conclude that a process called performance management has at its core the intention to control performance. And they’d be right!

Why performance management doesn’t work today

Performance management was created to manage (i.e. control) the work of an industrialized workforce to maximize output. No thought was given to the development of the individual.

Fast-forward to today and the rise of the knowledge workforce, which is very different from an industrialized one.

  • One right way –> Multiple right ways, best approach varies with the situation;
  • Maximizing production output –> Creating competitive advantage through best use of talent.
  • Creativity detracts from results –> Creativity is essential for results
  • Command and control –> Collaboration and self-motivation.
  • If-then rewards motivate –> Mastery, autonomy and purpose motivate.

It’s no surprise that a process created to control the output of a workforce where work was standardized and repeatable doesn’t work as a tool to develop a knowledge-based workforce. No matter how much you massage around the edges.

I won’t quote a bunch of survey statistics here because, unless you’ve been living under a rock, you’ve seen them – over and over and over. So has your CEO. What you may not know is that it’s also expensive, rolling in at about $2,000/person.

Practical ideas that may help

What I haven’t seen in any of my research is data confirming that performance management is delivering on its objectives. Not. Once.

It’s time for us to change our lens from performance management to talent development. And I believe HR needs to lead the way. Your leaders are waiting for new ideas from you.

Article Continues Below

While surveys and research findings confirm the problem, not many address the solution. So I’ve provided some practical ideas to help you get started.

  • Unbundle. Stop relying on one jumbo process; done once or twice a year, as the basis to drive all your talent-related actions. Take a close look at what you are trying to do with performance management and unbundle those activities.
  • Cultural shift to continuous feedback. Begin building the foundation for a cultural shift to valuing and encouraging feedback. Change the notion that feedback only goes top-down. Encourage people to get and give feedback in any direction. Emphasize the idea of agility and feedback when needed. There are lots of good tools out there that can enable this. Two of my favorites: Rypple and Cleargears.
  • Invest in improving feedback and coaching skills. Enable your workforce to both give and receive feedback effectively. For years, we’ve trained people to participate in a months-long process where the outcome is to give a grade. This does nothing to prepare them to effectively coach and develop each other. Helping people at all levels in the organization build this capability signals a shift in perspective from identifying weaknesses to capitalizing on strengths; reinforcing a cultural shift from judging and grading to coaching and development. And it’s a much better spend of your $2,000/head! Feedback and coaching support innovation and creativity much better than assessing and grading do. And, helps to shift responsibility for growth to the individual by empowering them to ask for feedback versus waiting for the scheduled time for it to be administered from above.
  • Succession planning with a purpose. Make talent reviews and succession planning an ongoing dialogue with leaders. These discussions are critical to helping you understand where you have deep bench strength and where there are gaps that need to be closed. Follow-up on agreed actions and share insights with those being discussed, encouraging people to take an active role in the planning and execution of their development activities.

When HR professionals shift their focus to talent development and bring fresh, creative ideas to leadership, they get a seat at the table that is truly value-added. They become an advisor to the business around talent, driving value to the bottom line by linking an organization’s talent strategy to its business strategy.

Which, let’s face it, will be one of the biggest challenges of the 21st century.

This was originally published on PeopleResult’s Current blog.

Kristi Erickson is a Partner at PeopleResults, a consultancy that guides organizations and individuals to “start the wave” of change. She specializes in organizational design and talent development and has advised many clients on achieving competitive advantage through best use of their talent. Kristi was previously a Partner at Accenture, and she also serves on the board of Dallas Social Venture Partners. Contact her at kerickson@people-results.com.


63 Comments on “Why We Need to Change Performance Management to Talent Development

  1. I see this as a shift from HR pushing a process onto
    frontline managers to “document” individual’s performance, to a world
    where HR is supporting a leaders ability to develop their people.


    In an ideal scenario, our leaders have always been trying to
    coach their teams on an ongoing basis in order to maximize the individual’s
    potential… and in turn realize great results. The reality is that this is
    hard. The old paradigm was to check in once a year to see what happened.


    If can deliver the support and the solutions to our leaders
    to make the process easier, then we should see more managers achieve their own
    potential as leaders.


    What do you think, have I over simplified?

    1. Tom, thanks for your comment.  I completely agree with you.  The developmental aspects have been lost along the way somehow.  Self-motivation is key and teaching people how to develop and coach each other will go a long way to helping unleash potential.  Performance management is so entrenched and held sacred by so many, won’t be an easy change.  But, its a necessary one

  2. Tom – I completely agree with you.  The developmental aspects have been lost along the way somehow.  Self-motivation is key and teaching people how to develop and coach each other will go a long way to helping unleash potential.  Performance management is so entrenched and held sacred by so many, won’t be an easy change.  But, its a necessary one.

  3. Amen. We have sacrificed meaningful interaction and thoughtful development at the altar of the almighty process–one that simply doesn’t apply to today’s workforce.

  4. This is a great post Kristi. I have definitely learned something here. Your approach with offering practical ideas is extremely helpful. I am forwarding this to a few CEOs I know that will find this insightful. Thank you!

  5. Kristi, very interesting blog. I agree with your perspective & it will take reframing business leadership on what success looks like. But worth the effort. Well done!

    1. Thanks Patti – I think you’re right that reframing business leaders perspective will be a key element of the change journey on this one

  6. Yes – this is one of those Big Ideas that I think companies are ready to embrace! Huge change in the mindset, but seems to be in the best interest for everyone involved!  Loved it!

    1. I think many more companies are warming to this idea, largely from looking the reality squarely in the eye – all the facts are there, we just have to figure out what to do instead – and that’s where the fun begins.

  7. I’m a believer but can hear the nay-sayers …. “If you take away the once/twice a year forced performance conversations, then it will never happen.” Even managers and leaders who ‘get it’, often fail to give on-the-spot feedback and coaching. The responsibility shifts to employees to ask for it which isn’t a bad thing.

    1. You’re right Marta – and that’s why teaching people to both give and receive feedback is a necessary component of this type of change.  Interestingly,  i think some of the shifts in workforce demographics and the influx of Gen X and Gen 2020 workers will help speed this change along, since they were born and raised on the idea of real-time feedback and learning via the social realm.  And, they’re much more likely to initiate a request for feedback since they don’t have as much of the negative bias to “feedback as a grade” as some of us who have been in the corporate world longer might have.

  8. Really interesting comparison from the old needs to the talent needs for today’s world. A huge mindset change though for many companies to make!

  9. HR needs to give up some command and control behavior too for this to work. It is a great opportunity for HR to change the talent culture at their companies.

  10. Great points Kristi,

    I just came on board and in the midst of revamping what existed – a purely competency based appraisal once a year filled form for rewards. I am redesigning it to incorporate KPI elements. 

    But, having the numbers and forms is not what PMS is all about. As rightly pointed out, it’s has to add value to the bottomline results – both financial and non financial – in a meaningful and purposeful way. And, this requires feedback and continuous improvement. Herein, lies the challenge to HR – getting genuine buy-in and support from line management, in particular giving up their ever so precious time to “engaging ” their people. I fully agree technology may be able to fill the gap in providing the ease of comfort and time saving. But, that works fine when the feedback is positive. What happens if the leader needs to deliver some bad news. You still need to rely on F2F sessions to coach the person. Why hide behind a laptop?. Culture is such a powerful influencer to the success of the PMS execution. The challenge becomes even more difficult when apathy is deep rooted. 

    I echo Martha’s view – it is time to shift the feedback solicitation to the employee. Of course this takes moral courage and tact. It pays to be reminded the person that really loses out the most is the employee because it concerns their performance and motivation – whatever that be.

    1. Thanks for the insights Yuvarajah.  I agree that face-to-face is best for both positive and developmental feedback – particularly since so many conversational insights come via visual cues.  But with so many people working in global, physically distributed teams, its not always possible.  But a live conversation whether in the same physical location or virtually is important.  Too many nuances missed if the entire exchange is electronic.  I do think that technology can be an enabler though, and lots of good options available today.

  11. Great insight Kristi — this will take a big shift in thinking, but plenty of solid reasons to make the change.

  12. I completely agree with you Kristi- glad you are making this a topic for larger discussion!

  13. Kristi, this is good stuff.  I just read Strengths Finder 2.0 by Tom Rath which talks about finding and developing one’s strengths, not trying to fix what’s wrong.  I think the old performance systems try to “fix what is wrong.”  Really good thinking…  thanks.

    1. Thanks Gena!  I love the strengths stuff because leveraging someone’s strengths makes so much more sense and has much greater likelihood of having a positive impact, not only to the individual, but to the bottom line

  14. Performance management processes have always been so painful for all involved.  It is high time we ask ourselves why that has been the case.  Productive, effective processes shouldn’t hurt so much. You raise a great topic that should be pushed on further.

    1. Thanks Iain.  Such a painful process – its really time for companies and talent leaders to figure out the next wave.

  15. Kristi – great insights…love the mindset shift that you recommend. It really truly does require a new way of thinking and agree with Heather…giving up the command and control mentality is a starting point.

    1. Thanks Sheri – it will definitely require a new way of thinking, and i think its high time!

  16. Kristi, great blog and I completely agree!  I especially agree with the ideas of moving organizations toward cultures of collaboration and continuous improvement through improved feedback and coaching skills. 

  17. Totally agree..  Demonstrating trust for employees by allowing them the autonomy to use their own creativity to get the job done reaps incredible rewards – for the employee, the business and the supervisor!  Great article…   Charlotte keany

  18. Yes indeedy! Agree with the point about social media and increased expectations for real-time feedback.   A lighter touch, more ongoing feedback approach could yield massive benefits not just for engagement and productivity but also to spread the cost of payroll changes more evenly over a year.

  19. Kristi,
    Agree completely with your  views but I think there is a more fundamental problem. As someone who worked in HR for many years and then spent a lot of time as a consultant training managers in “performance management” , my conclusion is that senior people in business and particularly the banking sector need to take a close look at their recent behaviour and ask themselves one very fundamental question:   

    “Does taking huge bonuses which bear no relation to the success of my company or have been gained by practices which are either illegal or ethically questionable, project an image of credibility and trust to the people I an supposed to be leading?”

    Too often when I have been delivering training in performance management or change management, I hear the old line:
    “Fine stuff Gerry but you should really be talking to our senior team. We don’t see them practising any of this, so why are they engaging you to tell us to do it?”

    Leaders lead by example, by the behaviour they demonstrate to those below them. If their rewards were linked to their ability to deliver results based on their ability to coach and enspire those below them, consistent with honesty and integrity, we might indeed see some fundamental change for the better.

    p.s. When Bob Diamond was asked to repeat the 3 fundamental principles of the founders of Barclay’s Bank i.e. honesty, integrity and plain dealing – he couldn’t!

    Gerry Lynch

    1. Gerry – very thoughtful comments, thank you.  You are spot on.  In the space of a blog, I didn’t have time to get into all the nuances but I do think the concept of “unbundling” might start to get at some of the points you raise.  Having one system/process that is supposed to address grading (for pay) and development(for growth) is like holding Jenny Craig meetings at the ice cream parlor.  And, I think our approach to rewards is fundamentally broken as well, given that for knowledge workers, we know the “if-then” approach is not a motivator.  So much to discuss, would love to have a live conversation, if you’re interested!

  20. Kristi, Nice summary of a lot of the research and thinking I have been reading related to innovation, creativity, engagement and the future of management (leadership).  Thanks for putting it so succinctly.  Now the hard work of evolving many of our control oriented cultures and leadership notions!

    1. Thanks Rob – there is so much interesting research out there and I do get a sense the tide is shifting and that employees are primed and ready for a change like this – I hope the corporate zeitgeist won’t be too far behind.

  21. Completely concur. 

    Military has used mentoring and “right of passage” programs to develop leadership and functional skills for years, works well in many places but not all.  Big push for self directed work teams few years back.  Conceptually great idea but saw majority fail because management didn’t have the courage to give up some control.   In addition, failure of the organization to have clear mission and goals often made it difficult for teams to understand what they should be doing.  Successful teams often were the result of someone standing up and providing both leadership and coaching setting the goals and encouraging individual contributions to reach those goals.

    After 40 plus years in the work place, military, civilaian and private (including a decade in HR) there always seemed to be few common impediments to promoting talent.

    1) Managers/mentors who are not confident enough in their own capabilities to pass them on.
    2) Job protection, if no one else knows they won’t get rid of me (instead of if someone else knows I can move up.)
    3) Work demands so intensive that simply isn’t time to mentor.  (Military used to mandate at least a half day of training everyweek.  We often used that to develop young soldiers skills and promote initiative.)
    4) Managers/mentors who don’t know the culture of the organization or work place can’t instill that in others.
    5) Poor communications within the organization.  Applying talent also requires knowledge.  Hard to come up with a better way to support another business unit if you have no clue what other units do.
    6) Many managers don’t want to leave their comfort zone.  Promoting talent and innovation invoves some risk, failure is looked at as a death sentence not a learning process so isn’t acceptable.  Great success has always involved some failures along the way.

    I think it is a great idea but a lot of baggage from our industrial era needs to be removed from the work cultural.  As mentioned, will certainly be a challenge.

    1. Bruce – all solid points.  I do think a change like this will require an investment, in all the  types of areas you mention.  Control and fear will be two of the biggest impediments.  I believe a key enabler/opportunity area here is the idea of collaboration and peer feedback.  If that gets traction, it can start to shift the “command and control” mentality.

      Thanks for taking the time to comment, I appreciate it.  

  22. Great stuff.  Getting feedback from the front line staff is very important.  I find that most are intimidated by titles like director or VP, it is important to break/change those barriers to communication.

  23. I agree with Kristi, our talent management needs to catch up with the needs of our workforce. My question is how do we get executives schooled and steeped in industrial belief systems to not only support but encourage and commit to Kristi’s suggestions?

    1. Hi Maria – thanks for your comment.  I fully agree that we need to get involvement and buy-in at the top for these changes to get a real foothold.  In my experience over the last several years, most leaders do not believe that performance management is helping to either identify or develop top performers.  And survey findings support the same.  So, I think those at the top are ready for a change too, but, haven’t been given options to consider.  That is both the challenge, and the opportunity, for HR & Talent professionals and I hope to see more who are willing to step up to help drive transformational change.

  24. Great article. I know many people, including those in HR, who feel performance management processes are demotivating. We need processes that propell employees to give their best rather than crushing their spirit in order to fit everyone into a bell curve.

    1. Thanks Nicole – I think almost everyone who has been part of a performance management process has indeed had their spirit crushed – well said!

  25. Bethany – thanks so much for your comments and I love the link to education. One of the speakers that really inspires me, and has contributed a lot to my thinking on creativity and collaboration is Sir Ken Robinson.  Have you seen his 2 speeches on TED?  If not,  you should, they are fabulous!

  26. Great synthesis of reality versus perception of what is working. As a nonprofit consultant, I plan to utilize these ideas as I work with organizations. They will be very helpful in the area of Executive Transition Management.

    1. Thanks Carol – and I agree with you that these concepts apply just as well to the nonprofit world.

  27. I like the premise of your article.  I was particularly interested in the “Invest in improving feedback and coaching skills.”  We have many legacy corporate cultures where an “opportunity for improvement” (which should be viewed as positive feedback) is delivered and received as a “weakness.”  Your article points toward implementing a culture of continuous improvement where we all thrive on continuous feedback that points out our strengths and our opporutnites for improvement, but that change is difficult – but that’s what we should be moving toward! 

    And as Gerry pointed out, so many of leaders have bonuses that are tied to what I’ve heard described as “perverse incentives” that we don’t have much chance to change the culture to one that aligns the entire workforce to accomplishing strategic objectives aligned to mission, vision, and values. 

    All change starts with a single step – thanks for identifying several of those needed steps!

    1. Paul – thanks for your comments.  As you know, that first single step is a biggie!  But in my client interactions, I am getting the sense that people are ready to try something new, since what they have isn’t working.  You can’t win a war with talent, if you don’t know how to grow and develop your talent to achieve business results.

  28. Kristi, I love what you have written here.  I have spent the last 27 years coaching and consulting in the entrepreneurial world, and this is exactly the approach we take when dealing with small companies.  I would love to see this approach utilized in the corporate world, as I have long held that if large corporations ran their divisions/departments in a more entrepreneurial way, it would greatly increase their bottom lines.

    People need to feel recognized and heard, which is much more possible in an environment where giving and receiving feedback is encouraged and supported.  As you mentioned, people need some training in how to do that effectively, and a great place to start is to build on their strengths and show them how to leverage those in helping others grow.

    Very insightful!

    1. Thanks Margery – I like what you said about being recognized and heard – I think that’s so important!

  29. I find the view expressed in this article overly simplistic. A much better approach can be found in “Managing Performance” by Michael Armstrong and Angela Barton.One of the things that they make clear is that a modern approach to managing performance is that the focus should be on a mutual responsibility for developing performance. Leadership instead of old fashioned (control-style) management is essential to get there.

    By the way: the article starts with: ‘When you Google the word “management,” ‘ and then states that it (=management) is all about control. That would hold for talent management as well. If you try to control talent you will probably suffocate it.

  30. Kristi,

    You stressed a really important factor “encouraging people to take an active role in the planning and execution of their development activities”.  It is only through this partnership that learning and growth is accelerated and thus business results.

    Deedra Bouline

  31. You’ve got this spot on.  Far too much weight placed on a behemoth of a bloated process.  It’s become a means to an end…let’s cut corners on base comp, run an incredibly complex process, which for today’s workforce is inherently very subjective.  One can’t rate performance on ‘production’ per se when we’re talking knowledge capital, innovation, etc. rather than machine parts.  Then let’s use that process to snap a line between Well Above, Above, Average and Below Average performers in order to spread variable pay to ‘make up’ for the below average guaranteed cash.  Great Blog Kristi.

  32. The suggestion of changing performance management to talent development
    because organizations are not using effective practices seems to be a
    questionable notion. I would suggest that organizations need both systems, not
    one or the other. But more importantly, they need systems that work and that
    have a positive impact on how people perform and behave.

    You start off by stating that Google defines performance
    management in certain terms having to do with control, and you summarily reject
    performance management based on that. Twenty years ago, performance management was a whole new way of looking at employee performance. Today, it might appear that many organizations call their old, ineffective performance evaluation systems by the name of performance management, but they are not really
    performance management systems. So someone, perhaps it was HR, implemented a
    system that has no positive impact on employees’ performance and that is the real problem.Too often we get caught up in the rhetoric and not the substance.

    Twice in the past 6 months, I have made presentations to HR
    groups on performance management and in
    both instances there was only one organization
    represented that stated they had a system in place that they felt worked. And
    in both venues, there was no suggestion on anyones’ part that they were
    concerned that they did not have a system in place that worked.

    Subsequently, I spoke to the leadership of both HR
    organizations and got a similar response. So I ask you, why would you think
    that HR could more effectively design and implement a talent development program
    and get a seat at the big table if they can’t administer the current broken
    performance management system? There is something that needs to be put in place
    before HR can effectively introduce new ideas. What that something is, can be
    very different from organization to organization.

    I don’t mean to pooh pooh your idea, but the only HR groups
    that can effectively implement a talent development system are those that have
    a performance management system that is already working, so they don’t need to

    1. Hi Bill. thanks for your comment. We probably just have different perspectives on this one. I’ve been working in the talent development space for almost 30 years, both as part of a large corporation and as a consultant. And in all my experience, i have never had a conversation in which anyone, HR or business leader, said “man, our performance management system sure does drive performance!” In my view, the first step HR needs to take is to accept that most current performance management systems aren’t delivering outcomes that help talent develop or succeed. Then, i think they need to have a collaborative discussion with business leaders to 1) admit the as-is is ineffective and 2)define what a better approach to unleash the potential of employees might look like. I am fully convinced that business leaders would be open to and engaged in that kind of a dialogue. If companies feel the need to hang on to a rating/ranking system in order to allocate reward, then, so be it. But, they need to acknowledge that type of system isn’t really focused on developing talent (I mean, for one thing, its entirely backward looking!) Times are a changing, and how we think about developing talent needs to change as well.

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