Why the performance management model is broken and five ways to fix it

To grow a team of feedback-hungry individuals, and develop leaders with the capacity to deliver this feedback, you need to build the right environment to foster a desire for improvement. But establishing a quality performance management structure remains a challenge.

Last time we asked them, 98% of our clients said they could improve the way they manage performance. When we then asked more than 900 organisations around the world what they wanted to know about performance management, the answer was clear. A resounding 70% said they didn’t know how to hold managers and employees accountable for effective, quality performance conversations.^[1] And it’s not just those in the C-suite who feel the feedback loop is broken – just 59% of employees report receiving adequate feedback on their performance.^[2]

This is not a surprise. Performance management is something that all organisations do, and it impacts every employee. It affects (or at least it should affect) career progression, promotion and remuneration decisions – and also our sense of self-worth. It’s no wonder that it can be so hard to get right, and why we focused on it in our recent research.

We wanted to take a new angle to such a well-covered subject. So in our research paper Performance Management: A bold new perspective on how individuals, teams and organizations excel, we spoke to 67 elite performers in fields outside the corporate world – including athletes, professional musicians and the military.

What we learned was illuminating. All our respondents shared common insights, along with a marked difference between their approach to high performance and our corporate benchmarks. The insights led us to conclude that above all else, getting feedback right is imperative.

There are three key elements to this:

• getting the structure (the scaffolding) right,
• equipping leaders to deliver effective feedback, and
• building feedback-hungry employees.

This article is the first in a series of three, with five ways to start building that scaffolding. We’ll then share practical guides to empower and strengthen the skills of leaders and employees.

1. Timing is everything

Many report participants from outside the corporate world were astounded to hear there is often a months-long lag in feedback delivery within companies. It’s time to step away from the traditional annual performance review and make the feedback cycle much shorter.

For example, when a major Australian investment bank realised it needed to provide feedback on performance closer to real time, it moved away from a calendar-driven rhythm to align performance reviews with a more deal-based business cycle. Conversations now happen when deals and transactions take place. The result is more accurate, relevant feedback – and documented evidence that can be used during the annual review.

Similarly, in many industries, feedback cycles can be aligned to projects rather than an annual review – and this means lessons learned can be applied to the next project individuals work on.

Performance management structures can also take their cues from agile methodology. We’re not proposing performance reviews every 24 hours, but daily stand-ups to discuss what is working and what isn’t, and retrospective reflections at the end of each two-week sprint all help build a culture and rhythm of regular, structured feedback conversations. Once reserved for tech teams, we’re starting to see this become part of the operating rhythm across diverse sectors in the Asia-Pacific region.

2. Be open to experimentation

We’ve known for years how important feedback is to maximising productivity. But if finding the right performance management structure was that easy, or had one simple answer, everybody would do it. What works for one organisation might not apply to another due to differences in size, goals, values, organisational structure or sector.

For example, an agile structure won’t suit every team or organisational structure. When we worked with a utility company to help them shift from a siloed to a project-centric structure, we also realised its frontline teams needed a stronger focus on daily reviews and team goals while office-based teams might need a more individual assessment approach.

In production environments such as mining, frontline (Level 1) operators require shift-based reviews as a minimum. In fact, in more technology-integrated mining settings where performance is immediately visible, feedback can be instantaneous – typically delivered by the team leader or supervisor.

3. Find your flexibility

This one-size-doesn’t-fit-all ethos also applies across different channels and verticals of larger institutions. We helped a Singaporean conglomerate create a common framework and set of values around what good performance looks like, and then adapted it throughout its wildly diversified business – including shipping, rail and real estate development.

A good performance management structure also needs to adapt to individual preferences for feedback. As one elite athlete told us, what might work for alpha personalities might not work for introverts. Leaders need to build in time to learn how to best connect with each member of the team.

4. Setting expectations

To live up to expectations, you first have to set them. Build a process to do this at the outset of each feedback cycle by clearly outlining roles, goals and opportunities for individuals that go beyond their title.

At the beginning of each cycle – whether it be a deal, project or a set period of sprint time – set expectations in short one-on-one conversations (as little as 5 to 10 minutes) to clarify a person’s role, strengths and weaknesses and opportunities for development during the cycle. This gives you a foundation to hold more structured feedback conversations.

Making this a two-way conversation helps build a culture of healthy feedback and psychological safety. People shouldn’t feel scared of feedback, or worry they’ll get in trouble for making mistakes. 360-degree sessions allow everyone to share the behaviours they would like to start, stop or continue.

5. Lean on your purpose

Your organisation’s purpose underpins everything you do – including your performance management structure. Performance measures should align with your values. For example, in elite sporting teams each team member is driven by competition for a place in the squad as well as the overall team goal of success. This team-wide, shared purpose facilitates feedback delivery, and prompts team members to seek out analysis of their performance – how they can tackle better or make better decisions in key moments of a match.

Similarly, if a financial services firm’s purpose is to build better retirement outcomes for members, you can develop a structure that assesses the contributions team members make towards that purpose. On the pitch or in the office, culture and values help maintain focus on purpose, creating an environment in which feedback is the norm.

Before you can find the optimal delivery methods for feedback, you must first create a performance management structure and culture that suits your organisation – and your people. Only then can you develop leaders with the skills and capability to deliver feedback well to employees with a hunger for it.

To learn more, download our report Performance Management: A bold new perspective on how individuals, teams and organisations excel.