Question

Consulting firm Deloitte works with many organizations to improve their business practices. Recently, the firm looked at its own internal processes and determined that its performance management system needed some new life. With over 65,000 employees to rate, the goal was to make the process faster, continuous, and simpler. After gathering information on its current practice and investigating the science behind performance evaluation, Deloitte came up with a revolutionary way forward.

The current practice was a traditional method of cascading objectives from the organizational strategic level down to the individual contributor level. Managers would rate each employee at the end of a rating period based on how well he or she met those objectives. However, annual goal-setting did not coincide with business operations schedules, and the process consumed nearly 2 million hours a year. Since Deloitte is in the business of improving efficiencies and productivities for clients, it only made sense to radically change its own performance management system.

The science behind evaluations shows that ratings are often affected by unconscious rater biases and perceptions rather than factual performance outcomes. Deloitte’s employees often work in teams, and individuals believe that they are able to use their skills and strengths effectively at work. The firm’s new approach asks team leaders to specify what future actions they plan to take regarding each member of the team. This shift in thinking recognizes that raters’ assessments of performance may be inaccurate, but the way they plan to work with someone in the future says more about that individual’s actual performance.

Team leaders now report their future-oriented intentions, from endorsing that they would like to keep the individual on their team to recommending that the individual poses a performance risk that might endanger client relationships or team performance. Since an essential component of performance management is to facilitate improvements in performance, team leaders now check in with each team member once a week to review project status and priorities, provide feedback on recently completed work, and provide any needed course corrections. This frequent communication is initiated by the team member rather than the leader. In this way, each individual takes ownership of their performance and seeks out feedback and input on their performance. Deloitte has moved away from assigning each employee a single performance rating score in favor of ongoing feedback.

Questions

1. What is your overall opinion of Deloitte’s new approach to performance management? What type of training would you recommend for managers, team leaders, and team members before switching to a system like this?

2. What actions should be taken if an employee is ranked as a potential performance risk? How would compensation decisions be made without a performance score for each employee?

Answer 1

Answer = If we look at the present performance management approach of the company, it seems that the company is more driven by the motive of gaining the greater customer relationship experience and it is more directed towards the development of the team goals with the help of consulting with the team leaders so that they can be a common area between the expectation of the management and the expected performance by the team leader. The new system is more practical as the team leaders are responsible for managing their own teams and thus they must be given free hand during establishing the team goals and selection of the team members.

Before switching to the new system it is important that the managers and team leaders are given intense training on the measurement of the performance, determining the team goals, and how to judge the performance of the employees on regular basis.

Answer= If a certain employee is characterized as the potential performance risk, it is important tom train that employee on those areas where he is lacking or where the improvement is desired. The team leader needs to facilitate the expected feedback about his performance and how the performance can be improved.

In this situation, in place of the individual compensation plan, the organization can think of implementing the team-based compensation plan that will motivate the entire team and ensure that all the members of the team are putting their efforts.