Internal feedback demonstrates that our people like the predictability of this process and the fact that because each person is assigned a counselor, he or she has a representative at the consensus meetings. These evaluations are factored into a single year-end rating, arrived at in lengthy “consensus meetings” at which groups of “counselors” discuss hundreds of people in light of their peers. The manager also comments on where the person did or didn’t excel. Objectives are set for each of our 65,000-plus people at the beginning of the year after a project is finished, each person’s manager rates him or her on how well those objectives were met. More than likely, the performance management system Deloitte has been using has some characteristics in common with yours. But we might never have arrived at its design without drawing on three pieces of evidence: a simple counting of hours, a review of research in the science of ratings, and a carefully controlled study of our own organization. This system will make much more sense for our talent-dependent business. Its hallmarks are speed, agility, one-size-fits-one, and constant learning, and it’s underpinned by a new way of collecting reliable performance data. We’ve arrived at a very different and much simpler design for managing people’s performance. It will have no cascading objectives, no once-a-year reviews, and no 360-degree-feedback tools.
What might surprise you, however, is what we’ll include in Deloitte’s new system and what we won’t. With all this evidence in hand, the company set about designing a radical new performance management system, which the authors describe in this article. From an empirical study of its own high-performing teams, the company learned that three items correlated best with high performance for a team: “My coworkers are committed to doing quality work,” “The mission of our company inspires me,” and “I have the chance to use my strengths every day.” Of these, the third was the most powerful across the organization. It discovered that the organization was spending close to 2 million hours a year on performance management, and that “idiosyncratic rater effects” led to ratings that revealed more about team leaders than about the people they were rating. To arrive at this design, Deloitte drew on three pieces of evidence: a simple counting of hours, a review of research in the science of ratings, and a carefully controlled study of its own organization.
Its hallmarks are speed, agility, one-size-fits-one, and constant learning, all underpinned by a new way of collecting reliable performance data. The new system will have no cascading objectives, no once-a-year reviews, and no 360-degree-feedback tools. It searched for something nimbler, real-time, and more individualized-something squarely focused on fueling performance in the future rather than assessing it in the past.
Like many other companies, Deloitte realized that its system for evaluating the work of employees-and then training them, promoting them, and paying them accordingly-was increasingly out of step with its objectives.