For years, employees and HR professionals alike have lamented that performance management systems, plagued by lists of competencies, are broken.

“Performance management is probably the process that we have most overcomplicated in HR, and all with good intentions,” said Marc Effron, president of the Talent Strategy Group, an HR consultant. “When you come to the average manager with this booklet of competencies, they basically understand that you don’t get the business.”

Companies that successfully create performance management design models can use them to solve business problems, according to findings from a survey of more than 1,400 HR professionals, published in May by the Institute for Corporate Productivity (i4cp). This means getting rid of check-the-box models that burden managers with long lists of competencies in favor of one-on-one meetings between managers and employees to set challenging yet achievable goals. Social performance management platforms such as WorkSimple and Work.com, formerly Salesforce Rypple, help managers and employees monitor, evaluate and modify these goals throughout the year.

Kelly Services, a Troy, Mich.-based staffing company, focused on solving these business problems when reforming its performance management process four years ago.

According to “Abandoning Performance Scores,” a case study published in March by Bersin & Associates, the company conducted an internal focus group in 2008 that found managers spent an average of seven hours per employee conducting a performance report. Managers spent little of this time, however, in one-on-one interaction with employees. What conversations did take place rarely stimulated discussions of how to improve.

“The performance score itself was keeping them from having honest dialogue on how to improve,” said Stacia Sherman Garr, principal analyst at Bersin & Associates and author of the case study.
The workforce made it clear it found the performance scores to be more hindrance than help, so rather than focus on reforming the performance score process, HR and the company’s executives focused on what the employees most wanted to improve: performance management conversations.

Now, as part of the annual January performance conversations, employees meet with their managers and set between three and five goals for the year designed specifically to help meet business objectives. Further, each employee sets two goals for his or her own professional development.

Throughout the year, managers and employees are encouraged to meet to discuss progress on each goal and potential room for improvement. Feedback for the new performance management system has been positive. Employees say performance-related conversations have improved, and managers no longer spend hours filling out performance reports.

Kelly Services’ decision to eliminate scores from the performance management process represents an extreme. But many companies are evaluating and reforming their performance management systems.

In 2011, 70 percent of businesses surveyed by Bersin & Associates used the coaching and development model, a 16 percent increase since 2008. The findings appeared in “High-Impact Performance Management,” a five-part report based on a survey of more than 500 HR leaders.

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