Emma Grogan, PwC
Emma Grogan, PwC

Many organisations that made the "radical" move to scrap their performance ratings are seeing cracks appear in their strategies, according to a PwC performance management specialist.

Employees complain performance management without ratings is less transparent, unless they have great managers, PwC partner Emma Grogan told HR Daily ahead of her upcoming webinar on effective performance strategies.

Prior to removing ratings, employees – despite not necessarily liking what they heard – at least knew whether or not they were meeting their manager's expectations, and understood how they were performing relative to their colleagues, she says.

Further, when they received ratings, there was typically a clear link between the rating and their variable pay outcome or fixed-pay increase.

Grogan says all the "noise" around the other much-hyped change over the past few years – removing annual performance reviews – was "quite misleading" because most employers still held an end-of-year discussion, but just decreased its significance in the context of more regular conversations.

However, "a major assumption underlying the effectiveness of that change was that managers were going to have those more frequent discussions and that they had the capability to make those discussions valuable", she says.

In fact, it's "very difficult" to change managers' capability, and it "doesn't happen quickly; it's a long-term intervention".

"Fundamentally shifting a level of capability – for example, coaching capability – across hundreds and hundreds of people that may be geographically dispersed is actually a very challenging and cost- and resource-intensive exercise," Grogan says. "The [idea] of lifting capability relatively quickly over an annual period or a two-year period was probably ambitious to start with."

Organisations that have improved manager capability have often introduced targeted training and tools, such as conversation guides, that dictate the themes of the conversations managers should have with employees throughout the year, and how they should structure such discussions to ensure they are effective and address the right topics.

Technology can also play a big role, Grogan says. "We've also seen technology being used to supplement feedback – so, for example, [prompts for] managers that just don't tend to prioritise that conversation or aren't good at giving that feedback in a structured way."

Employees can ask a manager to tell them how they went on a project they finished last week, for example, and the manager can complete that feedback, providing the employee with a snapshot of their performance.

Managers can also use the technology to receive feedback from employees on how their coaching or performance management experience is going. "It can give the manager direct feedback and more frequent feedback so they can start to be more self-aware... about where they do have deficiencies or where they could do better."

Ratings not the "fundamental issue"

Grogan says the conversation about performance management gets "stuck" on whether or not to remove ratings, and "I strongly believe that's not the question we need to be asking".

"The fundamental issue is how we get managers having better quality conversations more frequently [that are] focused on development; more on influencing performance rather than evaluating performance," she says.

"And I've seen organisations with ratings that have made improvements there, and I've seen organisations without ratings make improvements in that same space."

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