Analyzing the PM Revolution

Wharton professor of management and HREonline.com columnist Peter Cappelli just coauthored (along with Anna Tavis) a new piece in the upcoming October issue of the Harvard Business Review that takes a look at the ongoing “performance management revolution”:

In 2002, the idea of abandoning the traditional appraisal process—and all that followed from it—seemed heretical. But now, by some estimates, more than one-third of U.S. companies are doing just that. From Silicon Valley to New York, and in offices across the world, firms are replacing annual reviews with frequent, informal check-ins between managers and employees.

Cappelli and Tavis argue that the biggest limitation of annual reviews is that, “With their heavy emphasis on financial rewards and punishments and their end-of-year structure, they hold people accountable for past behavior at the expense of improving current performance and grooming talent for the future, both of which are critical for organizations’ long-term survival.”

“In contrast,” they say, “regular conversations about performance and development change the focus to building the workforce your organization needs to be competitive both today and years from now. Business researcher Josh Bersin estimates that about 70% of multinational companies are moving toward this model, even if they haven’t arrived quite yet.”

The article does a great job of tracing the performance review’s trajectory throughout the last century and into this one, and also offers three reasons why companies should drop appraisals.

Read the full story here.