Ahead of the

curve:
The future of
performance
Management
McKinsey & Company

by Boris Ewenstein, Bryan Hancock, and Asmus Komm

 BUS 660.2_GROUP 3

SYEDA AFSANA KHANAM

ID 2135072660

WASIMA JAHAN RABI MURSALINA TABASSUM

ID 1735317060
ID 2215397660

MD.FAISAL KARIM
ID 2035571660
Outline of today’s discussion
Introduction & Summary of the Article
Importance of Performance Management & Today’s
Business
Traditional Performance Management Approaches

Challanges of Traditional Performance Management

New Performance Management Approaches

Limitations of New Performance Management

Current Work Scenario

Importance of Data

Future of Compensation
Outline of today’s discussion
Findings of the Article

Recommendation

Example of Successful Implementation

Video

Quote

Conclusion
 "Ahead of the Curve: The Future of Performance Management" by
McKinsey & Company

 The article explores the evolution of performance management and

proposes a new approach that better suits the changing nature of work.

 The article highlights how traditional performance management systems

have failed to keep pace with changes in the workforce, technology, and the
economy.

 Instead of annual appraisals and rigid performance metrics, the authors

suggest a more agile and continuous approach to performance management
like focus on outcomes, not activities, continuous feedback, foster
collaboration and teamwork.

 Overall, the article argues that companies that adopt a more agile and
continuous approach to performance management are better able to adapt to
changing business conditions and meet the evolving needs of their
workforce
 Importance of Performance Management & Today’s
Business
Performance Management:
1. Performance management is the process of ensuring that a set of activities and outputs meets an
organization's goals in an effective and efficient manner.
2. It helps identify areas for improvement and opportunities for growth and development
3. Effective performance management can lead to increased productivity and employee satisfaction
4. It enables organizations to stay agile and responsive to changing market conditions and customer
needs

Importance in Today’s Business:

5. In today's competitive business environment, organizations that prioritize performance management

are better positioned to stay ahead of the curve and achieve their strategic objectives.
6. Yet nearly nine out of ten companies around the world continue not only to generate performance
scores for employees but also to use them as the basis for compensation decisions
7. Continually assessing and improving employee performance can help organizations remain agile and
responsive to changing market conditions and customer needs.
 Traditional Approaches to Performance Management

01 Annual Performance
Reviews:
02 Ranking Systems:
***Employees are ranked against
***Focus on past performance one another
***Example: Forced ranking
and employee evaluation
system or "rank-and-yank"
***Example: Once-a-year
reviews with a rating scale

03 Objective Setting:
***Employees set specific, measurable goals
for the year
***Example: SMART goals (Specific,
Measurable, Achievable, Relevant, Time-
bound)
 Challenges with Traditional Performance Management

Time-consuming and Focus on Weaknesses Negative Impact on

Inefficient:
• Annual reviews require a
significant investment of time
and resources
• Infrequent feedback delays
learning and development
opportunities
and Short-term Results:
• Traditional approaches may
not encourage long-term
growth or development
Employee Morale:
• Forced rankings can
create unhealthy
competition and
damage teamwork
 Innovative Strategies for Performance
Management
1.Continuous Feedback and Check-ins:
• Regular, real-time feedback to support ongoing development
• Example: Weekly or monthly one-on-one meetings with
managers
2.Strengths-based Approach:
• Focus on leveraging employees' strengths rather than fixing
weaknesses
• Example: Gallup's Clifton Strengths assessment and
coaching
3.Agile Goal Setting:
• Adaptable, flexible goals that evolve with business needs
• Example: Objectives and Key Results (OKRs) framework
 Limitations of the Implementation of New
Approaches

1. Wrong Design
2. Absence of Integration
3. Lack of Leadership Commitment
4. Ignoring Change Management in System Implementation
5. Incompetence
 Current Work Scenario with Examples

 Performance management is usually divided into two sub-disciplines: corporate

performance management and people performance management.

 The focus of CPM is on strategic performance improvement. CPM tools and techniques
include management dashboards, Balanced Scorecards, KPIs, analytics, strategic
planning, budgeting and forecasting, benchmarking, business excellence models, Six
Sigma, enterprise risk management, project or programmed management, and
performance reporting.

 PPM focuses on the management of the people within an organization. Tools and processes
that are commonly used to manage people performance include appraisals, reward and
recognition systems, personal development plans, performance targets, and performance
review meetings.
 Importance of Data

 Performance management data can include quantitative and qualitative

information from various sources.

 Good quality data helps to support decision making. It helps to identify what
policies and processes work and why.

 Hence, only valid, reliable, accurate and timely information to manage services,
influence improvement and account for performance.
 Challenges and for overcoming obstacles what type of
strategies HR should follow

 Lack of leadership support can be one of the hardest challenges to overcome. HR leaders
sharing performance management success stories with other company leaders can make a
difference.

 Employee motivation and morale; The company's leadership team should communicate
the importance of performance management to employees. In addition, having employees
participate in the goal-setting process and potentially contribute to the review in other
ways can help them better understand their important role.

 Other challenges comprises limited budget, lack of HR tech skills, software challenges etc.,
which can be mitigated with proper communication, planning ahead and via training.
 Future of Compensation

Snapping the
link between Share
performance and generous
compensation stock awards

Offer
Take the Giving a
competitive
anxiety out of purpose and
base salary and
compensation value in the
peg bonuses
. work
 Findings of the Article

Managers and staff view performance

management as time consuming,
excessively subjective, demotivating,
and ultimately unhelpful.

Leading companies are adopting to Data are now more real-time and factual.
new, varied, and experimental ways So, importance of data in performance
of performance management management is now important than ever.

Seeing purpose and value in work is the Identifying and nurturing truly
single most important motivation factor distinctive people is a key priority
Recommendations
Companies should continually crowd-
source performance data throughout the
year

Performance discussions should be more on

what’s needed for the future than what
happened in the past

Companies should set goal that are more

fluid and changeable than annual goals

Companies should shift from backward-

looking evaluations to fact-based performance
discussions

Innovation in coaching is highly critical to

inspire and motivate performance
 Successful Implementation

PwC Microsoft Google

Adopted a "Real-time Feedback" Replaced annual performance reviews with Adopted a "Project Oxygen"
approach ongoing feedback **Focus on soft skills, give feedback and
**Give feedback and coaching **Established "Manager Excellence." development opportunities.
through a mobile app.

Netflix Adobe Systems Accenture

Replaced traditional performance reviews Adopted a continuous feedback Eliminated annual performance reviews
with a "keeper test" approach called "Check-in" with continuous feedback
**Focuses on retaining top performers **Focuses on regular check-ins between **Adopted a "Performance
rather than evaluating everyone. managers and employees. Achievement."
TED Talk by Patty McCord, former Chief Talent Officer at Netflix, that discusses the
company's innovative approach to performance management and culture:

https://www.ted.com/talks/patty_mccord_8_lessons_on_building_a_company_people_e
njoy_working_for?language=en

In the talk, McCord emphasizes the importance of creating a culture of high performance and
trust, and shares insights into how Netflix achieved this through their unique approach to
performance management and talent development. The talk discussed the importance of
continuous feedback, a focus on development and growth, and a shift away from traditional
performance metrics towards a more holistic view of employee contribution.
“At the end of the day, feedback is just a perspective, and it’s
up to the individual to take it or leave it. But if you create a
culture where feedback is the norm, then people will seek it
out and use it to get better."

—Satya Nadella, CEO of Microsoft

 Conclusion
The traditional approach to performance management is no
longer effective in today's rapidly changing business
environment.
Adopting an agile and continuous approach to performance
management can help organizations stay ahead of the
curve and adapt to change business conditions.
Thanks!