What a Bell-curve: The evolution of performance management

Can we finally say goodbye to annual appraisals; performance ratings and the bell-curve distribution model?

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HR Alchemy: Making use of Deloitte’s “Global Human Capital Trends” report 2017

These days everyone is trying to get ahead of the game, to clamber to the top of the pile and launch the next big idea or workplace innovation, and that’s great, but look before you jump. The water sure feels nice, but you don’t want to land on a rock.

This is my first article (and introduction) of a series through which I aim to look at each of the trends identified by Deloitte in their recent report, and consider some of the legal implications for employers.

If you haven’t already read “Rewriting the rules for the digital age – 2017 Deloitte Global Human Capital Trends” then you can find and download it here:

https://www2.deloitte.com/us/en/pages/human-capital/articles/introduction-human-capital-trends.html

It is well worth a read, although at 144 pages it may need to displace your favourite novel for a while.

Nearly half (49%) of the respondents who contributed to the report were organisations with between 1 – 1000 employees; and 25% of the respondents were from Western Europe. The data set and conclusions therefore have very real applicability to UK businesses at all levels.

The report identifies 10 trends, or “new rules”, as follows:

  • Trend 1. The organization of the future: Arriving now
  • Trend 2. Careers and Learning: Real time, all the time
  • Trend 3. Talent Acquisition: Enter the cognitive recruiter
  • Trend 4. The employee experience: Culture, engagement, and beyond
  • Trend 5. Performance management: Play a winning hand
  • Trend 6. Leadership disrupted: Pushing the boundaries
  • Trend 7. Digital HR: Platforms, people and work
  • Trend 8. People analytics: Recalculating the route
  • Trend 9. Diversity and inclusion: The reality gap
  • Trend 10. The future of work: The augmented workforce

The introduction to the report highlights the fact that productivity is not keeping up with technical developments. This is widely known, but not very well understood.

Recent Stanford University research has highlighted that innovations have themselves become increasingly costly, as new ideas and different ways of doing things become harder to find, leading to bigger and more widespread innovation and R&D teams – but that isn’t the whole story.

Technology develops first. “Innovation”, by definition, leads the way to new ways of doing things. The figure below taken from Deloitte’s report shows how this works. Individuals adapt and adopt those innovations quite soon and these two elements drive the desire and ability to change.

Deloitte graph

Businesses lag a little behind. Organisations are always complex, and they need the innovators, progressive leaders and creative HR practitioners to keep anywhere near close to the technological innovation and change in individuals. Relatively speaking, every organisation has its Luddites, which makes businesses slower to adapt even when the desire to change is present.

Public Policy (and therefore law and regulation) is the millstone around innovation’s neck. Often the debate around public policy actually works as a counter-agent to innovation.

For example, if we were to look at Trend 10 – “The future of work: The augmented workforce”, we would all recognise many of the elements of this starting to take hold today,  such as: The “gig economy”; low-commitment and on-demand supply of labour; and output based measurement etc…

However, regulatory frameworks protecting workers rights; reward based upon hourly rates of pay; taxation systems seeking to box people into categories; and obligations to employees relating to working time, and pay during periods of leave – do not help to facilitate the transition of work into the modern age.

The starkest example of this in the UK is the unpopularity of “zero-hours contracts”, which are portrayed as the source of much evil in the modern world. It isn’t the form of contract that is the problem. Zero-hours contracts provide flexibility and are aligned to the development of the way we work in the modern age. It is the abuse of zero-hours contracts by unscrupulous employers that is the problem.

Unfortunately, public policy likes to use the sledgehammer, so the target becomes the use of zero-hours contracts, rather than the abuse of them. This then potentially inhibits the ability of employers to engage a truly flexible on-demand workforce, even though that is where technology and individual desire is taking us.

As a consequence of this, trailblazing businesses who want to the lead the way and implement innovative ways of working often take a significant risk when doing so. There have been many reported examples of these in the media in recent times.

Deloitte’s report is based upon very real and relevant data. Their “new rules”, as they put it, are affecting all businesses – whether or not you can actually feel it in your own business yet.

Deloitte’s call to action is for businesses and HR to do something about it, to take steps towards addressing these trends in your own business. That is, of course, sound advice which no-one can really argue with, but I do have a word of caution…

… Take the time to identify and know the legal risks and regulatory pitfalls as they affect your business before charging off and changing the world.

 

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