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11/10/2016
Most corporate performance management systems do not work because they are rooted in a model of economic activity that breaks roles down into discrete work tasks, according to an article in the McKinsey Quarterly. In addition, linking performance ratings and pay ignores a growing body of evidence questioning the value of performance-related pay.
Employees may worry excessively about the pay implications of even small differences in ratings, so that the fear of losing pay influences their behaviour at work far more than the possibility of monetary gain. High tech companies are pioneering the transformation of performance management and ‘more companies will need to follow – quickly,’ the article suggests. New models need to focus on the drivers of motivation that are stronger than relatively small incremental changes in pay. In other words, employers must use ‘technology to democratise and re-humanise processes that have become mechanistic and bureaucratic,’ the authors conclude.