Among companies that have made major changes in their approach to performance management, the multinational consulting firm Deloitte provides an interesting example. In 2013, Deloitte conducted an internal study that revealed it was spending around 2 million hours on performance management–related activities. Performance management consisted of annual evaluations in which managers and employees set goals at the beginning of the year and then rated progress made at the end of the year.
Despite the time spent on them, the system did not provide adequate or timely feedback to employees, nor did it provide organizational decision makers with sufficiently accurate performance data to be used in important decisions such as incentive pay. The company decided to give the system a makeover but also to change the company’s view of what performance management is and how to approach it.

To recognize performance, Deloitte decided to use the performance ratings as a starting point. Chief Learning Officer Jeff Orlando notes that every “people decision” will be data informed but not data driven. HR and business leaders could use this information to decide whom to promote and whose performance needed intervention. The system is meant to help support (but not replace) decision makers in their efforts to recognize employee contributions.

Case Discussion Questions 1. Which aspects of Deloitte’s new performance management system do you find most radical?
2. If you were a manager at Deloitte, how would you have reacted to such a system? Would your answer change if you were an employee?
3. What are your thoughts regarding measuring performance with four simple questions? Do you think these are the right questions? How would you know if a particular question is effective?
4. How would you motivate managers to conduct frequent check-in meetings with employees? How would you counter the argument that these meetings take a lot of time?
5. How transparent is this system? Do you think Deloitte’s decision not to share individual ratings with employees is warranted?