The Office of Personnel Management consistently points to the private sector as a source of best practices for employee performance management, the process where managers and employees work together to plan, monitor and evaluate job performance.
At its core, the purpose of performance management is steering people towards an organization’s objectives, but public and private sector objectives are quite different.
Private companies must prioritize shareholder value, growth and earnings, which can incentivize competition-based, individualistic performance practices. Public sector organizations, in contrast, must meet agency missions and deliver outcomes to the public—requiring performance systems that encourage collaboration, service-orientation and intrinsic motivation.
Most of the private sector still uses traditional performance management practices much like the federal government, including annual reviews, supervisor-driven feedback and individualized rewards.
A major takeaway from our research is that much of the private sector also has not figured out this thorny issue — as evidenced by how often companies change their internal performance management practices. But we have identified several innovative performance practices from forward-thinking companies that the government could adopt to meet its mission-driven objectives.
Performance reviews should be continuous, collaborative and flexible
Employee performance in traditional performance management systems have long been maintained through annual performance reviews. Individual employee goals are set at the beginning of the year and supervisors have limited touchpoints with employees until the year-end performance review – which many supervisors find overly burdensome and employees experience as demoralizing. Traditional systems have rigid, individualized goals that do not incentivize innovation and collaboration needed for high-performing organizations.
In response to these challenges, private sector companies like Adobe have implemented continuous review systems that shift focus from past to present – giving employees more frequent feedback they can use to improve – and emphasize agile, team-aligned goals. The system allows employees and supervisors to adjust goals as the circumstances of their work change, keeping employees better aligned to mission objectives and more engaged in their work.
After moving to continuous check-ins, Adobe found 30% fewer employees quitting, 50% more involuntary departures (as poor performers were dealt with in a timelier manner), and 80,000 managerial hours saved from annual reviews.
An important caveat – continuous reviews should not be implemented on top of annual reviews. Organizations often believe they can get the best of both systems, but instead they just increase workload burden for supervisors while reducing their bandwidth to conduct continuous review effectively.
Feedback should be a tool for growth that comes from a range of sources
Reforming performance management systems goes beyond the cadence and alignment of reviews; it requires addressing the types of feedback needed for reviews.
Traditional performance management feedback is typically backward looking and often rests only on the supervisor’s perspective. Unchecked supervisor feedback alone can yield inconsistent, inaccurate performance reviews that do not support an employee’s continuing development and motivation, directly impacting the ability of employees to meet organizational outcomes.
Reimagined performance management systems use crowdsourced feedback as an important mechanism for forward-looking employee growth.
Feedback is not an end in and of itself, but rather an ingredient in understanding an employee’s strengths and development opportunities. By fielding input from many sources, like Atlassian does for its 360-degree feedback system, organizations further emphasize the role of the team in the workplace while ensuring reviews and feedback are more accurate.
Rewards and recognition should motivate employees and elevate teamwork
Rewards and recognition are another important tool for keeping employees motivated towards achieving organizational objectives. Traditional performance rewards are often based on individual performance reviews and focused on monetary incentives. Research has found that while perception of fair compensation is essential to not demotivate employees, individual monetary rewards are not as strong a motivator as many believe.
One private sector approach centers on providing rewards around team-based achievements. Providing individuals with a collaborative goal encourages employees to work together toward achieving a specific outcome rather than competing against each other to earn more individual rewards. Private sector companies, like Microsoft, have shifted from solely individual-based reward systems to incorporating a team-centered approach, and it has seen significant improvements in productivity and collective success.
Federal performance management reform requires more than just following the private sector
While we should not copy-and-paste private sector practices into the public sector, there are clear insights to be applied in a reimagined system. Ultimately, creating an effective public sector performance management system will require comprehensive reform to include some of the innovative practices being explored in the private sector.
We must incorporate these to design a system fit for the purpose of government—informed by the public who best understand what the government needs to deliver and the practitioners and experts who know how you can get government to deliver.
Learn more about the Government for a New Era initiative, our effort to develop reforms for a more effective, responsive and accountable government.
If you are a current or former federal employee interested in sharing your experiences and contributing to our reform proposals, please complete our Federal Community Intake Form and indicate your expertise or interest in performance management.