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Telling fish about water Since before we can even remember, beginning with our first staggering attempts to crawl or walk, we are surrounded by evaluation of our performance. Estimates suggest that students have undertaken more than 2,500 tests or exams by the time they complete secondary education. And domestically, we all get plenty of (often unsolicited!) assessment from many quarters at home. Opinion polls, player rankings, league tables, grid position, or the national happiness index are all mechanisms to assess performance. I am currently working with five clients from five different industries – drinks, retail, investment banking, gaming and software – totally diverse sectors all with one common singular aim: How do we drive performance? Performance, it appears, is the wallpaper of life. The challenge of managing organisational performance dates back as far as the enactment of the first US corporate statute in 1811, but it is currently in a state of chassis. The old rules are no longer valid for the new economy. A state of chassis It is not without good reason that companies like Microsoft, Adobe, Motorola and Accenture are choosing to abandon traditional performance management methods. Managers have traditionally relied on the crutch of the traditional performance management system with its accompanying calibration ranking as a means of driving performance, but as one senior HR executive at Microsoft recently observed: the system simply results in “capricious rankings, power struggles among managers, and unhealthy competition amongst colleagues”. Good employees are on the move as a result of some current management practises According to a recent Bersin survey, 58% of organisations believe the annual appraisal is a waste of time yet, up until recently, 100% of companies insisted on doing it. In the same survey of 2,500 companies across 90 countries, a meagre 8% believed their performance management process drove high levels of value. Adobe calculated that annual reviews required 80,000 hours of time from their 2,000 managers each year - the equivalent of 40 full-time employees. After all that effort, internal surveys revealed that employees felt less inspired and motivated afterwards—and the departure of good people actually increased. Unfit for purpose UCLA’s Sam Culbert went so far as to say recently that if the performance review was a drug, it would not be approved today by the FDA (Food and Drug Administration). The reason for its dramatic fall from grace is that the context for work has evolved far beyond what the existing system of performance management was initially designed for. The current creaky system has its roots deep in an Industrial Age characterised by stability, predictability and slow change. A time when Henry Ford once declared: “How come when I ask for a pair of hands around here it comes with a brain attached?” Back then the mostly manufacturing-based workers simply needed to follow direction and performance could easily be calculated in measureable outputs like widgets and hours. Today, by contrast, 70% of the labour-force works in service or knowledge related roles where performance is centred…