The Evolving Landscape of Performance Management

Performance management has remained stagnant in many organizations, relying on century-old annual or biannual review practices that fail to evaluate employees’ contributions accurately in the modern workplace. However, innovative technologies such as organizational network analysis (ONA) promise to transform outdated systems into data-driven, fair processes adapted for today’s distributed work environments.

In this edition of the WorkplaceTech Spotlight series, host Guillermo Corea explored performance management’s past, present, and future with Confirm co-founders Josh Merrill and David Murray. As leaders of a company integrating ONA into talent evaluations, they provide unique insight into how analyzing employee networks can overhaul dysfunctional review practices.

The Flaws of Traditional Performance Reviews

Performance management has followed the same basic structure for over a hundred years, centered around managers subjectively evaluating employees through scheduled reviews and ratings. However, modern work practices have evolved much faster than these outdated systems. With increased remote and hybrid work arrangements, managers often lack visibility into daily employee activities, making the typical annual or biannual review an inaccurate snapshot based on limited interactions.

Unsurprisingly, 95% of managers are dissatisfied with their organizations’ review system, according to recent surveys. In 2023, only 33% of employees were engaged. Employees who are not engaged or who are actively disengaged account for approximately $1.9 trillion in lost productivity nationally.

In addition, 59% of managers and employees see little value in their organizations’ current performance management processes. And, according to Gallup, only 14% of employees strongly agree that their performance review inspires them to improve.

Clearly, there is a pressing need to develop more effective evaluation methods aligned with distributed work environments. As Josh Merrill noted, “Managers today have less visibility than ever into the impact of their direct reports. ... The way that we evaluate that work has not changed.” This is seen in the nearly half of companies (49%) that still give annual or semiannual reviews. The result is an increase in biased decision-making, talent retention issues, and wasted time navigating inefficient systems.

Harnessing Organizational Network Analysis

Confirm integrates ONA, a methodology that maps out formal and informal workplace connections, into performance evaluations to address these pitfalls. ONA captures a multidimensional view of employee networks and interactions that goes beyond the limited visibility of any single manager. The resulting data quantifies individuals’ influence and impact based on peer feedback—not subjective opinions.

By layering ONA data into performance management, Confirm’s co-founders aim to create a transparent process whereby an employee’s advancement possibility depends not on their manager’s advocacy but on their actual contributions. As Josh Merrill said, “We’re bringing the science of organizational network analysis into performance reviews ... giving people clear visibility into who they can’t afford to lose.”

Benefits of Applying ONA to Performance Reviews

ONA delivers several advantages that traditional and even 360-degree evaluations cannot match. By analyzing a more comprehensive range of relationships and perspectives, ONA helps surface talented individuals who may fly under the radar. The technology’s comparative benchmarking also reduces bias and subjectivity, which can distort reviews.

Additionally, ONA pinpoints skills gaps, untapped internal experts, mentoring needs, and more—insights vital for growth and succession planning. David Murray suggested that 360-degree feedback’s exhausting nature does a “disservice for sometimes your most talented employees,” whereas structured ONA feedback integrates easily into talent management systems.

For organizations overwhelmed by rapidly advancing technology, Merrill recommended focusing on integrated solutions that embed innovations within existing infrastructure: “Bringing new and emerging technology into old systems allows you to get ROI [return on investment] faster and ... doesn’t require massive systems change initiatives.” Starting small also allows for iterative approaches over time.

Steps for Adopting ONA and New Performance Practices

Transitioning to ONA requires updating processes, technologies, and mindsets across the employee life cycle. Organizations should follow four key steps:

1. Integrate ONA data and comparative benchmarking into existing performance review systems.

2. Train managers to interpret ONA-based talent profiles during calibration.

3. Educate employees on review methodology changes, and encourage networked feedback.

4. Continuously refine algorithms and weighting over time based on feedback.

Regarding mindset, Merrill explained, “If you’ve ever been in a calibration session ... you know the advancement and success of employees in this company doesn’t depend on their performance, it actually depends on my ability to advocate and influence on their behalf.” But implementing innovative technologies like Confirm can shift the focus back to performance and merit.

The Future of Performance Management

As ONA and related innovations gain traction, they have the potential to fundamentally reshape company cultures, engagement levels, and retention rates. Merrill and Murray said they envision ONA becoming a pervasive part of professional life through embedded enterprise solutions, allowing organizations to make strategic talent decisions based on real-time impact visibility.

Murray concluded, “We think that organizational network analysis is the future of performance reviews. ... It’s the future of how we measure work.” The business case is clear: Evolving dated review processes via data-driven tools saves managers time, boosts employee motivation, and ensures high performers are recognized accurately.

For HR leaders dissatisfied with their current systems, following Confirm’s model of integrating advanced but accessible technologies could provide a blueprint for the future. Rather than discarding all institutional knowledge, innovations like ONA should be seen as optimization opportunities. Small starts today enable continual iteration toward a modernized and compelling vision of performance management for the distributed, dynamic workforce of tomorrow.

FAQs

What is Organizational Network Analysis?

Organizational network analysis (ONA) is a methodology that maps out the formal and informal connections between people in a workplace based on digital communications, surveys, and other data sources. The resulting network charts and talent maps provide visibility into the breadth of employees’ internal relationships and influence.

How does ONA differ from traditional and 360-degree review systems?

Unlike limited single-source feedback or intensive 360-degree reviews, ONA takes an impartial, data-driven approach to quantify individuals’ impact and connections. By benchmarking against the whole organization’s network, ONA provides the context missing from other evaluations about how central or interconnected an employee’s role is.

What are the key benefits of implementing ONA in performance management?

ONA reduces bias and subjectivity in the review process while surfacing hidden talents that are not visible to any single manager. The network perspective boosts inclusion and diversity, identifies mentoring needs, supports stronger succession planning, and enables precise targeting for growth opportunities.

How can organizations transition to an ONA-based performance management system?

Adopting ONA requires updating processes, technologies, mindsets, and skills development across the employee life cycle. Core steps include integrating ONA data within existing infrastructure, training managers on interpreting talent profiles, educating employees on changes, and continuously refining algorithms.

What future developments can we anticipate in performance management technology?

As ONA and artificial-intelligence-powered talent analysis become widespread, performance evaluation will shift from episodic and reactive to continuous and predictive. Over time, embedded enterprise solutions could enable organizations to base strategic workforce decisions on real-time network insights into employees’ performance and potential.

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This article was written based on Episode 17 of the WorkplaceTech Spotlight.

Thank you to Josh Merrill and David Murray, co-founders of Confirm, for contributing to the conversation. 

Sources: 

• [Source: SHRM - WorkplaceTech Spotlight - Episode 17] [https://www.youtube.com/watch?v=5-sYa0GUtWU]
• [Source: SHRM - Reimagining the Performance Review][https://www.shrm.org/topics-tools/news/all-things-work/reimagining-performance-review]
• [Source: Gallup - In New Workplace, U.S. Employee Engagement Stagnates]
  [https://www.gallup.com/workplace/608675/new-workplace-employee-engagement-stagnates.aspx]
• [Source: Betterworks - Maximizing Employee Potential: A Talent Management Framework Guide][https://www.betterworks.com/magazine/guide-to-talent-management-frameworks/]
• [Source: The Performance Review Problem]
  [https://www.shrm.org/topics-tools/news/hr-magazine/performance-review-problem]