There is growing momentum within large corporations to develop a strong performance culture and increase individual accountability for productivity. As a result, low performers who typically maintained their rank year after year are being weeded out in favor of more motivated workers, according to The Wall Street Journal.
For example, in years past, having a job at Kimberly-Clark meant a secure job for life. The company offered competitive salaries and avoided layoffs, and even those who contributed little rarely felt pressure. "A lot of people could and would hide in the weeds," Rich Herbert, a former sales director at Kimberly-Clark, told The Wall Street Journal. Now, one of the company's main goals is "managing out dead wood," with the help of performance management software that monitors and assesses employee progress. As a result, turnover has doubled in the last decade.
This attitudinal shift mirrors changes occurring within numerous large companies in a variety of industries. Now, preferred methods of performance management include continuous oversight and feedback intended to drive improvement, as opposed to annual reviews. Many companies, such as Accenture and General Electric, have dropped annual performance reviews altogether.
A variety of factors accounts for this change, according to the report. For one, the latest nationwide recession forced many employers to rethink the almost automatic annual raises they had been handing out, and instead now more carefully identify high and low performers when giving promotions and raises. Another reason is millennial employees demand more coaching and feedback on a regular basis.
Companies spend $14 billion a year on products that support employee management and human resources, with about $2 billion of that dedicated to performance management, according to Deloitte. Such systems allow managers to track employees' progress through dashboards that include their goals, accomplishments, attendance, peer feedback and other data, according to the report.
And these measures make a visible difference on organizations' bottom lines. According to Nicholas Bloom, PhD, an economist at StanfordUniversity in Palo Alto, Calif., companies that set goals and develop cultures of accountability have faster growth, higher profitability and are less likely to go bankrupt, The Wall Street Journal reported.