Performance Management at Deloitte: Frequent, Holistic, and Focused on Growth

Deloitte is a corporate giant, a beacon of success. But beneath its grandeur lies a secret weapon, not hidden in its financial reports or market strategies but in the approach to people management. Deloitte's story isn't just about numbers or targets; it's a story of nurturing growth, fostering potential, and embracing change.

Companies that don't evolve and adapt to changing business and societal circumstances will fail to harness the full potential of their workforces.

Deloitte stands out as a champion of innovation and change in people management. 

Ranked as one of the top 20 companies to work for in 2023, Deloitte went through a major overhaul of its performance management approach in 2015, delivering better engagement and more growth-oriented outcomes for its workforce.

So, what makes Deloitte's performance management system so successful?

This case study will scrutinize how Deloitte's system works, how it evolved, what sets it apart, and how you can replicate its key features in your organization.

⚒️ What is Deloitte's performance management system?

Assessing employees' performances against their objectives, i.e., employee appraisals, is no easy task. Organizations need to balance their business needs with those of their people, aligning personal, aspirational, and organizational goals.

An effective people performance management process captures several dimensions, including the key aspects of performance management and performance appraisals. This means nurturing and promoting a high-performance culture while also assessing employee performance in a meaningful and informative way.

Deloitte's performance management approach has undergone a major redevelopment to repurpose its objectives and serve as a holistic developmental tool rather than a benchmarking device.

Deloitte's leaders also reframed the focus of performance management towards what leaders would do with their team members in the future rather than rating them on past performance.

"What is the purpose of performance management at Deloitte?" is a question that Deloitte's leaders considered carefully, explains Erica Bank, Deloitte's US Workforce Strategy and Innovation Leader. ‍

"We conducted focus groups across the firm ... and crystalized three primary purposes for performance management."

Based on their people's feedback and following a period of introspection, Deloitte's leaders established three new goals for a renewed performance management approach:

1. Recognize performance.

2. See performance clearly.

3. Fuel performance.

Deloitte addresses these goals using seven essential themes.

Recognize performance

Deloitte's system seeks to promote sensible compensation and merit-based promotions, recognize people's strengths, and identify low performers.

1. Shift from annual to regular feedback

Deloitte shifted from annual performance reviews to more frequent "performance snapshots" and check-ins that feed into succession planning, development strategies, performance analysis, and more.

The performance snapshots and check-ins are augmented by surveys, talent reviews, and other processes designed to measure, reward, and improve performance.

With the shift to more frequent and information-rich feedback, "Deloitte has taken an important step forward in developing a richer understanding of each employee's strengths and capabilities," says Deloitte's US CFO Insights: Performance Management Strategy.

"If you want people to talk about how to do their best work in the near future, they need to talk often," explains Marcus Buckingham and Ashley Goodall in a Harvard Business Review article. Buckingham and Goodall are performance management experts and former directors of learning at Deloitte, respectively. "And so far, we have found in our testing a direct and measurable correlation between the frequency of these conversations and the engagement of team members."

2. Simplification of the review process

The new system reduces the complexity of performance reviews, introducing a short, four-question survey for managers to complete after each project or at least quarterly.

The survey asks leaders to answer the following questions about their people based on what they know about each person's performance:

1. If it were my money, would I award this person the highest possible compensation increase and bonus?
2. Would I always want them on my team?
3. Is the person at risk for low performance?
4. Are they currently operating at the next level?

The questions are designed to be future-focused and move away from traditional assessment criteria, such as skills, and toward the feelings and intentions of the reviewer.

"We ask leaders what they'd do with their team members, not what they think of them," say Buckingham and Goodall.

Deloitte's leaders get more accurate feedback about their people from these questions, and the responses help guide subsequent conversations about promotions and improvements in the future.

3. No more forced rankings

Deloitte abandoned the traditional "bell curve" system of ranking employees.

Deloitte's leaders seek a multidimensional understanding of employees' aptitudes, interests, contributions, and potential. Deloitte favors recognizing and nurturing individual strengths, which may not always be neatly quantifiable using a simple ranking system.

See performance

Deloitte's leaders want information that gives them a view into the performance of the organization to help them decipher:

• How performance trends differ in different parts of the organization.
• Who needs improvement.
• What business leaders can do to influence performance outcomes.

4. Using technology

Deloitte's system allows its people to understand and explore their strengths through a self-assessment tool, allowing employees to learn more about their performances and share their strengths with colleagues, leaders, and others.

The new technology was a first for Deloitte's people, so it boosted engagement in a way that had not been seen before.

The technology is designed to highlight employees' strengths, as Deloitte sees this as a significant contributor to future performance potential. It's also designed to be simple, quick, and easy to use, encouraging interaction and sharing.

Deloitte introduced a mobile app to complement the technology platform, facilitating regular check-ins and real-time feedback between team leaders and their people. This makes the feedback process more agile and user-friendly. 

5. Rating the reviewer

One of the innovative features of Deloitte's performance snapshots is that they require reviewers to rate their own actions rather than the qualities and behaviors of their team members.

This unique approach to talent management promotes a more proactive stance in forming people assessments.

The process prioritizes the subjective judgment of the raters, i.e., team leaders, as they're closest to their people's performance and best placed to form assessments. It excludes other (functional) managers or peers in the interests of simplicity.

Fuel performance

Deloitte's system not only identifies and monitors currently observed performance but also drives future performance.

6. Focus on future development

The system prioritizes forward-looking conversations, such as those prompted by the four survey questions that leaders ask of their people. There's also an emphasis on discussing how employees can develop and grow in the future, including leadership development, rather than focusing on past performance.

"We've shifted from a batched focus on the past to a continual focus on the future", explain Buckingham and Goodall. "As we've tested each element of this design with ever-larger groups across Deloitte, we've seen that the change can be an evolution over time."

7. Emphasis on team performance 

The system leverages the benefits of collaboration at Deloitte. It places a greater emphasis on team performance rather than individual achievements.

"The beauty of the data is it sits at team level," says Alec Bashinsky, former Deloitte partner, about the information gathered through the performance system. "The way the questions are phrased, I can actually gauge the pulse of my team, how effectively they're working, how fully engaged they are ... This is now enabling us to ... focus on the effectiveness of the team, and that's been a huge outcome for us".

The system's design provides better support for high-performing teams than in the past.

Here's a summary of Deloitte's approach to performance management:

👀 Why was there a need for a new performance appraisal system at Deloitte? Five reasons

Deloitte's decision to revamp its performance approach was driven by critical shortcomings with the old system.

Inefficient and time-consuming reviews

Deloitte's old system consumed vast amounts of time and was bogged down by complexity. It involved lengthy forms, extensive documentation, and a cumbersome process of gathering and consolidating feedback from multiple sources.

"We tallied the number of hours the organization was spending on performance management and found that completing forms, holding the meetings, and creating the ratings consumed close to 2 million hours a year", recall Buckingham and Goodall.

Despite the time spent, the system diverted attention from the core purpose of performance assessments, and the derived ratings didn't provide meaningful insights into employees' performances.

"The traditional process itself is highly administrative," explains Bashinsky, and "the ratings don't correlate to any metrics."

A lack of engagement and falling levels of performance

The old system was seen as a bureaucratic exercise that lacked relevance to employees' daily work. Deloitte conducted a survey that showed their leadership team felt the system neither drove employee engagement nor high performance.

Rather than focusing on career development, the system encouraged lengthy internal discussions about rating outcomes.

"As we studied how those hours were spent, we realized that many of them were eaten up by leaders' discussions behind closed doors about the outcomes of the process," say Buckingham and Goodall.

There was a need for something more agile, real-time, and individualized to re-align the system's focus on engaging Deloitte's people and harnessing their potential.

Focus on the past

The system was focused on past behaviors and performances and was not designed to prioritize future outcomes. Its backward-looking approach didn't offer employees constructive guidance on improving or developing their skills in the future.

"We wondered if we could somehow shift our investment of time from talking to ourselves about ratings to talking to our people about their performance and careers—from a focus on the past to a focus on the future," reflect Buckingham and Goodall.

The system also failed to address the changing nature of work, which calls for adaptability and continuous learning.

Infrequent information

The legacy system used a cumbersome and infrequent annual 360 degree feedback approach. In comparing the 360 feedback approach with a performance appraisal approach, the system had the advantages of multi-directional and holistic feedback but lacked timeliness.

The infrequent annual feedback cycle meant that feedback was often outdated by the time it was delivered. Opportunities for timely changes of direction or developmental guidance for employees were missed, and Deloitte's people were left without a clear understanding of how their day-to-day activities aligned with Deloitte's expectations and goals.

Inadequate focus on strengths

The old system emphasized weaknesses or areas for improvement rather than employees' strengths. This was demotivating. It also diverted attention away from opportunities to leverage the areas where Deloitte's people performed well.

"I would say, as a general statement, that 2–3% of any organization's workforce is not great, for a whole range of reasons", says Bashinsky, "but we put 97% of our people through a negative process. That doesn't mean you don't manage out poor performers—because you do—but it's about focusing on the 97–98% of our good people and, building on their strengths, and helping them grow within the organization... The process is not transparent, and it focuses on the weaknesses."

➡️ See how Cisco develops its people through a commitment to innovation, development, and collaboration.

🗝️ The key to Deloitte's performance review success

Here are seven features of Deloitte's performance management approach that make it stand out from most other organizations.

Frequent, informal check-ins

Unlike many organizations' annual or semi-annual reviews, Deloitte's system uses frequent, informal check-ins. These are not tied to compensation or formal evaluation criteria, and they encourage Deloitte's people to be more honest and constructive compared to the assessment frameworks used at other organizations.

Performance snapshots

Performance snapshots are a unique feature of Deloitte's system. In contrast to the lengthy review process typical at many other organizations, performance snapshots are concise, quarterly surveys seeking feedback from Deloitte's leaders about their team members. They are a significant departure from the volume of forms and checklists that were a part of Deloitte's old system, and that's typical of many systems today.

The performance snapshot responses are confidential, and the data is aggregated to provide a timely, realistic picture of how teams perform.

"We set out to develop a framework that was simple, local, and focused on real-time data and on individuals' strengths," explains Bashinsky.

Future-focused feedback

Most systems at other organizations are set up to evaluate past performance. In contrast, Deloitte's system—particularly through its survey questions—is designed to gauge future potential. It seeks to assess the likelihood that a team leader would want to work with an employee again or whether that employee is working to their potential, amongst other factors.

The system aims to drive future performance rather than dwell on past performance.

Simplified rating system

Deloitte's system features four questions and a five-point scale. This is far simpler than the complex systems found at other organizations and helps to reduce the biases that tend to appear in those complex systems.

The simplicity of Deloitte's system aims to capture the nuances of performance more accurately by providing a clear and easy-to-digest process while directly aligning employee goals with organizational priorities.

Emphasis on strengths

In developing the new system, Deloitte's leaders ran empirical studies on their strongest-performing teams. "We were overwhelmed by one of our findings," says Bank, "performance, retention, and client satisfaction are strongly predicted by our people's beliefs; they are playing to their strengths."

As a result, Deloitte designed its system to be heavily strengths-based, focusing on what employees do well and how they can leverage their strengths to perform at their best. This contrasts with the systems at many other companies that focus on weaknesses.

Cultural integration

Deloitte's system closely reflects its broader cultural evolution, emphasizing agility, continuous learning, and a developmental mindset. This goes beyond process changes and promotes a progressive philosophy about employee growth and organizational success.

Deloitte's system differs from the performance management frameworks of many other organizations, where the systems are less integrated with the cultural direction of the organization.

Research-based approach using technology-driven insights

After extensive, in-depth research into what drives performance, Deloitte's new system was developed, resulting in an evidence-based design that sets it apart from the systems at many other organizations.

This data-driven approach is maintained through tech tools that continuously collect and analyze performance data. Using technology in this way assists real-time analytics. It provides more timely and insightful feedback than the annual or bi-annual performance data collection at most organizations.

➡️ How can you implement a performance management system like Deloitte?

Zavvy can help you implement a performance management system that emulates the best elements of what Deloitte does.

Process efficiency

Deloitte overhauled its system to cut down on bureaucracy and remove inefficiencies. 

With Zavvy, you can use powerful tools to make your performance management processes more efficient and automated.

For instance, you can set up a fully customizable employee feedback system using Zavvy's 360 feedback software, which lets you solicit upward, downward, peer, and self-feedback.

The extensive features of the software allow you to build a flexible system using advanced tools and settings, including:

• Survey templates, developed by Zavvy's learning scientists, using cutting-edge research to prevent biases and remain robust to poor-quality data.
• An easy-to-use feedback builder that's highly customizable.
• Advanced anonymity settings, allowing you to decide which feedback should be anonymous and which should not
• The ability to mix and match elements of frameworks such as competency-based, culture-based, and teamwork-based approaches.
• Career paths and role level descriptions that clearly articulate the characteristics of different levels of your career framework, providing role clarity for the tasks, deliverables, processes, goals, and KPIs of each role.

You can also save time and stay on track by using Zavvy's automated features—automate feedback discussions and set up times to discuss and share feedback, for instance.

Frequency of assessments

Deloitte shifted from annual to regular feedback, including quarterly performance snapshots and weekly check-ins.

Zavvy helps you quickly implement frequent check-ins using the one-on-one meeting software.

You can set the frequency, day of the week, recurring questions, agenda for one-on-one meetings, and check-in cadence. 

You can also keep track of tasks and write private notes while checking in on blockers, task loads, and the well-being of your people.

You can also set up multiple check-ins with the same team member, each with a different focus: performance check-ins, development conversations, goal check-ins, etc.

Deloitte's performance snapshots are vehicles for team leaders to capture their assessments of each of their people's performance at a moment in time.

You can emulate performance snapshots with Zavvy by:

• Setting timelines for the snapshots.
• Customizing evaluations with selected questions designed to extract the insights you seek. Deloitte crafted a series of questions that asks managers to assess their own intended (future) actions about their team members based on what they know about their performance (rather than what they think about them personally).
• Making participation easy using Zavvy's automation features.
• Selecting participants for each review cycle.

Focus on strengths

Deloitte's system emphasizes strengths rather than weaknesses.

You can use Zavvy to help you develop and grow your people based on their strengths in several ways.

Start with a thorough understanding of skills across your organization using a skills matrix to map out where your people's strengths are, visualize talent densities, and identify development opportunities.

Use career pathing software to set clear goals for every role and level, map out relevant pathways for each employee based on their strengths, and use objective data to guide and motivate them.

Build out pathways efficiently with powerful templates and Zavvy's AI capabilities.

Zavvy's AI tools help you build robust development programs quickly and intelligently:

• Establish meaningful competency models and career paths in minutes, using just a few clicks, and build frameworks for any size and setup.
• Create training and onboarding materials quickly and efficiently so you can spend more time strategically tracking and improving your content.
• Close the gap between development goals and training by populating your people's development plans with concrete, skills-based training suggestions in seconds.
• Run growth-oriented feedback review processes by directly connecting results to concrete actions, such as development plans and training courses.

Look to the future

Deloitte prioritizes forward-looking conversations and future growth.

Using Zavvy, you can focus on your people's future growth and development by:

• Establishing employee growth cycles that encourage your people to define development plans that reflect their aspirations and future potential.
• Monitoring and supporting your people's employee development plans.
• Developing competencies that benefit your people's specific needs, e.g., enhancing sought-after skills in fast-emerging technologies such as AI and data analytics.
• Developing the leadership potential of your emerging leaders with programs such as the Microlessons on Leadership. These are designed to hone leadership techniques through practice, repetition, and mastery and are used by leading organizations such as N26, Deezer, and Google. The microlessons include "nudges" to help learners apply the techniques to their everyday routines, helping them become more efficient leaders through practice and self-reflection.

📅 Book a free 30-minute demo to see how to bring out your people's full potential using a performance management system that emulates the tried-and-tested ideas from organizations like Deloitte.