FIVE STEPS TO IMPROVEMENT
There is little doubt performance management needs to lift its game. Many organisations are working to enhance their approach, with 45 per cent of survey respondents reporting their companies have moved from annual to ongoing feedback. That’s big news.
Yet the majority still lack confidence the changes being made will achieve the greater goal of aligning employee performance with business performance, especially as the nature of work and the workforce changes rapidly.
So what’s to be done? The research suggests five major changes will result in improved performance for employees as well as the business:
• Develop people through constructive conversations and coaching. Performance management is not just the formal assessment of performance.
It’s about the vital information employees need from their leaders and from one another to develop to their full potential. This is not news but we now have the data to prove high performance is not achieved without it.
• Create a culture of openness and transparency. Employees are rightfully suspicious — and can become unmotivated — when performance management is a ‘black box’ where both inputs and outputs are obscure and inconsistent.
Seventy nine per cent of leaders and 69 per cent of employees believe transparency is expected and even required in an era of open information sharing.
In a connected world, feedback will often become available through informal sources anyway. Organisations might as well get on the front foot.
• Personalise performance management. Some organisations are increasingly customising coaching and feedback, the goal-setting process and types of rewards and compensation, all based on the needs of individual employees or workforce segments.
They are doing away with annual performance reviews and moving to an approach that allows the company to better understand its people’s performance, skills, abilities and aspirations throughout the year.
• Move people decisions closer to the people. Many leading companies are eliminating ratings. This moves further towards business-led decisions, placing more decision-making power in the hands of leaders — or, sometimes, in the hands of employees themselves.
Supervisors are given flexibility in allocating rewards based on sound insight reflecting the business strategy as well as the budget. For example, rewards can be allocated based on real performance data which is often available from multiple sources in real time or survey data from all of an employee’s project leaders.
In some leading-edge cases, employees determine rewards for one another in a crowdsourced approach.
• Clearly define high performance and then track toward that vision. Sixty-five per cent of respondents (56 per cent of leaders, 73 per cent of employees) feel performance management does not adequately identify what high performance is and, correspondingly, who the high-potential employees are.
The changing nature of work in the digital, networked economy is causing organisations to radically rethink the very definition of exceptional performance.
They are redefining high performance to take into account collaborative work, effort or the ability to quickly learn new skills, as well as cultural criteria they want to encourage.