Part 2 of our coverage on performance management systems for business and HR leaders
Today’s business climate and world at work require a fresh perspective towards how we take on performance management and people development.
In any given organization over the course of an annual performance cycle, strategies evolve, goals shift, and employees often switch between multiple projects under various team leaders. The workforce today also actively seeks real time information on performance that informs them about their progress and motivates them to do better. Given this dynamic, it is hardly surprising that 70% of the organizations surveyed by Deloitte stated that they are either currently evaluating or have reviewed and updated their performance management process in the last 18 months.
In a world where employee retention and workforce capability are significant indicators of business success, the performance management process should focus on continuous coaching and forward looking development, rather than retrospective and competitive evaluation.
In this note, we try to unpack a few determining components of a future ready performance management system.
1. It builds transparency and enables visibility
Employees need to feel there is a connection between their day to day effort and the needs of the business. According to a recent talent survey by Ceridian, 92% of respondents who feel their work makes a business impact are happy with their jobs and more likely to apply high levels of effort towards meeting purposeful goals.
While setting and communicating goals, key job expectations and responsibilities should act as the main guide and reference. Goals should not only address what is expected, but also how it will be achieved and why it’s important. The ‘what’ covers quality or quantity expected, deadlines to be met, cost to deliver, etc. The ‘how’ refers to the behavior to be demonstrated to achieve these outcomes, for example, ‘how’ to focus on customer service. The ‘why’ explains the link between individual goals and the organization’s strategic priorities, for example, becoming leaders in a certain market segment. In addition, some organizations choose to include competencies or core values within performance expectations, to reinforce the link to desired organizational culture and values.
2. It allows for evolution and adjustment of goals
Organizations where employees review their personal goals quarterly—or even more often—were nearly four times more likely to score at the top of Bersin by Deloitte’s Total Performance Index.
Some goals, like your desired customer NPS, might remain steadfast. However more often than not, fluctuations in the business environment will call for goals to be revisited and adapted in line with the current scenario. Employees in agile and dynamic teams also often find themselves being allocated new projects and tasks that can’t be attributed to the goals they set at the start of the year.
Successful organizations allow for goals to be changed and targets to be altered if the assumptions used to set them change unexpectedly. This helps ensure employees actually have relevant goals they are working towards every day, and all their contributions are duly accounted for in any performance related decisions.
3. It enables employees to receive timely feedback and promotes honest dialogue
According to PwC, nearly 60% of survey respondents reported that they would like feedback on a daily or weekly basis—a number that increased to 72% for employees under age of 30. Successful organizations focus on on-going feedback provided informally in the natural flow of work and rapid feedback loops that give people specific and actionable inputs to implement in real time, learn from and course correct before it is too late.
Leading players like Accenture, Adobe and Deloitte have reported that regular, organic and multi-directional conversations between managers and their team members in the form of informal team check-ins have led to more meaningful discussions, deeper insights and greater employee satisfaction. Adopting this practise requires performance management processes to also include building skills in managers to not only give better feedback themselves but also promote a culture of authentic feedback without a fear of conflict within their teams. When upgrading your performance management system, look for ways to support your managers and enable practises like ongoing team check-ins and manager 1:1s.
4. It leverages the power of social recognition and celebrating small wins
Social recognition has been known to improve employee productivity by over 60%. Mozilla, like many other leading organizations, discovered the power of social performance management early on. Debbie Cohen, VP HR once stated “Mozilla was experiencing large, global growth. We needed iterative, ongoing dialogue on the impact of contributions. At the same time, we wanted to build community and recognition.” By allowing employees to socially recognize a job well done, a helping hand, someone going above and beyond, or even company values demonstrated in the moment, organizations can promote a culture of collaboration, improve engagement, increase job satisfaction and motivate employees to improve performance.
Additionally, social recognition also promotes building on one’s strengths rather than highlighting one’s weaknesses. A Gallup study found that teams with managers who received recognition on their strengths showed 12.5% greater productivity than teams with managers who received no recognition. Good for the employees AND good for the business? Sounds like a win-win to us.
5. It unbundles performance development and compensation
People development is simply too important a subject to let compensation bury it. More often than not, when compensation, bonuses and increments come into play, authentic feedback and action planning around performance improvement takes a backseat. In addition, when employees are competing for their share of the bonus pool or chasing the highest individual rating, teamwork and collaboration gets significantly hampered. When you review performance, the focus must be purely on what the employee did and how he or she can do it better next time. Whether you call this a performance review, a 1:1, or a check-in, it doesn’t matter. The key is to have an open and frank discussion where everyone involved listens and exchanges views.
While shifting focus to performance development, it’s also important to make sure employees understand how bonuses and increments are calculated. The more objective and transparent something is, the more accepting employees will be towards any decisions made in this regard.
Let fairness, sharing and transparency be your key values, and your people will reciprocate.
6. It bids adieu to old ‘bells’ and whistles
Research has shown that the distribution of employee performance more often follows the ‘long tail’ rather than the traditional ‘bell curve’ especially at talent-intensive companies that thrive on expertise and innovation. In other words, a small population of employees are top performers or ‘hyper achievers’, a small population of employees are low performers, while the large majority work at the middle level of performance. In industries such as software, a top performer can often outperform a mid-level performer by as much as tenfold.
Hence, your performance management system should be equipped to identify and treat high performers very well, while encouraging mid-level employees to improve through coaching and development. At Adobe, the new performance management system focuses on both ends of the performance curve—keeping high performers happy and offering practical advice for lower performers looking to improve. The results have been profound: Since rolling out the new approach worldwide, Adobe experienced a 30% reduction in voluntary turnover in a highly competitive talent environment.
Effective performance management for today’s (and tomorrow’s) world of work is both an art and science. It requires careful attention to both the intangible human aspects of performance development like coaching, ongoing feedback and social recognition, and the more tangible aspects of performance management like decisions around role changes, training and compensation. But the need to pay attention has never been more pressing.
Luckily, help is on the way. Mesh is a social performance management platform designed for today’s workforce, keeping these trends and needs in mind. Mesh makes it easy for employees to manage goals, track tasks, ask for feedback, share recognition, run team check-ins and 1:1s, all in the flow of work. It simplifies performance and project management processes and replaces the need for up to 4 different management tools with one daily social network for work.
Do you have any other tips or advise for managers to be better at leading teams? We’d love to hear from you. Write to us at firstname.lastname@example.org.