5 Behaviours Driving the Future of Performance Management
The way we look at performance management is beginning to change. Executives are finding that current approaches are driving neither engagement nor better performance, whilst employees look for a richer, more agile process that can offer regular feedback and coaching, and an ongoing assessment of how they are performing against expectation. The attraction, retention and engagement of talent remains a key priority for business and performance management has an important part to play – too often appraisals on performance become reviews on the individual.
Traditional performance management has annual goals (set historically for the coming year), cascading objectives, a backward looking assessment and an annual ranking or review. Much like a school report. But just as students generally need to know in real time where their efforts are falling short, so do employees – particularly as we look to them to undertake more responsibility for their own development.
Increasingly complex, competitive and fast-moving trading conditions are driving businesses to want quicker insights into performance and motivation; goals and objectives need to be more flexible and managers need to know who is performing well at specific times and how to improve the performance of those who aren’t. Objectives can’t be set for 12 months if a manager can’t be sure of their business priorities in three months time, whilst research has already shown us that 61% of a performance rating is usually a reflection of the rater not the ratee. Distilling annual performance into a single rating ignores the much broader and more nuanced set of actions, influences, skills and capabilities that determine an individual’s contribution to the business. Clearly a one-off annual review no longer seems fit for purpose – performance management is no longer an event but becoming a continuous process.
Businesses are now moving away from annual rankings and reviews. Microsoft, for example, have changed from an evaluation focus to a growth focus, replacing their existing ratings and calibration approach with an ongoing, continuous dialogue between managers and employees aimed at helping the latter to continually learn, grow and improve results through stronger impact and greater collaboration. Employees now think in terms of individual accomplishments, the contributions they make to others’ success and how they leverage others’ ideas, whilst managers have embraced the opportunity to assess performance without rating.
At Deloitte the focus has similarly moved away from annual rankings, to recognise varying performance and insights through quarterly or per-project ‘performance snapshots’, seeking to improve performance rather than measure it. This relies on regular, weekly conversations between employee and manager and a focus on individual strengths.
Performance is clearly becoming a much less tangible, less measurable concept. As our understanding of how it impacts our business objectives, and is likewise impacted by organisational structures, increases so the way we assess and evaluate it changes, and with this comes the need for organisations to have a culture that embraces new behaviours.
These are the 5 top behaviours that we should be encouraging:
Transparency – New approaches call for transparency, with open, constructive and honest feedback. Much like the ‘leadership culture’ that I referenced in an earlier blog, a performance culture needs to grow around similar foundations, with mutual responsibility – employees own their development whilst managers undertake to discover and develop potential. Transparency also works two ways, with managers’ goals often being visible to their teams as well as peers.
Feedback – The ability to give constructive, honest feedback is a skill, and one that should be recognised and developed early on, not added as a module on a leadership development course. For a growth focused approach to work well employees need regular feedback with managers, and on-going conversations about work and priorities, with an understanding of how their performance is being evaluated. We need to up-skill our managers to have insightful conversations too.
Collaboration – Performance management previously focused on the individual and their own tasks, with evaluation very much between them and their manager. The new processes favour a much more collaborative approach. Each employee is evaluated on their contribution to the wider team or business objectives, and feedback is taken from colleagues as well…in some cases feedback from customers and clients should also be considered.
Agility – The pace of change within businesses means that goals and objectives can shift regularly. Previous approaches relied on annual goal setting in advance but newer processes allow for goals to be adjusted during the year in response to changing priorities. Performance management is no longer static but needs to be flexible and responsive, and will need managers and employees who are comfortable with this.
Impact – As the focus shifts from purely the individual to a broader work environment so performance becomes more about the impact and influence that each employee has on their team and internal network. How have they contributed to the business and other individuals, and how have others helped them? Managers will need to understand how impact and influence work internally and develop ways to encourage and assess it
(image courtesy of Top Employers Institute report)