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3 Changes Your Company Should Make to Performance Management in 2017

Managers and employees alike are stressing because they're about to have their dreaded year-end performance review. Fix that.
3 Changes Your Company Should Make to Performance Management in 2017
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This may be the happiest season of the year, but for many managers and employees, things aren’t all that merry and bright.

Related: Should You Ditch Annual Performance Reviews? It Depends.

Many are stressing about whether they've put in enough face time with the boss or clocked enough hours at the office. Why the trepidation? Because they’re about to have their dreaded year-end performance review.

Things maybe different this year, however. Thirty-seven percent of people in the United States work from home an average two days per month, and we’ve seen the number of those telecommuting full-time swell by 103 percent over the past decade.

This fast-rising rate of remote workers, combined with the ever-present talent war, is forcing companies to reexamine not only their stance on staffing telecommuters, but also the ways in which they go about evaluating their performance.

Millennial employees now make up a significant part of the workforce -- more than one in three, to be exact -- and they are driving the biggest overhaul of performance-management standards in decades. Both millennials and Gen-Xers see work and life as closely intertwined; they tend to want a different kind of relationship with their managers, and more frequent feedback.

No trophy necessary

Never ones to accept the “that’s just the way it’s done” mentality, most millennials -- or, more precisely, 62 percent of them -- report staying with their employers longer if they feel like they can talk to their managers about anything, including non-work-related issues.

This new wave of workers craves employer-employee relationships based on growth, not rewards.

Related: Millennials Are Not the Only Ones Who Want Feedback

In the past, professionals wanted swanky corner offices, company cars and personal secretaries. Today, the focus is on work-life integration. People want the flexibility to move to a new city, state or country and pursue their passions while they’re still working for your company.

Throw remote workers into the mix, and you can really measure your team members’ productivity only by the quality of their output, not how many hours John put in or how long Jill came into the office for. As salespeople have long known, results are what truly matter.

Instead, focus on outcomes to evaluate productivity and determine opportunities for future improvements. The worst performance-management decision you can make is to reward employees who try but consistently fail to reach needed outcomes by working hard, not smart.

New performance standards

Performance evaluation often quantifies how much face time employees put in, not necessarily the quality or outcome of their work. The problem with this approach is that involvement and engagement are not one and the same. To ensure your team members feel supported and valued, measure output, not time spent.

Here are some tips we’ve implemented in our own remote organization that should become standard for any team.

1. Align employee expectations with company goals. 

This is key to engagement. By clearly defining our overarching goals, we clarify what accountability means and what each person’s top five responsibilities are; in this way, we help our team members align their activities with those expectations.

Systems such as the Entrepreneurial Operating System (EOS Traction) or Rockefeller Habits (Gazelles) can help in this regard.

Zoup! Systems, for example, was able to keep its staff focused on its vision after taking EOS companywide. Its leadership team now uses this system to track sales and the cost of goods and labor through a weekly scorecard, which last year helped the company chalk up $48 million in revenue.

You, too, should clarify how team members will be evaluated, and let them know how to win. If they don’t know the rules of the game, don't know the goal or how to keep score, they'll find it difficult to strategize their day-to-day efforts to achieve success.

2. Tie evaluations directly to core values. 

If team members don’t know what you value, how can they target their behaviors to meet expectations? Without clear core values, you’ll struggle to hire the right talent and to cultivate a strong, happy, productive culture in which people are accountable for their work with little to no oversight.

Evaluate fit as much as skills. If you’re hiring a remote worker, rather than just looking at what applicants can produce, look for experience working from home. Learn what traits your successful employees have in common and how to identify those qualities in your candidates. 

To keep our own company's core values top of mind, we recognize people who embody those values with shout-outs on our biweekly company video calls. We also give out core-value awards at our annual summit.

After reading aloud what nominators said about them, we announce these winners' names. Our team members strive -- consciously and subconsciously -- to receive this honor.

3. Provide constant feedback. 

Younger, remote workers want greater accessibility to leadership, and, as a result, an annual performance review just won’t cut it. In fact, 69 percent of workers ages 18 to 34 surveyed have said they find the “traditional” performance review to be flawed. They want a mentor, not a boss.

We take a proactive approach to feedback by sending out weekly surveys to staff and conducting quarterly check-ins. A number of effective strategies help us stay on top of employee sentiments and whether team members are on track for meeting their goals and objectives.

One strategy is our rule to give feedback on something within 72 hours or let it go, as quarterly check-ins shouldn’t address issues that should have been discussed long ago. 

To do something similar, when you schedule your regular meetings -- both one-on-one and all-staff meetings -- take advantage of every opportunity to publicly recognize your team members’ performance.

You can even open the floor to team members and allow them to shower a little praise on their colleagues. Your team will feel good about themselves, and appreciated for their work.

Related: Five Steps for Giving Productive Feedback

A talent war is under way, and it’s becoming harder to find the people who are both a cultural fit and a skill fit for the job. Then, once you bring real talent on board, you must do everything in your power to keep them, and that likely means changing the way you evaluate employee performance.

If they don’t "feel the love," chances are they’ll look for it elsewhere.

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