How Rethinking Performance Management Can Help Drive Business Success
By deconstructing performance management into the three separate micro-processes detailed here, we can ensure resources are used efficiently, our strategies have impact, and, ultimately, our business is a success.
Employee performance management is undergoing a crisis of confidence at the moment. Some multinational companies, frustrated by a lack of results, have scaled back the whole process. But rather than scrap it, I think we need to deal with its fundamental problem: the wrong belief that performance management is a single process able to achieve multiple, highly distinct outcomes. By deconstructing performance management into the three separate micro-processes detailed here, we can ensure resources are used efficiently, our strategies have impact, and, ultimately, our business is a success.
1. DEFINE, REWARD, AND ALIGN CONTRIBUTIONS
A never-ending issue with performance management is that tasks, such as appraisals, are done blind to business needs.
It's rare for organizations to cascade their goals. By which I mean business targets are aligned to the targets of the department, which are aligned to the targets of the individual.
This process enables employees to understand their performance rewards, because they have a clear knowledge of what the organization is aiming to achieve, and how their work affects it. It ensures performance targets are effective in terms of both employee and business growth. When goals don't cascade, we see a breakdown in employee engagement. This was highlighted in a Willis Towers Watson report on modernizing the employee value proposition.
Based on two surveys that collected opinions from over 2,000 employers and 31,000 employees, nearly half (45%) of employees complained there was no clear link between their work performance and pay. It's therefore unsurprising that a similar number (50%) reported that their organization did a poor job of explaining the performance management process.
So how can we set these cascading goals effectively? It goes beyond simply emailing the company goals to all staff on a regular basis.
Talent management programs should enable employees to view the connections between their own goals, team goals, and the corporate strategy.
Line managers should receive effective training on how to execute their performance management responsibilities, including a clear understanding of these cascading goals, and the need to deliver prompt, constructive feedback.
2. SUPPORT CONTINUOUS FEEDBACK
Another issue with many performance management programs is that they restrict feedback to specified times, such as an end-of-year review.
Yet the world is fast-paced. Projects frequently end in months, rather than years, making ongoing feedback paramount. It shouldn't be restricted by a performance cycle. A continuous feedback system is far more likely to create engaged employees, which feeds right into business success.
At this point, I imagine alarm bells are ringing in terms of time management. It's the obvious reason why this type of feedback system isn't more common.
One multinational professional services company estimates that just their traditional performance management process eats up two million hours of manager time per year. So, what would that figure be like if there was even more feedback?
Yes, it sounds a lot. But is this really the case? In the Willis Towers Watson 2016 Global Talent Management and Rewards and Global Workforce Studies, 53% of managers reported spending far less time on employee performance management than the "two million" figure may imply– just four hours or less per employee per year.
The fear that more feedback means more paperwork is real though, even if it does deliver more engaged and driven employees.
So, how can we offer more feedback without creating more work? This is where new technologies come in. Blockchain technologies, in particular, allow companies to build a system that allows real-time feedback, assessment of performance, as well as compensation decisions. Imagine a mobile platform, for example, that facilitates continuous feedback.
Coupled with cascading goals, this type of system could rapidly build a high performance, non-judgmental culture that drives the desired behaviors.
3. ENGAGE IN FUTURE-FOCUSED DEVELOPMENT Technology isn't just solving problems, though. Its rapid rise is also creating new challenges, particularly when it comes to how we work.
The traditional idea of a full-time job for life is under threat. Technological advancement is changing how we get work done and allowing organizations to deconstruct and disperse work across the world. Offices are becoming increasingly virtual.
This means employers need to adapt their approach to career management to foster employee attraction, retention, and engagement. In the Willis Towers Watson studies I mentioned, employers who provided good career planning tools and resources had 60% of their employees highly engaged.
Business success is therefore pinned on offering a performance management system with a robust career development program that supports talent growth.
The Middle East is one region having particular problems here. In 2016, one fifth (21%) of workers surveyed in the region said they received no career development discussion with their line manager in the past year. This compares with 11% globally.
So, how can we build a future-focused development program? It's vital that career planning discussions take place, so let's start here.
Ensure all managers understand this role, even in parts of the company where opportunities don't necessarily come frequently. After all, employees don't have to move laterally. There are non-traditional advancement opportunities, such as special assignments or secondments.
It's also vital to take the time to deconstruct jobs and build them back into tasks, which allows more control over the changing nature of work. By knowing what is likely to become automated, for example, managers can help employees look at roles that will offer stability and growth in the future.
Finally, invest in technologies to support such an approach including employee portals. These can provide employees with easy access to career management tools and resources.
Three micro-processes, one big difference
The debate about how performance management can drive business success has been going for as long as I can remember. But I can't recall a time when change was more possible than it is right now. By deconstructing that traditional view of how to manage employee performance, I hope I've shown that it's both possible- and necessary.