Article: How performance management systems are changing to drive engagement

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How performance management systems are changing to drive engagement

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The future performance management systems will become more qualitative based on the tenets of continuous feedback, ongoing dialogue, agile objectives, and a coaching focus
How performance management systems are changing to drive engagement

In an increasingly volatile, uncertain, complex and ambiguous world, the very fundamentals of performance are changing. The annual performance management is viewed as a process that is subjective, demotivating and time-consuming. The growing disconnect in enabling agility and the gap between the performance management processes and business outcomes has aggravated the need for change. If organizations do not address prevailing issues, this disconnect is only set to grow. Enriched roles with more responsibilities, new employment models, new-age skills and collaborative ways of working are a reality that demands a more attuned performance management paradigm. 

Agile feedback loop: 

According to a survey by CEB research, 49% of HR leaders have eliminated or are considering eliminating ratings with feedback becoming the core of performance management. And the feedback loop itself is getting shortened, with annual cycles being replaced with half-yearly, quarterly and even monthly ‘check-ins’. The ownership of feedback is shifting to the employee, and performance dialogues are taking a more ‘conversational’ form rather than mere metric based assessment. This has enabled a positive performance culture that focuses on improvement instead of reprimands. A case in point is Deloitte, which has eliminated annual ratings and reduced performance conversations to four simple questions. An employee-manager feedback ‘check-in’ on a weekly basis complements the company’s performance paradigm of recognizing, seeing and fueling performance for the future. Timely and ongoing feedback have been the cornerstone of this successful feedback loop adopted by other leading companies as well. 

Short term focus: 

A rapidly changing business landscape increases the propensity for short-term wins, giving birth to a short-term performance outlook. According to HR Influencer, Josh Bersin, “companies that set performance goals quarterly generate 31% greater returns from their performance process than annual ones, and monthly performance goals give even better results”. These short-term goals must be carefully devised in line the organizational objectives and must be flexible. A great way to make short-term goals work is for the managers and reportee to set up mutually agreed upon goals. This needs to be followed by periodic reviews and modifications through continuous feedback discussions. 

A people-development and coaching approach: 

The changing nature of work has led to complex responsibilities, exploratory tasks and collaborative workflows. As employees face challenges in aligning their performance to business objectives, the focus will be on enabling them to not only meet business goals but to also nurture the employee’s aspirations. A capable talent pool is a strong competitive advantage, therefore, professional learning and behavioral enhancement opportunities will help employees improve their productivity. An emphasis on learning and development also creates better employee engagement.

As the mix of work changes, the need for a learning organization will increase. As digital natives join the workforce, linking performance management to development needs will enhance the employer value proposition.  

Need for qualitative KPIs:

The changing nature of jobs and a need for regular feedback has necessitated an increased focus on qualitative KPIs. This would not only help managers have regular conversations with their reportee, it would help to identify key development areas and skill gaps. It is up to both HR and business to identify key qualitative performance measures. The demand for qualitative KPIs has also created an opportunity area for HR service providers to think of solutions that that map the career development areas 

Integration with business goals: 

With many companies moving away from ratings, companies will need to rethink their performance management strategies and its alignment with business goals. This means examining compensation structures, link with other benefits, enabling employees to meet business objectives through mentoring and coaching and mapping the values of the organization to their rewards mechanisms. Companies that have discarded ratings and rankings need to reflect on how best to link rewards to qualitative feedback received during ‘check-ins’.

A meaningful performance management system is an outcome of strong fundamentals aided by the right technology. Agile and ongoing performance management is the way ahead. The right technology should rely on automated tools to drive goal management, review communication, coaching support and performance visibility, all in real-time environment and with utmost accuracy. Continuous engagement based on openness and transparency is the key to unlock the advantage of happy and productive employees. 

Topics: Lets Talk Talent, Employee Engagement, Performance Management

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