Blog: Changing nuances of performance management

Performance Management

Changing nuances of performance management

Performance Development is an important aspect of the employee experience that is being increasingly re-defined. There are 7 mega trends that are becoming the “new normal” and would go a long way in how performance is both measured and developed.
Changing nuances of performance management

The difficulty lies, not in the new ideas, but in escaping from the old ones - John Maynard Keynes

An interesting analysis by Gallup suggests that only 2 in 10 employees say their performance is managed in a way that motivates them to do outstanding work. The other 80% of employees have probably echoed a sentiment that has finally made its way to the custodians of performance policies in organizations worldwide.

In the last few years, organizations around the world have radically changed the way they manage and develop employee performance. Performance Development historically has been a complex mechanism - the idea of relegating an entire year of an employee's life to one number (THE rating!) has been up for a fundamental discussion time and again. 

Come 2020 - the pandemic wreaked global havoc in an unprecedented manner. Disruptions that had already started presenting themselves at the workplace, found an accelerator leaving very little space for innovation and experimentation. Remote working, gig/temp economy, highly matrixed organization structures, added dimensions to the idea of diversity, and mental/social Well Being have redefined the contours of employee experience. 

Roughly a year ago, the questions that plagued companies in the country were to do with the hygiene of making “the biggest remote working experiment of the world” come to life. How do we keep teams technologically connected? How do we collaborate daily? How do we respect individual and family boundaries? These issues and challenges are more or less settled as we speak, and now the discussion is primarily about ensuring and enhancing performance in the face of these disruptions that are a way of life now.

Performance Development is an important aspect of the employee experience that is being increasingly re-defined. There are 7 mega trends that are becoming the “new normal” and would go a long way in how performance is both measured and developed:

Mega Trend 1: Increased Flexibility

Teams are geographically spread, and this implies reduced command and control. The implication of this on performance development is increased delegation and flexibility to team members to have a bigger sense of control over what they do and what gets measured; Some call it “priorities” while others call it “objectives” - the semantics can be varied. 

Organizations like Google have long adopted philosophies like ‘OKRs’ - Objectives and Key Results as a flexible methodology in goal setting that helps companies align goals and ensure everyone is working on things that matter.

Mega Trend 2: Increased Agility

Agility of workplaces has presented itself and manifested in different ways. Goals, objectives, and targets are no longer subject to the constraints of the realm of traditional financial and fiscal years - work is fast-paced and continuously changing and therefore goals need to reflect such changes. Further, an interesting report by the World Economic Forum outlines skills that are likely to become redundant by 2025. This itself presents the need to be agile in the skills that employees would require sooner rather than later. A backward-looking performance system may not be the solution to either of these issues.

Mega Trend 3: Culture of continuous coaching

The changing face of performance development recommends a culture of continuous feedback, check-ins, coaching, and course correction that gives employees a sense of control over what they can do differently. The role of managers, supervisors, and team leaders has transitioned to a player-coach from being a traditional boss. Research on neuroscience also tells us that goal striving is a bigger motivator than goal-setting alone. By ensuring regular check-ins, employees tend to be more motivated and engaged towards their goal achievement. 

Technology, fortunately, has come to our aid in these times. There are performance applications that are built to facilitate real-time feedback, on-the-spot recognition, and collaboration tools. To make conversation easier and more meaningful, organizations are relying on building “listening guides” that help managers ask the right questions of the teams and guide a more outcome-based conversation.

Mega Trend 4: Move from Annual Reviews 

Performance development was always envisaged as a marathon of activities through the year but in most cases, it turned out to be a 100-metre sprint that more or less started and ended with the annual review. Reviews often looked back at things that happened in the past, with little focus on the future - Not only was this demoralizing but was also unactionable. 

Further, the annual meeting between the manager and their team members tends to focus on issues of pay and promotion with no one thinking about development and growth. With the changing nuances, annual reviews will still happen - albeit, the most effective ones being those that are a culmination of all the regular conversations that have happened between the manager and the employee over the year.

Mega trend 5: Data and Technology for better Performance

With an increase in the number of touchpoints and better access to technology, there is far more data than what has existed in the past. Organizations need to make sense of this data in a manner that is predictive, holistic and developmental. For example, combining performance ratings with peer feedback or potential assessments is becoming a widely used tool for de-risking critical positions and building a robust talent pipeline.  

Mega trend 6: Ethics and privacy

Organizations need to be a lot more conscious about the implications of technology in the ethical context. Data is available but there is still a grey area because we haven't yet figured out as a society who owns that data. The good news is that global companies are trying to follow a stricter protocol than what currently may be warranted in their country of operation. For example- even in the US, many companies are following European data privacy standards.

Mega trend 7: Replacing performance ratings with talent actions

Giving performance rating is like labeling employees which also becomes their identity in organization. For example - A person may have been a low performer due to certain circumstances but it will affect employee’s present as well as future. 

Organizations like Adobe, Microsoft and Accenture have all stopped using a single number to define performance of their employees. Replacing performance ratings with talent action is the need of the hour as it is a forward looking action which will help employees grow in a much better way.

Broadly speaking, there can be four target actions for employees:

  • Outperforming employees: Promote them and start thinking about their next role.
  • Good performers but need to upskill: Give or find projects for them where they can grow based on their strengths and skills
  • People who are not performing to their potential: These employees have performed well in the past but lately, they haven’t been motivated enough. Why not talk to them, find out what’s coming in their way or maybe change their roles?
  • This one is difficult but most crucial one: Those people who do not have the right characteristics or mindset, transition them to a different organisation where they can give their best.

It’s understandable that in this current context, managers feel that they are losing control- the sense of control they want to make decisions on the team's behalf, which may be slightly away from how the corporate cultures are shaping up today

It may be worthwhile for organizations to spend time with their managers and help them be more aware of their own strengths in leading high performing teams - Managers play a disproportionate role in shaping a performance-oriented and engagement based culture and it’s only fair that companies empower and equip these critical strata in building future leaders.

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Topics: Performance Management, #GuestArticle, #RethinkPerformance

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