Traditional performance management techniques are more than 70 years old, and they’re not built for the way we work now. To address today’s HR challenges, you need a performance management model that puts people first.
“The pandemic, as well as the retention issues that we were seeing and the hiring issues that people were going through, really put a different spin on, ‘What is performance management doing for my organization?’” Stacey Harris, Sapient Insights Group’s chief research officer and managing partner, noted during a webinar with Betterworks CEO Doug Dennerline.
“People are realizing they need performance management,” Dennerline said during the webinar, “Connecting the Dots: A New Model for People-Centric Performance Management.” “They need some kind of process, and they realize the old processes aren’t going to do it in this new environment. They are searching for something different.”
Check out these highlights from Harris and Dennerline’s conversation about how performance management is changing, and how you can develop better processes for managing performance in your workforce.
A focus on the future
Sapient’s research found that only 68% of companies currently have a performance management approach or application, according to Harris. That’s down from 75% the year before, and the decline stands in sharp contrast to increases Sapient saw in learning, onboarding, and other categories.
“Our take on this is that people actually were making the decision to stop using performance management systems,” Harris said. The pandemic forced companies into remote workplace situations that overwhelmed managers and employees. People were experiencing burnout, and adding a traditional performance management process wasn’t seen as contributing value.
Beyond not adding value, the traditional annual review could actually do more harm in this environment than not having a performance management system at all. There’s a greater emphasis today on empowering people to perform at their best, but the annual review undermines that by forcing people into ranking systems that are often demoralizing and rarely (if ever) actionable.
In today’s fast-paced work environment, managers and employees alike find the most value in frequent, lightweight performance conversations, Dennerline said.
Wanted: Meaningful, timely feedback
About 60% to 70% of organizations are still using an annual or biannual performance management process, Harris said, citing Sapient data. This traditional approach is reactive, often tied to compliance, and belatedly addresses performance issues from a year earlier.
That’s the “irony of the performance management process,” Dennerline explained. “Candidly, it’s who you like and who you don’t.”
Proactive approaches are more effective. Check-ins are quarterly or biquarterly conversations between an employee and their manager, where they discuss the employee’s performance, how it’s tied to company goals, and what resources the manager can provide to help the employee improve or progress.
People want to feel like they are making a meaningful contribution, Dennerline said, to “feel like they know their work is actually helping the company achieve something.”
“I think that’s the piece that we’ve lost in this conversation,” Harris added. “We do a lot of thinking [about the data] we need for the company. I don’t know that we do a lot thinking [about the data] we need for the employee themselves.”
Using a people-centric frequent feedback model allows you to collect data on individual performance, and then interpret it in actionable ways through one-on-one check-ins between managers and employees. These kinds of conversations empower employees with a better sense of how they can improve moving forward.
Adapting to remote work
Remote work is still relatively new to many companies. Only 6% of companies surveyed by Sapient were predominantly remote before the pandemic; recent research shows that about 30% of organizations currently have 50% or more of their workforce working remotely.
This shift to remote and hybrid work environments requires a different approach to performance management, one in which everyone can quickly and easily see the top two or three personal goals that will help the company achieve overarching business objectives.
“It’s around, ‘What are you doing now? How can I help you? Do you have the tools you need? How can I lower barriers for you?’” Dennerline said. “It’s helping them achieve. And, whether you’re home or in an office together, you can see progress.”
Because the focus is on defining and achieving outcomes, the location where work happens is less of a factor. Employees and managers alike can quickly track progress and address obstacles.
Using data to invest in employees – not punish them
Dennerline doesn’t believe in employee ratings, a point which he made very clear in the webinar: “It’s a process that I really never understood when — especially if you’re doing a bell curve, a forced bell — you’re basically saying to 70% of the organization, ‘You’re mediocre,’” he said. “Where’s the value in that?”
Rather than relying on a forced rating system or personal opinions, companies can use performance management data to identify the best performers within their organization. By using data to support all employees, companies take the long view by helping employees stay engaged and feel like they have room to grow.
By only focusing on high-potential workers, Harris said, employers create unnecessary divisions. “Because you’re basically just saying we’ve used our data to only support one set of people inside of our organization.”
Setting transparent goals
Transparency is a key aspect of modern performance management models. And it’s often the one that requires the greatest adjustments in mindset by employees and managers alike.
“It takes a few quarters before people see value in the change. They’re nervous at first,” Dennerline said. “Like, ‘I don’t know how to do this lightweight thing because I’ve always done this heavyweight thing.’”
The benefits of this change are real. Betterworks research finds that attrition decreases, engagement scores increase, and leadership confidence soars.
“We have to help you have the courage to know that, on the other side, you’re going to be seen as a hero inside the organization because you’re actually going to have a positive impact,” Dennerline said.
These conversations aren’t easy, and Harris noted that Sapient research shows that organizations are struggling here. Harris and Dennerline each emphasized the importance of simplicity.
“One of the problems is we force conversations, but we don’t necessarily force good conversations,” Dennerline said. Provide managers with the training, system, and resources to have good conversations so they can help their team members identify and achieve their long-term goals.
Watch the full webinar to learn more about designing and implementing a new model for people-centric performance management.
By Alex Larralde