Performance management

The need for a performance management make-over has been long time coming. According to a 2015 Deloitte.com report, only 12% of +-1400 organizations rated their performance management systems as very effective. Citing a Brandon Hall Group’s white paper, Deloitte.com indicate that the number 1 barrier to effective performance was the lack of skill level of managers for having meaningful, ongoing, coaching discussions. The number 2 barrier was managers’ lack of ability to distinguish levels of performance and provide appropriate feedback.

Apart from the examples cited above, it has been clear to all in the field of talent management that performance management is in desperate need for re-invention. Covid-19 may have accelerated the much needed transformation companies were hesitant to make before.

While the fundamentals of performance management are unlikely to change, Covid-19, and the dramatic change in work habits it resulted in, may have been the catalyst for leapfrogging performance management to where it belongs.

What are the most significant shifts that need to be made?

  1. Shared ownership

Instead of line managers driving performance management unilaterally, greater collaboration between line managers and employees will be needed to set performance goals and OKR’s. Greater onus will rest on employees to initiate and act upon proactively identified performance opportunities, thereby contributing towards a culture of performance.

  1. Team focus

A greater shift ‘from me to we’ is suggested by McKinsey for team goal setting, appraisal, feedback and recognition as requirement for a business to operate at full potential. Already companies who embrace this approach are achieving success. A financial institution that replaced all individual objectives in contact centres with team objectives saw productivity gains of more than 10 % within months.

  1. Agility

In future, shorter-term goals and OKR’s will be required, accompanied by the anticipation of the collaborative morphing of these with more realistic measurements when circumstances change within or external to the organization. Greater agility will be necessitated by a change in the way we perform our jobs – regular or daily check-ins/outs and regular retrospectives will become the norm if we would want to succeed.

  1. Trust and ongoing communication

To deal with the tension between agile and flexible goal setting, on the one hand, and employees’ need to fulfil their longer term career aspirations, on the other,  will require optimal two-way trust, supported by ongoing conversations and transparent top-down communication.  Even in crisis times employees would want to know that their longer terms career objectives and needs will be recognised/kept in mind.

  1. Coaching competence of managers

Instead of using performance discussions to decide on pay increases, the focus of discussions will increasingly shift towards the development of employees. This will require enhanced coaching competence of managers. Of the participants who felt that their companies were successful in performance management, 71% indicated that their managers were adequately trained in giving feedback and coaching.

  1. Data-driven platforms

Rather than falling victim to the halo-effect, managers will need employee platforms that will enable “personalized, on-demand, data-driven performance feedback” and recognition in real time, based on the ongoing tracking and verifying of performance by multiple (360°) sources. Not only will this increase fairness, but also greater skill in differentiating among above-average, on-par or below-average performers, using more objective, specific measures.

  1. Rethink recognition, rewards and incentives

Some companies are already experimenting with more creative and personalized means for rewarding deserving employees compared to the traditional, formal financial rewards of yesteryear, for example, access to desirable projects, based on employees specific career needs. There is also a growing trend to reward and recognize teams, while another trend is for informal recognition to be carried out in real-time, on a peer-to-peer basis.

The need for performance management to be re-invented in organizations has never been as great as it is now. The Covid-19 pandemic offers organizations the opportunity to transform. Some companies will rise to the challenge. Others not. What about you?

SOURCES:

Deloitte: Performance Management Reviewed – July 2015

Gallup: Performance management must evolve to survive Covid – 19 August 2020

McKinsey: From me to we – the next shift in Performance Management – May 2020

McKinsey: Individual performance management in the Covid-19 world – December 2020

McKinsey: Unlocking the true value of effective feedback conversations – February 2021

Do you prefer to have a visual summary of the shifts that need to be made for effective performance management? Then download our infographic on 7 Essential Performance Management Shifts for Succeeding in the New Normal by clicking here.

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