Blog & News

Re-Humanizing Performance Management

Written By
Clare Bourke
Senior Content Writer

There once was a world where human capital was plentiful. There were countless qualified potential recruits just waiting to be hired by companies. And existing employees hoped to have long, fruitful careers in their organizations, where they would be rewarded for their hard work, and fired only if they were not performing.

In this world, compensation was directly linked to compliance. Workers strived to adapt to the company’s rules and regulations, to do their work exactly as expected, and to fit into a certain mold. And when December came around, men shined their shoes more brightly and women wore their crispest blouses, nervously awaiting the annual appraisal that would determine their futures at the company.

If they had achieved their goals and done well overall, they would be allowed to remain in their posts or even get a promotion or raise. If they had not, they could be demoted or let go to join the long queue outside another corporation’s gates.

As we know, this world no longer exists.

A New Context For Performance Management

Nowadays, specialized talent is scarce and companies need to compete to acquire and retain the brightest minds. Furthermore, employees’ mindsets and business processes have shifted, all of which have led to the need for a new way to evaluate and develop employees.

Here we explore four of the most important new challenges that performance management teams face:

1. There’s a Talent Shortage

In the U.S. there are more job openings than unemployed people, a situation called “full employment” by economists. That means that most people who look for work, will get it. And if they quit a company, they’ll easily find another place of employment. In a candidate-driven market, individuals can choose who they want to work for and when.

And how does this affect a firm? A study by Employee Benefits News states that the average cost of losing an employee is 33% of their annual salary. And if you factor in recruitment fees, lost productivity and training, a high turnover rate can have serious financial consequences.

2. There’s No I in Team: The Rising Importance of Team Performance

“Great things in business are never done by one person. They’re done by a team of people”. If teamwork was good enough for Steve Jobs, it certainly is for the companies of today. Businesses benefit from having people from diverse backgrounds work together on projects.

As a result, we’re seeing a strong tendency towards teamwork and collaboration in businesses across all sectors. This is a result of increasing interdependencies between people, processes and technologies getting work done in the enterprise.

In fact, 31 percent of survey respondents in a recent Deloitte survey revealed that they now operate mostly or almost wholly in teams. But in this context, traditional appraisals and performance evaluations fall short. By focusing on individual accountability they can generate competition, which makes it tricky for peers to collaborate.

3. Company Objectives Are More Fluid Than Before

We live in an agile world in which companies’ objectives change over time as they pivot in response to a continuously changing market environment. Organizations no longer have definite annual cycles, which means that rigid performance management systems and cycles don’t reflect the new reality.

With innovative organizations evolving every day, why should their employees be evaluated only once every 365 days? It’s more than likely that objectives set in stone at the beginning of the year will lack relevance by the time the next review period comes along. This makes it impossible for performance management teams to evaluate how employees are getting on.

4. Our Collective Appetite For Feedback is Growing

According to PWC, 75% of employees believe feedback is valuable and 60% reported that they would like it on a weekly basis. Not taking performance feedback into account on a continual basis can hamper an organization’s ability to remain agile and limit employee development. Not having regular and holistic conversations with employees about their goals throughout the year can foster frustration and lead to higher turnover and lower productivity.

In fact, employees that don’t feel recognized when they do great work are almost two times as likely to be job hunting, according to a TINYpulse employee retention report. And when managers fail to offer constructive feedback, this leads to a loss of talent in organizations. This is particularly true for millenials who expect feedback to be more frequent, faster and even mobile-friendly. They don’t just value good compensation: they need to feel appreciated for their work.

Those performance management professionals who are willing to rethink their talent management strategy will be best positioned to overcome these challenges.

A New, Re-Humanized Approach to Performance Management

By re-imagining performance management to focus on people, not processes, employees can be empowered to do their best work. They’re more likely to remain at the company for longer and to develop the skills they need to grow within their organization.

These five practices can help create a new way of managing performance:

1. Agile Goal Setting and the Use of OKRs

We all know that goals set the foundation for performance management. But when these objectives are broken down into attainable steps, also known as key results, they become a much more relevant and powerful tool. Specific and measurable, but also flexible to change in importance over time, objectives and key results (OKRs) make it much easier for both employees and managers to track ongoing progress.

Ideally, they should be agreed upon through open dialogue and this communication should continue over time. The right talent management software facilitates this process by providing employees and managers with a digital platform within which they can revise agile goals on an ongoing basis, put them on hold and reactivate them at any point in time to stay on track, and give and receive real-time feedback. Automation can also be leveraged to request feedback from collaborators upon completion of a goal

2. Ongoing Development Conversations

Regularly scheduled conversations, or 1-2-1s, provide a great opportunity for an employee and their manager to discuss performance to date. They can also address how to better achieve goals that have been set. These check-ins shouldn’t feel like interrogation rooms, but rather empowering and collaborative conversations. Performance and development are being built and evaluated by both parties and the tone and atmosphere should reflect this.

With Avature, you can schedule check-ins to happen on a predetermined basis. For example, you could remind employees and managers to have a career aspirations discussion at a certain point during the period. Leveraging customizable check-in forms, you can shape the conversations around key topics such as goal alignment, development and career aspirations.

3. Continuous 360 Feedback

“Anytime, anywhere, anyone” is the premise. Ongoing feedback helps employees realize what’s expected of them and builds trust between employees and managers. When managers provide continuous feedback (instead of on an annual basis), their employees are 3.2 times more likely feel motivated to do outstanding work and 2.7 times more likely to be engaged at work.

But feedback shouldn’t be a one-way street focused on top-down evaluation: the most advanced performance management teams are instilling a culture of 360 feedback. This is a whole new approach, which can inherently be difficult for some employees. But easy-to-use technology, such as Avature, that encourages peer collaboration, helps to remove the common feedback barriers or fear as it builds a two-way relationship.

With Avature, employees can request and receive feedback in real time from peers, managers, clients, vendors and more. The feedback process can be entirely customized according to company policy and culture, with tweakable options for question types, visibility and frequency.

4. Social Recognition of Performance

By celebrating achievements publicly, employees are more likely to feel valued and recognized for their work. In fact, in a recent Gallup survey, public recognition was identified as the most memorable method (over monetary recognition).

Integrated with Avature DNA, our interactive employee hub, our performance management solution allows employees to recognize each other in real time, strengthening the behaviours that your organization values.

5. Involve Employees in the Performance Management Design Process

For performance management processes to be effective and engaging, they must be a worthwhile use of everyone’s time. But in order to achieve that, you must take your employees’ opinions into account. Asking for their help in co-creating the experience is the best way to drive employee engagement. Take the time to interview employees, collate their feedback on existing processes and consider their ideas for an optimized approach to performance management.

Avature gives HR the possibility to reach out employees at any point with multiple custom survey mechanisms. As a result, you can gather the data that you need from your employees in a way that meets your company processes and culture.

The majority of employees want to perform well, develop their talents and grow as professionals. With the right performance management technology, you can create ongoing, agile and collaborative processes that focus more on future potential than past work. Re-humanized, as-needed, fact-based performance discussions help guide employees on their professional journey for engagement and improvement every day of the year, not just in time for performance reviews.