The effectiveness of performance management is firmly back in the spotlight. Management consulting services company - Accenture - hit the headlines recently when they announced they were getting rid of 90% of their current performance management processes, and PwC have shaken things up further, claiming that, in fact, one in 20 (5%) of organisations are considering stopping performance ratings completely.
And it’s clear to see why. The prospect of evaluating performance is often shrouded in negativity. Whilst the goal is to bring out the best in a workforce, people work, learn and develop in different ways. Some employees are more competitive, others more self-confident, and so low performance ratings and poorly conducted reviews can affect motivation levels and potentially dishearten some employees.
It’s also apparent that all too often, performance management is seen as nothing more than a tedious ‘tick-box’ exercise. Over a third of employees feel their end of year performance review is a waste of time, and in fact, only 8% of companies report that their performance management process is actually worth the time they put into it, and that it drives high levels of value.
On the flip side, leaders may argue that managing performance can help make more informed decisions around talent and the future of the business. But with the likes of Accenture claiming that annual reviews only encourage narcissism and self-promotion, is there a risk of doing more harm than good? And why have so many organisations still not got to grips with delivering a truly beneficial performance management process?
It’s how performance management is carried out that really counts, and for many, the quality and time dedicated to this process is lacking. PwC’s research also showed that two-thirds (67%) of respondents said that appraisals help them understand how they are doing, and nearly half (48%) said they help them to progress and think about their career, demonstrating just how valuable performance management can be when we get it right.
Above all, the key is to create a continuous, more dynamic and integrated process and provide more meaningful feedback which can drive performance, engagement and organisational success. So with this in mind, here are three ways to transform and improve performance reviews and ensure your performance strategy is a success:
1. Engage in regular communication
It's essential that managers regularly engage with employees to gain a deeper understanding of what motivates them to perform well, and what support and development opportunities they need to improve and reach their full potential. A year is a long time in today’s rapidly evolving business world; therefore, setting objectives and simply reviewing them 12 months later no longer delivers value, especially across a growing generation that needs and wants instant gratification and regular feedback.
2. Be clear about what ‘good’ performance looks like
It’s often the case that employees don’t know what’s expected of them. It’s vital to set regular goals which are specific, motivating, attainable and trackable as well as communicating what ‘good’ looks like in a role. Don’t just assume your employees know what is expected of them; it’s essential to ensure team members know what to do to contribute towards key business goals and how to progress to the next stage of their career.
3. Use technology to drive value
Don’t underestimate the power of performance software. Easy-to-use software with intelligent reporting not only streamlines performance tracking and administration, but can help managers easily identify areas for improvement and enable development resources to be flexibly directed to where they are needed most. Technology can provide a powerful tool for engaging employees in their own development, and by making it easier to identify talent for promotion, it can help create a more agile approach to talent management.
Developing and retaining employees, particularly your star performers, will not only help improve business performance, but can help you achieve and maintain a competitive edge. Whilst you may have a process in place for managing employee performance, if it's not effective, it's not worth doing. Culture is everything, and it’s vital that performance processes are underpinned by strong values which are demonstrated from the top down. If we get it right, managers and leaders can facilitate better conversations and drive long-term organisational success from within.
Find out how Kallidus can help at www.kallidus.com/Performance
Deloitte University Press (2014). www.dupress.com
PwC (2015). www.pwc.co.uk