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A Glimpse into the Future of Employee Performance Management

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If you type “performance management” in any available search engine, you will be flooded with news mentioning the status quo of employee performance reviews, or rather, pointing out to the fact that they are becoming obsolete.

This is becoming a common occurrence among major corporations, from diverse sectors, all over the world. One might notice a common pattern, a trend that reveals the replacement of unhealthy and non-efficient “rank and yank” systems with the use of personalized employee feedback and training.

The two sides of Performance Management

Throughout the years, performance management has proven to be a useful tool that helps employers track performance throughout a certain period. This tool offers employees the chance to hold themselves accountable for their actions, rewarding those employees that excel at their duties.

Unfortunately, these performance reviews have not only solved certain drawbacks, but they have also produced a few, such as the fact that the incentives given to the best performing employees sometimes create a sense of unhealthy competition between peers.

Among the main issues associated with performance management lies the fact that it is a highly rule-based and bureaucratic process, used as an end-performance review, and based upon strategic objectives created in the previous financial year. There is no shaping of performance improvement, just a mere measurement of it.

What Surveys Indicate

Several corporate surveys, conducted in the past years, have brought to light a common trend:  employees’ unhappiness towards annual and/or semiannual performance reviews. This discontent has come about as a reaction to the negative effects the review has on employees’ productivity, as well as a reaction to the unwillingness of all HR Managers to do such time-consuming reviews.

Such a reaction should not come as a surprise, given that performance management reviews have been more focused on the outcomes and financial results, rather than on the actual performance of employees. As a result, employees end up feeling disengaged and their performance takes a turn for the worse.

According to a survey conducted a few months back by the Institute of Corporate Productivity, more than 67% of the companies included in the survey were planning a “redefinition of their management performance process”. Out of those companies, 60% used as a primary source their employees’ feedback, as managers didn’t believe that the review process was leading to employee performance or engagement.

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Redefining Performance Management and Future Trends

Firstly, the entire idea of a cyclical review cannot be very efficient in practice, because employees need to receive on-the-spot feedback about their performance, from their supervisors. Real-time feedback provides support and fosters progress in addressing issues immediately. That is why, instead of redefining performance, managers must start coaching. This way, they can help their team achieve its goals and employ a style of continuous performance control that consistently looks for ways of improvement.

In recent years, corporations have taken a liking to the term “continuous performance management”. This term now encompasses both real-time feedback sessions, as well as a regular “check-ins” among employers and employees, occurring on a regular basis.

With all of this in mind, we have to remember that although corporations can choose to give real-time feedback or conduct check-ins any time they wish to, annual performance evaluations cannot disappear overnight. This is a process of trial and error, which means it might be a while until most individuals & companies get used to it. Coming up with innovations is in many cases easier than implementing them.

Secondly, taking into consideration all of the above, we should start taking a look at the main trends that are inevitably reshaping our corporate and natural environment, namely Big Data, analytics and digitalization.

The world we live in is ruled by technology and data; that is why, we should make use of this technology to boost the success of our company. Embracing digital transformation involves including digital data into the overall workforce planning activities, yielding a better and more efficient coordination of work tasks and a more solid performance analysis.

These technological advances are going to be applied to behavioral economics, psychology and HR and other fields that have human performance as their main research subject, providing a more analytical approach to the operational efficiency of a team, enhancing engagement efforts and performance feedback sessions.

By employing data and analytics, reviews remain unbiased and evidence-based, highlighting both the strengths and weaknesses of an employee. Furthermore, data usage eases the transition to feedback through surveys or user analytics.

Nonetheless, digital data is only part of the answer. Corporations are made of individual human beings, so a redefined performance management system has to be validated by both employers and employees. They are the ones who set a clear path of action and give instant feedback, with the purpose of growing and learning.

Recently published surveys and researches have pointed out that 85% of Millennials – those between the ages of 18 and 34 – prefer frequent performance review meetings with supervisors, and maintain a constant communication flow between themselves. What is more, over 45% of the surveyed Millennials wanted to receive very specific feedback and to have less biased supervisors.

The Evolution of Performance Management

It is clear that performance management has changed and will reshape its boundaries even more in the coming years. What we have to keep in mind is that performance management isn’t a one-size-fits-all process.

Slowly but surely, it will start placing more emphasis on real time conversations between leaders and team members, based on an alignment of corporate goals and coaching. Coaching and personal development will go hand in hand, substituting inefficient and time-consuming annual ratings and rankings.

Furthermore, leaders and HR managers will need to emphasize the importance of compensation conversations during their coaching/feedback meetings. It is no secret that employers have always had a hard time understanding how to apply compensation based on ratings, as it has often turned out to be quite counterproductive and negative for a team’s spirit.

The evolution of performance management is slowly but surely bringing a new idea to the fore: rather than having companies differentiate themselves through their use of performance management, PM is becoming more and more about differentiation through leadership, helping leaders understand that by aligning employee reviews with corporate strategy and individuals’ typologies, they can fuel their company’s performance.

EPM – the more you know!

We know that designing, implementing, monitoring, evaluating & auditing a proper Employee Performance Management System, with all its constituting elements, is not an easy feat and oftentimes proves to be quite the daunting task.

As such, The KPI Institute’s training programs, Managing and improving employee performance and Implementing Employee Engagement Programs, are designed to fill in any gaps you might have about or provide you with completely new knowledge on any aspects related to improving and developing your employees’ performance. One-up on your management practices today!

If you require further knowledge on the topic, feel free to enroll in our Certified Employee Performance Management Professional certification course or download any of our webinars that center around the idea of Employee Performance Management.

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Adam Galinsky: Learn how to Speak Up for yourself
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