Creating a Workforce Experience that Powers High Performance
Employers and employees could be on different sides of the table on most subjects. But something that tends to drive universal discord is the performance management process. A lot of thought has gone into the ‘ideal’ process but as a Deloitte study indicates, the process drives neither engagement nor performance.
If millions of dollars and tens of thousands of hours are going into it and everyone is still unhappy, what is the point of performance management?
But, what is performance management?
The name should be self-explanatory; performance management should be the management of employee performance and all aspects that can improve it. This process is commonly confused with the year-end review or appraisal, but performance management is a much larger and ongoing process that lasts throughout the year.
Comparing the two is like comparing a full-length movie with a still photo; the latter conveys the outcome but minus the context. The appraisal or review process is just one of the components of the entire process, but the one that causes the most heartburn.
A thorough performance management process includes:
1. Goal-setting: In alignment with the company’s vision and direction, goals are set for each department, function, and role. The process of goal-setting needs to be collaborative with relevant goals being defined in agreement with everyone who is involved.
2. Ongoing feedback: Managers should enable high performance by asking what support people need and providing it to them. This could include training, coaching, and any tools needed. Each manager should decide on a frequency to schedule check-ins with their team members. The agenda of such check-ins should be to give and receive actionable feedback. The tone of these check-ins is intended to be more future-focused than an analysis of the failings of the past. In addition, at times, various factors can dictate adjustments to performance objectives. This could be due to changes in the business environment or political/social changes.
3. Performance appraisal/review: At the end of each performance cycle, managers should get together with their people to discuss performance and performance outcomes. The emphasis is to highlight the progress over the entire period (typically a year)and revisit the highlights and challenges. Some of the questions that you can ask as a manager are:
-What goals did the employee achieve or miss?
-Why?-Did the ongoing feedback process work?
-What worked well or poorly?
-What were the obstacles the employee faced?
-How could these have been removed?
-What would help to attain great progress in the next cycle?
4. Take Action: Performance management does not end with assigning ratings to employees. Multiple outcomes should result from the process:
a. Rewards: High performance or gaining higher competence should translate into higher rewards in the form of bonus payments or merit increases. As a manager, your role is to clarify how people can earn more for their contributions.
b. Recognition: In non-monetary terms as well, make people feel valued and respected for their contributions. Recognition can take various forms –spot, ongoing, or end-of-cycle. Use a mix of techniques to keep people motivated.
c. Learning: Identify the key learning needs for individuals and teams from the performance data. Look for skill or competency gaps that may need to be filled.
d. Succession & Career Architecture: Create lists of people who are ready to move into new roles in the matrix –this could be horizontal, vertical, or diagonal based on the career architecture model you use.
e. Leadership communication: Embrace open and transparent communication where leaders connect with people across the organization. Make it a dialog where people can raise concerns, highlight grievances or successes, and have a candid performance conversation.
Why is performance management important?
Well, because high performance translates into better organizational results. Better results mean better opportunities for people, which further leads to better performance. This creates a virtuous cycle where people feel engaged and energized to elevate their performance.
A well-run performance management process sets the tone for company success. It builds clarity and unifies people’s efforts into chasing a common goal.
In addition, it enables you to build an excellent workforce experience (Wx) that supports high performance and achievement. A great Wx is key to motivating, engaging, and rewarding your people.
Something so important should be easy to prioritize. And yet, only 1 in 5 people agree that their performance management process encourages them to do outstanding work.
So, why does performance management fail?
One of the biggest reasons for a poor performance management process is the fact that it is equated with the performance review or appraisal process.
Garbage in, garbage out
That is not just an insight from the software industry. If your goal-setting is poor and people are not clear on what to deliver, you will get below-par performance. As the Cheshire Cat said in Alice in Wonderland, “If you don’t know where you’re going, any road will take you there.”
Some companies manage to set goals but get lost in the process instead of the outcomes. If you find yourself obsessing over tools to use, the exact language to write, and various other meaningless details, you may find that your performance management process lacks substance.
Do you provide timely feedback? Think of the performance as a live football game. The manager watches from the sidelines and either shouts out instructions or takes timeouts to help his team win. Of course, there are discussions after the game ends as well, but they are an add-on, not the only pieces of feedback available to the players.
If you are not providing real-time feedback that people can work on, performance will continue to be poor. In addition, people will feel blamed and will shy away from feedback discussions.
Not just that, some companies don’t invest in making their processes consistent. Too often, you will find the organization missing its financial targets but everyone in a particular function earning a massive bonus. This happens when performance measures are not defined in an objective manner.
What impact does poor performance management have?
It weakens the ties that hold the company together. Top performers either feel undervalued or get too comfortable in their environment. For them, there is no motivation to learn new things or adopt change. Average performers feel there is no direction and no roadmap to improve. Bottom performers don’t feel called out or held accountable and continue to drift.
Meanwhile, managers and leaders feel stressed at the downward spiral that results.
Over time, the entire culture begins to lose its sheen and the Wx becomes toxic. People are neither motivated nor engaged because they see no career development or adequate rewards.
Eventually, the company falls into mediocrity where all the components of people management are weakened.
How can a poor performance management process be prevented?
One of the biggest contributors to high performance is the Wx. The Wx contains company culture and more. It is the sum of all the people’s practices that people experience in your company.
Fixing a poor Wx is half the battle won. To fix the gaps in performance management, overhaul the entire performance management process.
1. Set the company direction: Be clear on the overall vision and how it translates into individual goals. Communicate the vision and direction to people at regular intervals and engage in dialog around the same.
2. Hire for fit: Hire people who are aligned with the company’s values and mission. Hiring for culture fit does not mean destroying diversity by hiring similar personalities. It refers to being inclusive and bringing in people who have the right skills, talents, and motivations.
3. Develop and train people: Use performance data to identify learning gaps at individual and group levels. Then, chart out a plan to conduct training on skills and behaviors.
Skills and competencies can also be assessed using tools such as TMA and fed into a career architecture. If people know about the career opportunities available to them, their motivation and engagement become much higher
4. Retain the best, train the rest: Create differentiated strategies that use agile talent management. Your goal is to make sure that top performers see a long-term career with your company and the rest are motivated to do better. If people are motivated to learn and improve, you will have a never-ending supply of internal talent.
5. Reward and recognition: Provide rewards and recognition in proportion to people’s contributions. Choose whether you want to pay for performance or for gaining competence in a role.
In addition, recognize people for their contributions at regular intervals (without waiting for the end of the year). Employee recognition shouldn’t make people wait for a grand annual event like the Oscars.
Vary the frequency of recognition and have recognition events that are not only annual but quarterly or even monthly. Create a spot recognition program as well to recognize people displaying the right behaviors or values.
6. Keep listening: Based on market changes and changing priorities, what worked for people yesterday may not be effective today. Hence, keep listening to your people and modifying your Wx to provide what they need to thrive and succeed.
Conclusion
Performance management must not start and end with the dreaded annual review. It has to be a process that is always on and always focused on people. If you focus on creating a Wx that matters, the rest of the pieces automatically fall into place.
Put people at the center of your strategy and build your processes around them. Use technology as an add-on and not as the centerpiece of your design. Ideal performance management processes focus on three aspects: mindset, skillset, and toolset.
Out of these, the skillset is easy to develop, and the toolset is easy to purchase. Changing mindsets is the toughest activity and can take significant time and effort.
About the Author
Sam Reeve
Sam Reeve, CompTeam founder and managing consultant, is a pay and talent performance expert and a certified global compensation professional. His extensive experience with pay programs and competitive compensation analysis, career architecture, and talent management allows him to help clients of rapidly growing firms see accurate, measurable results, including increased productivity and significant pay savings, year-over-year.
As an innovative thinker with practical application, Sam strongly believes that everyone needs to be healthy and happy in their own lives to strive as a high-performing contributor. He is driven to help organizations match their employees with the work they are passionate about and reward their people for outstanding work.
Sumit Single
Sumit has been working in HR & HR consulting roles for 16+ years across sectors and verticals and specializes in organizational design, well-being, storytelling & design thinking, and performance management. In his career with consulting firms such as Aon, Deloitte, and Accenture, he has successfully led programs aimed at total HR transformation for clients.
As Associate Director for India Consulting at Deloitte, he recently worked with clients on cultural transformation, HR processes, and policy design. He also organized and spoke at conferences and events about various topics relevant to HR today.
Now self-employed, he works with clients across the globe on various HR solution areas.
