Improving Performance Management for Better Business Results

As performance management evolves, organizations must collect as much data as possible to see if the changes they are making work or if further adjustments and training are needed.

With unemployment low and the pressure to improve business results rising, organizations must have a highly engaged workforce compelled to develop new competencies and learn new skills to drive the organization’s business goals. This requires an organizational culture dedicated to employee development and continuous learning.

For many organizations, performance management (PM) remains an administrative process focused on rating employees to make compensation and promotion (or termination) decisions. This provides scant business value and is a demotivator for managers and employees, creating low engagement levels. It explains why 72 percent of organizations plan major changes to performance management this year, according to Brandon Hall Group’s latest research.

The one question organizations must answer is: How can we move from a performance-management culture to a performance-development and enablement culture?

Here are seven steps to start the transformation:

1. Align performance development with business goals.

It’s painfullyobvious, but only about one-third of organizations say their performance management process aligns with their business objectives! But in all fairness, alignment is much harder than it sounds. It requires buy-in from leadership, a culture of collaboration, strong governance, and enabling technology, along with the ability to effectively manage change across the organization.

2. Look forward.

The traditional process looks at performance through a rear-view mirror. And it does so infrequently—just once or twice a year in most organizations. This hit-and-run approach—which often nit-picks mistakes rather than highlights contributions—is unpleasant, depressing, and destructive for everyone. To improve performance, managers and employees must work together to build on employees’ strengths. To be most effective, goals should be tailored, whenever possible, to the interests of the individual and the needs of the business. Setting and revising goals should be done frequently, as needed. For example, if an employee quickly reaches a goal, set a new one that is challenging but reachable. It’s important that goal setting is not solely a top-down affair. The best processes empower employees to decide on their own goals with input from their manager and co-workers.

3. Give employees frequent recognition, feedback, and coaching.

Frequent feedback—from managers and peers—can drive behavior change. But it’s not as easy as it sounds. Feedback must be constructive and specific; if it has not been part of your culture, you’ll need to train everyone involved. Coaching doesn’t come naturally to many people. But the payoff can be huge: Organizations that provide formal training in feedback and coaching/mentoring are 50 percent more likely to see increased employee engagement. Organizations with effective coaching and mentoring are 80 percent more likely to see increased employee engagement. Recognition for good work—major accomplishments and small but meaningful contributions—also goes a long way to reinforce behaviors that drive strong performance.

4. Hold frequent performance and growth conversations. 

Once feedback and coaching are ongoing, there must be periodic checkpoints to measure progress, revise goals—or set new ones—and give support, guidance, and motivation. In addition, managers must have frequent and meaningful growth conversations to explore career opportunities based on employees’ performance, and personal and professional goals. While only 17 percent of organizations say their managers are effective at conducting growth conversations, those who are effective are twice as likelyto gain increased employee retention and engagement.

5. Leverage technology. 

All talent-management platforms either have a performance-management module or the ability to integrate with dedicated PM software. The amount of data, analysis, and instantaneous communication required to connect employees with each other and their managers simply cannot be done manually. World-class performance development is made easier by technology that enables engagement at the office, at home, or anywhere else. 

Source: 2018 Brandon Hall Group Performance Management Study

6. Don’t forget about teams.

More important work is done in cross-functional teams than ever before. Employees‘ value increasingly will depend on their abilities to collaborate successfully with teammates. Each employee should be held just as accountable for actions within a team as for their individual work. Though recognition of teams is an after-thought in most organizations, that will change. Beyond evaluating the work of teams, organizations must offer collaborative development opportunities to improve team skills and underscore their importance.

7. Measure your progress. 

Many organizations feel a need to revamp their PM processes or else we wouldn’t see such large-scale change. But fewer than half of these organizations get opinions and ideas from their employees on exactly what needs improvement. The good news is that 80 percent or more of organizations that do get performance-management employee feedback share it with their managers. Without getting feedback from employees—and sharing it with managers—organizations cut themselves off from a vital source of information. As performance management evolves, organizations must collect as much data as possible to see if the changes they are making work or if further adjustments and training are needed.

Download a free copy of Tool to Use: Determining Your Organization’s Performance Management Priorities

Claude Werderis the vice president of Research Operations and principal HCM analyst at Brandon Hall GroupThe firm’s vision is to inspire a better workplace experience, and its mission is to empower excellence in organizations around the world through its research and tools. Brandon Hall Group has five human capital management (HCM) practices and produces the Brandon Hall Group HCM Excellence Awards and Excellence in Technology Awards; Women In Leadership Summit 2019: May 1-2, 2019; and the annual HCM Excellence Conference, in West Palm Beach, FL, February 4-6, 2020.

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