Transforming Performance Management
The annual performance review is under attack, and for good reason. Many HR professionals say it has outlived its usefulness.
“When we’re talking about performance management, many companies are moving away from the annual review and moving to more conversations as part of an ongoing process,” Irena Behery said. She is the Vice President and Head of Talent Management and Learning for Beacon Health Options.
The reason this is happening isn’t difficult to understand. For one, the performance review comes from a different time; a different era or work. The statistics back up that claim. According to SHRM, 95 percent of employees are dissatisfied with their companies’ performance review process. Taking it a step further, Gallup says these reviews simply don’t motivate employees to step up their game.
“The purpose of performance management is to improve quality of work, productivity, and other business outcomes, but traditional approaches have consistently fallen short.” ~Gallup~
Defining the Strategy
While there is a lot of attention on the performance review, it is only a small piece of the overall performance management strategy. So, what is performance management? Our guide on talent management defines the strategy as such:
Performance Management – Once hired, talent is expected to perform at a high standard. This process includes the way in which HR measures and improves performance. Common procedures include performance reviews, one-on-one meetings, and reward and recognition programs.
Change is in the Air
Having explained that, Behery believes what we know of performance management is changing.
“When you’re thinking about that engagement and having a conversation with an employee every day… how do you reward, how do you recognize… it is not just the program that I put you in or a little reward I give you that you can put on a wall. It is that human reaction and recognizing the work they’re doing every day,” Behery said.
The Head of Gap’s Talent Planning and Performance, Rob Ollander-Krane, agrees with Behery. In fact, he takes it a step further and offers a plan of action.
“If we really want to revolutionize performance management, we have to have a balanced scorecard that impacts compensation,” Ollander-Krane said. “In our company, we have 7 goals that impact bonus funding at the end of the year. Six of those are connected to the business and one is connected to HR… and it’s the first time we’ve ever had one connected to HR. It’s not a lofty goal. It’s says that 70% of our 143 critical roles in the company are 0-2 year bench. That’s all it says. And that seems like not a very high bar to jump, but boy, when we put that in there did that start to change behavior.”
Ollander-Krane said as a result senior leaders really began to focus on talent, how to assess talent and develop talent. In short, he says they started to have real conversations around the topic for the first time.
Gap isn’t the only company making changes to the overall strategy. Gartner says…
“Many organizations are reinventing their performance management processes by either de-emphasizing or eliminating annual performance reviews and introducing more frequent check-ins. These changes are being made with the goal of improving employee engagement, productivity, and retention. The trending belief is that traditional performance management focuses on the past and that reviews occur too infrequently to effectively course-correct performance or engagement issues. Employees are actually demotivated by a performance process that seems to be disconnected from their ongoing efforts.”
Performance Management of the Future
Employees, like their managers, and the executives above them, still have jobs to do however. You have to be able to make sure that the needs of the business are being met and that everyone is doing their part.
Performance management will always be there to help ensure that this is happening, but what will it look like?
Hitachi’s chief transformation officer, Levent Arabaci, envisions future performance management “as a tool that is embraced by business leaders to achieve results and is utilized not only once a year but as part of an ongoing feedback mechanism to develop employees and managers.”
That mechanism can be anything from coaching to social feedback tools. Other examples include rewards and recognition, pulse-survey tools and gamification. At the end of the day, performance management will always need to be fair and beneficial to all.
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