Did you know that performance management exists? introduced in a workplace for the first time more than 100 years ago, in 1920?
Since then, it has changed slowly over the decades, but this change has accelerated in the last 10 years.
The traditional approach to performance management involved a rigid annual cycle that focused on employee performance over the past year. There was no discussion about the future, which limited employees’ opportunities for growth.
Its development in Agile performance management is structured so that employees can use the feedback collected to improve their performance.
No wonder he is the founder of Bersin & Associates, consultant and HR analyst Josh Berlin It is estimated that around 70% of multinational companies are in the process of moving to an agile performance model.
In this article, you’ll learn how performance management has changed, why performance alignment is important, and what you can do in your organization to evolve the process.
Here’s what we’ll cover
Why the old performance management no longer works
Performance management is changing, parallel to the changes in human resources. The old performance management process looked something like this:
- Track and measure what the employee does throughout the year.
- Wait until the end of the year to meet with the employee.
- Use the meeting to tell the employee all the things they could have fixed during the year and give them a review.
There are several problems with this type of performance management:
- The employee had no idea whether he was doing well in his job or not.
- Receive feedback only at the end of the year is helpful neither for the employee nor for the company. The employee can’t fix something they didn’t do well a few months ago (because the window to fix it has expired) and the company doesn’t benefit from the employee fixing the mistake, resulting in lower levels of performance overall.
- Measuring only what happened puts a lot of emphasis on the past. There needs to be a discussion about future steps, growth and progress.
Instead, it is now necessary to adapt your processes to keep up with the trend towards regular feedback cycles as a new phase in performance management begins.
Modern performance management: 3 principles
Today’s market is based on innovation and rapid iteration, so employees and companies need to adapt their processes accordingly.
A recently commissioned one Report from Sage found that more than half of HR and business leaders (58%) believe performance management is more important now than ever.
At least 74% of those surveyed said that they found it more difficult due to hybrid working.
However, 75% of respondents believe their performance management processes are outdated, demonstrating a renewed need to improve processes and provide appropriate access for remote workers.
To meet this demand, you must reevaluate and revise your performance management processes. Here are three principles to remember:
1. Shorter feedback cycles
The old way of performance management was all about the annual review; The new approach is about having shorter feedback cycles.
This is where gamification comes into play.
Imagine being a character in a game and leveling up.
To increase your character’s level, you need experience, which you gain by successfully completing a mission. You have a bar that shows your current experience and you have just completed your mission.
You will have no idea whether the mission was a success or a failure until you hear back within a year. After a year we learn that the mission has failed.
In today’s game that would be ridiculous, but that’s how performance management used to be.
Employees had to wait about a year to find out whether they were doing a good job or whether they needed to learn and adapt.
No wonder that the McKinsey Global Survey 2017 found that 54% of respondents reported that their performance reviews did not have a positive impact on performance.
So companies started implementing it shorter feedback cycles with their employees. 1‑on‑1 meetings really help with this as they allow managers to focus on one employee at a time and discuss their performance in meetings.
These meetings usually take place every 15 days or once a month. This allows employees to continually see whether their performance is in line with the company’s standard.
And if performance does not reach the desired level, there is a solution for that too: performance development.
2. Performance development
The old way of performance management focused on past performance, but the new and evolved performance management splits the focus between performance reviews (the past) and performance development (the future).
Agile performance management also takes into account the growth potential of employees and uses meetings to talk about their development.
Companies have started using development tools like Massive Open Online Courses (MOOCs) to help their employees learn new skills and improve their current skills.
Due to the pace of innovation in the market, employees need to learn new skills every few years if they want to have relevant skills in the changing market.
Companies should focus more on this the further development of your existing staff because it is more effective than hiring new employees.
A study by Bain&Co found that inspired employees are 225% more productive than engaged employees.
To inspire employees, you need to invest in them and ensure they grow in their work — performance development is one of the best ways to achieve this.
According to the Sage report, more than half of HR and business leaders (59%) said they do not use data to inform performance discussions, and over half (55%) cannot identify high and low performers.
This represents an opportunity to update your performance discovery process and create a more accurate development path.
By investing in performance development, you can create growth plans and goals with your employees and track their progress to ensure their skills remain relevant within the company and in the market.
Take a look Human Capital Management (HCM) software This can help you make the best investment decisions for your teams. Highly skilled workers will be happier and more productive
3. Co-creation of goals
The old way of performance management was almost 100% top-down and the employee had little influence on the process.
The new type of performance management is more of a bottom-up process in which the employee formulates goals together with the manager (goal co-creation).
This works by the manager talking to the employee about the company’s goals and objectives and what role the employee plays in achieving these goals.
The employee talks about his (personal and professional) Development goals This ensures that they achieve these goals and keep their skills relevant in the market.
In one current Gallup poll, Employees whose managers involve them alone in goal setting are more than three times more likely to be engaged than employees who are not involved.
This is a win-win situation where both the manager is happy with the situation because the company’s goals are being achieved and the employee is happy because they are learning new skills and growing in the process.
Performance alignment brings goals closer
Performance alignment goes hand in hand with performance management. The difference between them can be described as the difference between efficiency and effectiveness.
Effectiveness does that Task right, while efficiency does Right Task.
Performance management examines how productive, engaged and focused your employees are. Through performance alignment, your employees will be productive, engaged and focused on the right processes, tasks and goals.
The goals that employees pursue must be aligned with the overall goals of the organization. So make sure your employees are productive (performance management) doing the right things (performance alignment).
Using technology to improve the process
Technologies and applications should be used to improve the performance management and performance alignment process. If the employee and manager are not in the same physical location to conduct their 1:1 meeting, they can use video calling applications such as Zoom or Teams.
There are other applications that can really make things easier for your managers. So consider investing in apps that:
- Help them monitor their employees better
- Allow them to communicate more easily with their team members
- Give them insights into the employee’s well-being and employee experience
The easiest way to understand which technology you should use is to break down the entire performance management process into its essential steps and then see which app would be helpful for which step.
The 4 main steps of a performance management process are:
planning
The technology at this stage is designed to help you better communicate with your employees, set the right expectations, and clarify any questions about roles and responsibilities in the manager-employee relationship.
examination
At this stage, you should use applications that help you organize meetings and track your employees’ performance in their daily tasks.
Coaching
In this phase of performance management, the focus is on the employee’s performance development and growth. So there are apps that can establish themselves
Micro-learning in the workplace and accompany employees through the learning process.
Rewarding
The final part of the performance management process is the rewarding stage.
You can use apps to set up a points system and show employees where they stand with their points, what rewards are available and how often they can exchange their points for a reward.
Final thoughts
Performance management has evolved, and so should your company.
By following the steps above, you can restructure your performance management process and make it agile.
You’ll experience numerous benefits from shorter feedback cycles, implementing performance alignment, and investing in the growth and well-being of your employees.
The new focus on people and transforming leaders into coaches will help you achieve better results for your company.
If you’re looking for a performance management tool that can empower your workforce, support and retain your best and brightest employees, and improve communication, explore other performance management resources and Sign up for a free demo session here.
