Performance Management – Making the Shift to Support the Needs of Today’s Talent Market

The workforce is changing, and so have performance management processes. Previously, annual performance reviews ensured companies adhered to ethical labor practices and regulated performance and compensation – but they were arduous, time-consuming and added hours in administrative tasks. In the last few years we have seen a shift, as research reveals performance management processes are typically over-engineered, time-consuming, demotivate employees and hinder candid and honest conversations. Neither employees or managers are fans of the process.

As a result, our notions about employee performance have changed. Time-consuming annual review processes just do not work in a fast-paced environment where agility, retention and engagement are key to a competitive advantage. Companies need better technology and tools to empower leaders with behavioral insight into their employee skills and competencies, and real-time data and intelligence that help managers more effectively engage with employees. Likewise, employees need improved career transparency so they have a clear understanding of where their career could lead, what skills and competencies they need to develop in order to get there, and how organizations values their experience, skills and contributions.

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As you look to move into a more modern age of performance management, try and answer a few key questions:

Who is owning the process?

At many companies, performance management falls outside of a traditional HR function. Finance owns the annual budget and associated compensation increase, OD owns leadership development, chief learning officers own learning and employee development, and HR generalists own compliance of the entire process. Rethink this model and develop a performance management, or even better, an employee development, steering committee where these groups come together and look at how the organization effectively manages employee engagement, performance, development and retention as a whole. Agree upon a targeted objective for performance management and consistently ask yourselves if the actions and processes being established are reinforcing that objective.

Does Objective Setting still make sense?

Many organizations continue to set annual objectives and this can work as a great foundation to align on corporate goal. Start with objectives but ensure the focus is really on the developmental aspects of the program. Take a step back and look at the entire lifecycle of an employee – development, retention, and rewarding performance. In most cases this will require developing a full talent management strategy, not just performance management in a silo. Managers need to switch their focus from performance feedback to employee development, engagement and retention.  It’s key to make it about a development discussion, establish talent review processes to coach managers through performance normalization, career pathing and coaching to employees.  And, make sure you reward and recognize your leaders who are effectively doing these things.

What technology and tools do you need to succeed?

Stop using the performance tool as a compliance tool. It feels punitive and reinforces the wrong behaviors. By investing in modern HR software platforms, companies are able to provide teams with tools that provide talent insight, including basic job data, recommended learning, coaching and mentoring opportunities, and career paths, which allows them to take control of their own career.

Have you prepped the organization for change?

And last but not least, ensure that as you make the shift from annual performance reviews to employee development, engagement and retention, you’re preparing the organization for this shift. Managers will need better tools and technology to ensure they have talent insight to provide effective coaching. Ensure that managers have adequate enablement to move from a standard model where a “meets expectations” results in a 2 percent annual increase to a model where managers feel empowered to have discretionary salary increases that support a model of integrity and compliance with the workforce. Educate employees and managers alike on what is changing, why it’s changing and how it will more effectively support their needs. And last but not least, ensure your organizational model supports this collaborative talent management strategy and the steering committee has the necessary top down and bottom up support to make it a reality!

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Amber Lloyd

Amber Lloyd
Amber Lloyd is global leader of HCM strategy and customer engagement at Infor, a business software provider.

Amber Lloyd
Amber Lloyd is global leader of HCM strategy and customer engagement at Infor, a business software provider.

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