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Some 90 percent of organizations say performance management is important or critical for driving business growth, according to Brandon Hall Group research.
But traditional approaches are not working. A majority of respondents to the 2019 Brandon Hall Group Performance Management Study said:
- Their current approach does not increase employee engagement.
- Their managers are biased when assessing employee performance.
- The current review process drives less than 40 percent of an employee’s performance improvement.
- Their current performance reviews are a waste of time for managers and employees.
Almost 70 percent of organizations said they are in the process of restructuring their approach to performance management.
The Heart of Performance Management Transformation
The transformation of performance management depends on managers’ abilities to:
- Coach their employees.
- Provide helpful in-the-moment feedback.
- Set performance goals that benefit both the employee and the business.
- Give frequent performance-based recognition for good work.
- Offer learning and development opportunities related to performance goals.
In every organization, there are excellent managers who exhibit these qualities and behaviors. But the research shows there are just not enough of them.
Scaling exemplary performance management is dependent on a change in manager behaviors across the enterprise. This requires a larger investment in ongoing training and support for managers, along with dynamic tools to enable more managers to leverage those behaviors to drive individual employee performance in alignment with organizational business goals.
Our research shows that many employers see the evolution of performance management through the lens of changing the performance review process. However, performance evaluations are not the critical problem. They are a report on the outcomes of management, not the driver of performance improvement.
The heart of performance management transformation is scaling strong management at all levels of the organization to drive individual and organizational growth.
The Price of Failure
Employers that fail to crack the performance management paradigm face:
- Declining employee engagement
- Increased turnover
- Growing competency and skill gaps as business needs change, and new skills and competencies need to be taught and developed
- Difficulty in growing revenue and profit
- A lackluster employer brand that will struggle to lure top talent
Key Questions
To conquer these challenges, organizations must answer several critical questions, including:
- How can we change manager behaviors to build a culture of coaching and continuous feedback?
- How can we better link performance management with business goals, employee career growth, succession planning, and competency and skill development?
- How can we reduce the bias inherent in performance evaluations so accuracy and value improve?
- How can we facilitate frequent performance-based recognition when employees do great work?
- How can we make it easier for managers and employees to collaborate in setting mutually beneficial performance goals?
- How can we empower managers and employees to hold focused, valuable one-on-one meetings in the flow of work and at the moment of need?
- How can we measure the progress we make in key metrics such as employee engagement over the course of our performance development journey with employees?
- How can technology help change manager and employee behaviors to make the performance management process have greater positive impact on business outcomes?
Brandon Hall Group POV
Collectively, employers have dug themselves a deep hole. Neither managers nor employees find the performance management process valuable. In fact, most say it is a waste of time.
Transforming performance management is a business imperative. It drives individual and organizational development and employee engagement. The first step to scaling performance management is making the choice to change.
Transforming performance management is a business imperative. It drives individual and organizational development and employee engagement. The first step to scaling performance management is making the choice to change.
Many companies are moving in that direction. But so far, we are seeing more form than substance—tweaking or overhauling performance evaluations and rating scales rather than the hard work of changing manager behaviors. Businesses must be committed to building—strategically and step by step—a culture of accountability where managers and employees are partners in progress.
But the road to transformation is so steep at this point that most organizations can’t do it alone. They need help.
Performance management technology assists committed organizations in facilitating the behavior changes that lead to business growth. These cloud solutions, through provider-buyer partnerships, can convert frequent feedback, coaching, performance conversations, and recognition from burdens perceived as taking people away from their jobs, to convenient actions that become part of the daily workflow.
Time is running out. The time to act is now. In the next decade, work will be transformed. Employees will need to acquire skills and competencies for job roles that don’t even exist now. While that will involve a lot of learning and training, the transformation of competencies and skills tied to business goals will require a close partnership between managers and employees. They must work together through agile goal setting, mutual feedback, and coaching and mentoring to learn and adapt to the fast-evolving needs of the business.
Performance evaluations and reviews are a report or outcome of the day-to-day relationship between manager and employee. Organizations must aggressively focus on developing more managers who have the competencies and skills to drive employee performance through meaningful interactions in the flow of work.
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Claude Werder is vice president of Research Operations and principal HCM analyst at Brandon Hall Group. The 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 the annual HCM Excellence Conference, in West Palm Beach, FL, February 4-6, 2020.