The Future Of Performance Management

Delivery mechanisms can help, but culture is key

Some HR teams experiment with performance management in response to workplace changes, but the basics haven’t changed. Company culture still matters the most. 

The future of performance management is a hot topic in HR as people management teams look for new ways to attract, engage, and retain valuable employees. More broadly, HR leaders are rethinking traditional approaches and, in some cases, retooling their tech stacks in response to the ongoing workplace fallout from the pandemic and tight labor market.

Performance management trends that focus on where, when, how, and even if businesses should deliver performance reviews are taking shape in workplaces around the world. It’s important to get this right because people crave feedback and recognition, and they don’t thrive on ambiguity. Put another way, if employees don’t know where they stand, they’ll be less likely to stay. 

So, feedback is vital, but will performance management trends fundamentally change the employee-employer relationship? Can different methods and tools help businesses keep their best people on board? I’d argue that company culture is more important than any feedback delivery mechanism or process. Let’s examine some current performance management trends to weigh the pros and cons. 

Performance Management Technology

Perhaps the hottest trend in performance management today is the idea that HR can modernize and transform employee evaluations with software. My experience as an HR leader tells me the modernization component is true, but the transformative effect may be over-hyped. When my team moved from a paper-based to a digital performance evaluation approach, we streamlined processes and alleviated administrative burdens, which was incredibly valuable. It enabled greater review frequency, which is also beneficial. But it didn’t change the fundamentals of providing constructive feedback, just the mechanism we use to deliver it. 

Provide more Frequent Performance Reviews

Another performance management trend is to step up the cadence of review frequency. One argument some HR leaders make in favor of this approach is that when companies do annual reviews, sometimes employees are surprised by the feedback they receive due to the lengthy timeline. My view is that the formal feedback provided in a review should never be a surprise, whether the reviews are annual, semi-annual or quarterly. HR may find value in providing more frequent formal performance reviews, but manager feedback should be continuous, and if it truly is, employees won’t be surprised by the formal evaluation because they’ll know where they stand. 

Eliminate Formal Performance Reviews

Some companies propose doing away with performance reviews altogether. It’s a way businesses differentiate themselves on the employee relations front, similar to the unlimited PTO trend. Every company is different, and eliminating performance reviews (or PTO limits) may work well for some businesses. 

That said, feedback is still critical to eliminating ambiguity, recognizing employees for a job well done, and identifying and addressing performance issues. So, while the HR team may get rid of formal reviews, they’ll still need a way to deliver feedback, even if they use a less formal approach. In that scenario, it’s still important to create a framework for providing feedback because consistency is critical to achieving fairness and equality.

So, will performance management trends fundamentally reshuffle the employee-employer relationship? It’s difficult to generalize since each workforce is unique, but I believe company culture is always the overriding factor. New approaches, processes and tools might make a difference at the margins, but they won’t fix a broken culture or disrupt a healthy one. 

Building a company culture that emphasizes communication and transparency should be the top priority. It’s also critical to invest in training for frontline managers, who provide most of the feedback employees receive. In the absence of manager training, significant employee engagement, productivity, and retention issues will inevitably arise. 

People aren’t widgets, so they’ll always need human-to-human connections, even if technology provides the framework in which the communication takes place. Employees crave continuous feedback, and that will be true regardless of the frequency (or elimination) of formal reviews. The bottom line? Performance management trends come and go, but the importance of company culture endures. 

Sean Loboda is the Chief Human Resources Officer of Leaf Home. Since joining Leaf in 2019, Sean has spearheaded a number of improvements, including a focus on programmatic recruitment advertising, the implementation of a new learning management system to both invest in employees and keep up with state-compliant training, and fostering new initiatives to emphasize diversity and inclusion recruiting. Sean brings with him 15 years of expertise with proven success in recruiting, human resources, and talent management. Before joining Leaf, he was previously the Director of Talent Acquisition for National General Insurance, where he was responsible for all human capital planning and recruitment marketing.  Connect Sean Loboda