It’s Time To Rethink Performance Management

A changing workforce demands a better way

With all the change the workforce and the workplace have experienced, just in the last few years alone, it’s hard to imagine that so many companies continue to rely on a process developed more than 70 years ago to manage and evaluate employee performance. And yet, they do. Time-consuming, backward-looking, and frequently tied to static goals that have no basis in reality once the end of a quarter, half or year comes around — the traditional performance management process is broken and it doesn’t change performance. We, as HR and business leaders, have to stop pretending that it’s not. 

If performance is the point — and it is, because why else does a company hire someone to do a job — why treat the management, enablement, and assessment of it as a compliance-driven event? Why should it feel punitive and anxiety-inducing, and not helpful to the people participating? And why rely on cumbersome technology that wasn’t purpose-built for performance management to administer it, simply because it’s “included” with your HR system of record — especially if it creates extra work, wastes time, and has no real discernible benefit to your managers and employees? 

Employees Deserve Better

Employees are taking notice, and the lack of investment in the processes that enable them to perform at their best, grow, and advance in their jobs is a contributing factor to the record turnover we’ve seen this year. A recent workforce research report from Betterworks showed that nearly 50% of employees were planning to look for work this year as of the end of February and that 1 in 3 could be lured away to another opportunity by the promise of better career growth opportunities. But even as the economic winds begin to shift and the number of active job searchers decreases, top talent is setting a new bar for the value exchange in employer-employee relationships. And if the companies they work for hope to retain their talent long-term, it’s important that the entire employee experience — including their processes for performance management — evolve to meet new demands.

Against the backdrop of a years-long pandemic that continues to affect businesses around the world, many workers are still remote, navigating a global environment that’s been anything but certain. They’re more productive than they’ve ever been without commutes and the other time costs of office culture, but they’re burning out fast — particularly working parents who bore the brunt of childcare access and affordability crisis that’s only worsened with time. Employees increasingly desire to invest their time and talent in companies and jobs that give them a sense of meaning in their work and offer the autonomy and flexibility they need to prioritize well-being.

Their expectations of managers and company leaders are changing, too. Employees want to know how they’re doing in real-time, how they can make a direct impact on the business with their work, and understand how their effort will help them get to the next milestone in their career. They want to see your DEI strategy made real by working to ensure that feedback and evaluations, along with the promotion and compensation decisions they often inform, are unbiased. They want to see internal mobility and know that there’s a future for them at your company. They want the growth and learning opportunities that can equip them for that future. An individual’s career is something that matters immensely to them — and companies who provide the tools and resources that enable great performance on an ongoing basis see significantly higher levels of engagement, retention, and attainment of top company goals.

Companies, however, have been slow to adopt the performance practices that can give employees the development and growth they want, and most aren’t investing in technologies that improve the experience of work. The same research from Betterworks revealed that two-thirds of employees don’t get 1:1 check-ins with a direct manager to receive feedback and coaching on work and progress toward goals more than twice a year. Furthermore, over half reported that they don’t discuss career goals with their managers more than once a quarter, and 60% feel like they don’t have the tools they need to track career progress and growth. 

If performance is essential to business growth, and career growth is essential to employee engagement and satisfaction — why are these numbers so low? What better way to reinforce to employees that their relationship with you is superficial and transactional than to only offer career-impacting feedback conversations every six or twelve months?

Performance Management — And Its Role — Must Evolve

Rethinking traditional performance management isn’t about making the old way better. It’s about creating new processes that enable great employee performance while making the experience of work more rewarding. It’s not an episodic event, but an incorporation of performance processes and tools into the way teams engage every day, in the flow of work. And at its core, it’s a shift in company culture. 

A great way to think about the difference between traditional processes and modern approaches to performance is that it’s an intentional move away from “management,” which implies control and hierarchical intervention, toward “enablement.” Performance enablement puts employee needs at the center and gives them the autonomy to create ambitious goals along with the confidence that they’ll be supported in achieving them.

The critical elements of a modern performance management program include seven practices that have proven to help companies drive better performance, increase employee engagement and improve employer net promoter scores.
 

• Transparent, flexible goal setting
• Frequent check-ins between managers and direct reports 
• Structured and unstructured feedback 
• Consistent recognition of work well done
• Using data to make the right people decisions and eliminate bias
• Formal development paths and plans
• Coaching 

In concert, these practices are a powerful and effective foundation for integrating performance management into the way employees work and can have a measurable impact. By building meaningful conversations and feedback into your company’s culture and the interactions that managers and employees have with each other, not only are teams more likely to stay aligned to top company objectives, they’re more likely to accomplish them. 

According to an analysis of customer data, Betterworks found that when performance programs include flexible goal setting (including both professional and personal goals), regular check-in conversations, feedback, and recognition, goal progress increases by an average of 30%. By giving employees and teams autonomy to create meaningful goals and course-correct as needed, as well as equipping managers to coach and enable — versus dictate and evaluate — companies not only achieve better business results but also create a more engaging and rewarding employee experience that increases satisfaction and loyalty.

While the future of work is full of uncertainty, one thing can be expected: that the emphasis on employee experience, employee engagement, and cultivating an inclusive and collaborative company culture is here to stay for the long term. The benefits of these investments are well-documented and the workforce demands them — and when employers fall short, their employees are increasingly leaving — a real risk during a time of constant change, when business continuity and institutional knowledge are important advantages. 

Companies that want to both accomplish their goals and create a work environment and culture that employees thrive in, must not only rethink their performance management processes; they must be bold and visionary enough to shift the culture toward one that puts employee experience and performance at the center of everything they do. 

As Vice President of HR Transformation at Betterworks, Jamie Aitken brings over twenty-five years of experience in delivering organizational development, HR transformation, and employee engagement strategies that contribute to business performance. Her portfolio has spanned multiple industries and sectors working both within those organizations as an HR practitioner as well as supporting them as a consultant across the entire spectrum of human capital practices. Connect Jamie Aitken