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Performance Management: Trends for 2016 and Beyond

Signs it is time to overhaul your performance management system

Do your employees and organisation share a common line of sight with regards to results and expectations?  Does the frequency of your performance system give you real-time updates and make you aware of your business realities often? Are your employees interested and line managers actively participating in the performance management process? If you answer to any of these is No, then it is time for you to overhaul your system.

Paradigm Shift

Like many things in our constantly evolving world, the conversation around performance management has changed. Organisations synonymous with high performance cultures like General Electric, Adobe and Zappos to mention a few are pioneering new trends and techniques that many others are finding insightful and instructive. Gone are the days when performance management was geared only towards evaluating employees, ranking them against peers and solely represented an employee with a numeric value at the end of a business year or the execution of a project. The conversation now revolves around how performance management can be used to drive individual and business performance in real-time and for the future rather than employing an approach that measures and reports results in the past after a long period of time.

A Trip Down Memory Lane

Performance management practices have been around as early as the third century A.D when the Chinese Imperial Rater evaluated members of the Chinese court using a scale of nine grades. In the Industrial age, industrialist, Robert Owen’s contribution to the system was to assign employees a degree of merit represented by a coloured cube which was hung over each employee’s work station. These earlier systems as well as others invented around this period focused primarily on ranking individuals and were rarely geared towards organisations. Fast forward to the twentieth century, and Employee Service Records became popular in many organisations. These records were however maintained in confidence and this prevented employees from improving on previous performances as well as setting goals and targets.

In the 1960s, Management by Objectives which was first popularised by Peter Drucker in his 1954 book ‘The Practice of Management’ was embraced by the public. This approach which stressed participative goal setting addressed issues from previous systems which included setting performance standards and goals and helping employee and organisation align their line of sight. The latter part of this century saw the introduction of concepts such as the Balanced Scorecard (which originally was a strategy development tool) to measure performance and progress in organisations and their employees. The application of technology to various business processes also permeated the performance management system, and today we have a thousand and one softwares for managing the performance of both employees and organisations.

 

The Now Generation

These changes to performance management systems are not stopping anytime soon. A Global Human Capital Trends research conducted by Deloitte in 2015 indicates that 89% of respondents recently changed their performance management process or plan only to change it within the next 18 months.

Across board, the features of the new performance management system being used or proposed in these organisations include focusing less on employee evaluation and more on coaching and development, shifting emphasis from forced distribution ranking of employees and giving regular real-time feedback to employees. This change in perspective is caused by the apparent failure of present systems as just 50% of respondents indicate that their performance process was a good use of time; and only 56% believed their present systems helped to improve employee performance.

Another reason for this shift is the changing employee expectation. It is not just down to Gen Y or millennials having different behavioural patterns, but the entire workforce wants more involvement. The workforce has changed markedly from being passive agents to active agents. Everyone everywhere wants more involvement, more accountability and more transparency.

In redesigning new systems for their organisations, these are some of the key features HR professionals are considering:

  1. Real-time feedback

In place of the once a year appraisal period that was quite popular with the earlier models of performance management system, many organisations will be employing systems that are based on real-time feedback and ongoing performance reviews. One of the strong cases for this is the present workforce generation. High potential employees want career advancement and the way to find out how well they are doing is to get feedback on a regular basis. Another strong point for this is the volatility of the business environment. It is essential that businesses assess their goals and objectives as often as the environment is changing and review them if necessary.

 

  1. Changing Technology

Indeed, technology is an important part of our lives and business now and it has found application in performance management systems for a long while now. One of the new things organisations are looking to achieve with the integration of technology and performance management is to involve managers and employees more in their own development and ensure performance management is not an isolated HR initiative. A few applications exist that connect employees in organisations and allows managers give points to employees and these points are posted as social feeds. With the help of these applications, managers and employees can set up goals and objectives and meet to review them at the end of a set period. These days, it is also possible to analyse data trends and spot what differentiates top performers and bottom performers.

 

  1. Empowering Employees

Many organisations are also putting employees in the drivers’ seat when it comes to performance management. They have realised that when it comes to getting the best out of employees and managing their performance, a one-size-fits-one approach is what works. Aside allowing employees be part of their goal setting process, this system requires managers to act more as mentors and coaches, as they help them set stretch goals and work towards the achievement of those goals. While it may sound a bit absurd that employees set goals for themselves (and ultimately for the organisation) and not the other way round. This approach to goal setting helps organisations leverage the strength of employees in achieving their goals. It is easy for organisations to optimise employees’ strengths to achieve set goals and objectives.

 

  1. Elimination of ratings and ranking

One final change that is part of many new performance systems is the elimination of rankings and ratings. Employees do not want to be measured against their peers as this is often subjective and can lead to unhealthy comparison. Employees want to know how well they are doing with regard to their unique skills and abilities and not against someone else. What this tends to achieve is to allow employees stretch to do their best within their unique skillset rather than simply do better than another employee. This helps organisations align objectives with employees’ strength and get the best of their employees.

As work is happening in real-time, organisations need to employ agile and responsive systems that can let them know how well they are doing with respect to their business objectives within a reasonable time frame. While it may look like the new system is significantly different from the old, it still helps us achieve the same objectives as the old systems. We still need to drive strategy with our performance management system; we still want to ensure employees are engaged and we still need to help employees improve daily on their roles. This new system helps us achieve these objectives in real-time and more frequently than the old system.

You might be wondering what these trends could mean for your organisation, and you are right to. Organisations that have changed (or are considering changing) their performance management system did not just do it because everyone was doing it, but because their performance management system was not helping them achieve their objectives effectively.

How is yours working for you?

At Workforce Group, we help organisations design performance management systems and practices that are best suited for their business context. We are a Management Consulting firm focused on helping individuals, teams and organisations succeed. We are consultants to some of Nigeria’s most important and interesting companies, delivering value across diverse areas such as Strategy, Learning, Human Capital and Outsourcing Services.

If you have any contributions, questions or enquiries about this publication, please contact:

The HR Community Manager

Olugbenga Gideon
Telephone: +234 903 194 6744

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