Reinventing Performance Management

Reinventing Performance Management

The onset of the pandemic brought with it a momentous shift towards digitisation and a need to reinvent the workspace and Performance Management (PM).


Organisational culture and growth are important facets of every organisation, right from startup companies to MNCs. The growth of every organisation is chartered by the path it employs especially when it comes to employee engagement. Chaos has reigned since the onset of the pandemic in 2020, with companies shutting down and making employees redundant. There has been a shift in what employees are looking for in terms of employment packages since then and high salaries and cash incentives are not the only criteria that rank high on their list of ‘must haves’.


Employee engagement and belonging


Employee engagement and a sense of belonging are important factors that affect the productivity and customer happiness of any organisation. Productivity and customer happiness ultimately determine the growth and profitability of the company.


We have, for some time, been functioning in a VUCA (volatile, uncertain, complex, and ambiguous) environment. The pandemic-induced lockdown accelerated this. This resulted in the momentous shift towards digitisation and a need to reinvent the workspace and Performance Management (PM).


Performance management is the single key lever that is responsible for organisational development. It also impacts behaviours introduced and reinforced for the future success of the organisation. However, leaders and employees as a rule are not in favour of the methods of PM, and hence there are major efforts required to reinvent or replace it with more effective and inclusive processes.


Performance Management and Compensation


There is always a close connection between performance and compensation. That is how performance is measured across most organisations. However, that link makes sense only if there are robust processes and metrics for performance assessment. They ensure fairness in assessment and ensure employee satisfaction. These processes and metrics are replicated across business units so that employees at the same level get rewarded at the same scale for similar performance, and leave no legroom for grievances.


Performance appraisals often bring with them stress and apprehension and just the thought of appraisals has employees worrying over what the future holds for them in the organisation. They shy away from performance assessment tasks.


Despite all the great intentions, performance appraisals continue to be biased. However, the Performance Management process cannot be scrapped, because it is a necessary record and serves as a reference for promotions and ‘payouts’. It is up to HR to quantify key performance indicators for Performance Management.


One of the key problems that businesses face is talent retention and employee happiness. The great resignation during the pandemic has contributed to the high rate of attrition, for varied reasons, that numerous organisations continue to struggle with. Improper Performance Management causes heartburns, and employees quit in frustration.


Employee friendly environments


Great workplaces have high employee engagement on a regular basis. This reflects high levels of morale and motivation, which results in great business performance. How do these companies differ from others that struggle with talent? There of course are many factors. However, undoubtedly one key difference is how Performance Management processes are orchestrated.


Forward-thinking institutions reinvent Performance Management processes with the help of the latest technologies including artificial intelligence (AI), machine learning (ML), big data, and analytics. To salvage performance management from the negative image, they integrate it into the corpus of their regular activities. Innovative solutions collect data from various touch points in daily work-life and convert them into insights regarding the real results of individual performance, team performance, and organisational performance.


These insights help one identify areas for improvement and the need for upskilling. Continuous monitoring and real-time feedback enable individuals to learn and grow in one continuum, along with the corporate goals. This improves employee performance and the company’s performance.


By creating a rewarding workplace, companies try to make performance management a fun and flattering component. Irrespective of the size of the organisation, there is always a limit or cap on the amount that employees may earn in terms of cash incentives or bonuses and salary hikes. However, companies are devising innovative ways of rewarding performance.


Like the various levels in a game, various levels of work performance are rewarded with points, stars, badges, employee of the month awards or other tokens. This recognition provides employees with a sense of achievement, self-worthiness, belonging, and ownership. These rewards accumulate and can be converted into incentives such as shopping coupons, special leave, work-from-home opportunities, compensatory off, and numerous other benefits.


Monitoring and tools


Despite volumes of training on performance management, HR departments in many companies struggle due to a lack of proper monitoring tools. There is a dearth of efficient tools to track, report, and optimise performance. Performance Management can no longer be relegated to an annual or bi-annual routine process that results in unequal distribution of pay hikes with some employees getting a larger percentage hike and others left wondering why they are being encouraged to participate in Performance Improvement Programs (PIP’s). Rather, Performance Management is woven into the fabric of daily work and reporting. It leads to gap analysis, on-the-job training, and continuous coaching and mentoring.


PMS or Performance Management Systems integrated with Learning Management Systems (LMS) and a well-built knowledge base takes care of continuous learning for continuous excellence at work. Employees should be aware that Performance Management is not an occasion to grill them and convince them why they deserve only a certain percentage of pay hike. Rather, it is an ongoing process to bring out the best in them, help them grow continuously, and contribute to the growth of the organisation. In the process, they partake of the successes that the organisation earns by the merit of their performance.


Automation of the process


Automation of the tiresome manual processes is one simple shift that is on the horizon. The Performance Management side of HR operations is being disrupted by cloud-based Performance Management Systems (PMS) in the Software-as-a-Service (SaaS) model. These PMS suites bring in the power of AI, ML, big data, and predictive analytics to companies of all sizes in affordable packages. The SaaS model offers quick deployment without the need for any huge capital investment, nor the need to maintain specialist support teams in-house and operate on a pay-per-employee-per-month model.


However, organisations need to navigate this space with due diligence. While selecting PMS services, they must thoroughly compare the service levels, features, quality commitment, and expertise.


Some services offer digitised versions of paper forms. These make data collection faster and error-free. In order to draw the right inferences from the data, you will have to manually plod through the data using third-party tools, using many manhours.


Some services offer a one-stop solution for data capture, analysis, and customisable dashboards for quick insights. These come at a premium price. Is the price justifiable is a question that organisations must ask themselves? This can be decided only by comparing similar services. After all, a tool is just a tool. How best it contributes to organisational growth relies on how best you wield the tool. So, be equipped to reinvent yourself using the best-of-breed tools. Empower yourself with the right knowledge and the right people. Through continuous assessment and Performance Management, keeping employees motivated is imperative to continued excellence.


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