Performance Management in practice needs to be more holistic, focusing on employees as a whole, and not just on productivity or goals.
Performance Management is going through a revolution of sorts. Companies across industries are radically rethinking the way they measure, evaluate, and recognise employee performance.
There are many reasons for this - the rise of the gig economy, significant progress in adopting AI/cognitive/robotics, and the change in the nature of careers, organisation models, and millennial expectations. And all this is altering what is being seen as work, who works, and how work is done. Employees are increasingly seeking instant feedback, and are anticipating untethered on demand collaborative learning and development. Traditional end of the year appraisal systems no longer seem as relevant or commercially viable. The very way of work is changing, and hence performance management systems need to be recreated. The word "management" has a "limiting" tone to it in itself, and if we are to remain viable as organisations, we need to dial up to "performance enhancement."
We are also witnessing a lot of debate on the merits of eliminating performance evaluations altogether. Performance reviews are not very comfortable, and are often biased. They tend to put us into boxes, with feedback being rolled out much later than the actual performance. Yet, getting rid of evaluations is not the solution. Even if organisations do away with ratings, decisions on promotions and compensation remain linked to performance, and hence we will need some way to assess the value of contributions.
Effectively, ratings will be prevalent in some form, but they will be behind the scenes, hidden in a black box with no input from employees. Forced distribution curves may seem to be a thing of the past, but many companies are wary of giving up the concept entirely. Ratings are being used widely, but instead of being numeric, they are more qualitative in nature. The solution lies in not moving away from performance management altogether, but build a culture of growth and recognition through a more holistic understanding and implementation of performance management philosophy/ processes and systems.
Going beyond the traditional systems
Additionally, the philosophy of a performance management process is to equip employees. Traditional approaches to Performance Management are unable to rise to the demands, because they are not sufficiently tailored to the goals of individuals. They are unable to match the right people with the right business needs. And the focus is largely over past performance with little emphasis on a progressive outlook, the objective is to make use of this for decisions on rewards. Thus, the actions taken are often too little, too late. In a rapidly changing market, a good performance management system should be enabling employees to promptly adopt new behaviours and skills. In today's market, people need to learn and unlearn quickly. Successful employees are people who can adapt their skillsets to remain relevant. Technologies can further support this by enabling real-time recognition and more customised learning and coaching experiences.
Organisation design also remains to be challenged everywhere with the transition from hierarchical business functions to a network of teams. Performance Management models also need to shift from individual achievements to contribution to team goals, and the team's contribution to the overall business priorities. Organisations are pioneering performance models to assess team dynamics, group goal setting, and team contribution. A focus on team performance also indicates a thoughtful experimentation with new performance metrics like trust, inclusion, and role clarity etc. Performance management strategies of the future will need to account for wider factors like work culture, organisation design, and physical environment.
Several organisations have built mechanisms to increase the quality and quantity of available performance data, but the question is - how do we embed these new sources of data in our decision making? There is a crisis of confidence in the efficacy of performance management in today's context. Organisations and work have become increasingly complex, and in a predominantly knowledge economy, traditional metric based assessments fall short of what is required essentially. There is no clear replacement, but technology can help provide some solutions and answers. New AI driven tools are helping organisations make goal setting social and digital, allowing for real-time progress tracking and instant feedback, using analytics to send recommendations to managers, supporting career development and mobility, and allowing for a superior embedded experience through integration with other productivity tools.
Subjectivity: The biggest impediment
Subjectivity is seen as the biggest impediment in the performance management process. Though subjectivity cannot be eliminated from the process entirely, technology can help in reducing biases. Obvious biases like race and gender are relatively easy to define, yet they need to be actively addressed. However, there are less obvious biases that are difficult to be put under scrutiny. For instance, contrast bias, where an individual's performance is compared with peers, instead of defined standards of achievement, or Recency bias, wherein actions in the recent past overshadow judgment. And this is where technology can be made use of to address not only process fatigue, but also logical fallibility. However, like with any technology, if not built carefully, it can intensify and perpetuate human cognitive biases.
Historically, performance management systems have focused on full-time employees. Considering a gradual shift to a contingent/contract worker economy, technology can also help manage performance of off-thebalance sheet talent through cheaper, scalable, yet customised insights and interventions. When choosing any system or technology, the first step is to decide what the organisation expects to achieve from the performance management system. This is critical, else you may get a great solution conceptually, which may not be relevant to organisational objectives.
The need to establish linkages It is also important to establish linkages between various HR processes and systems to drive a superior endto-end employee experience. 'Feedback' should yield to 'feed forward.' New performance management systems should nudge and make data driven recommendations to both managers and employees. A future-proof performance management system should be able to suggest unique areas of action for both managers and employees to drive greater engagement, retention, and satisfaction. This could mean individualised recommendations for professional development and dynamic data-driven career paths for employees. This would also enable managers to offer specific personalised recognition and coaching. Technology can be used to empower employees with real-time bite-sized resources.
Ideally, the tech tool needs to be user friendly and intuitive, so that it makes for easy adaptation. However, instead of solely focusing on how people can give their best, the focus of performance management also needs to be on equipping employees to be their best. This would mean equipping people on the basis of individualised development strategies, and helping them feel more empowered about the work they do. Workforces are increasingly becoming more diverse with people across generations, ethnicities, educational backgrounds and locations - with a steep rise in remotely located workforce. A mass, one size fits all approach will no longer work.
Performance strategies need to take a personalised approach to an individual's motivations in order to stay relevant. This would also mean relooking at traditional job roles to create new roles built around an individual's skills and interests. Managers have an important role to play in this. Managers will, more than ever, need to understand unique abilities and individual motivations, and accordingly challenge each employee to excel in their own way. Every individual is unique - managers will need to identify their unique strengths and recognise them to trigger the discretionary extra performance that all organisations aim for. Performance management in practice needs to be a more holistic concept - focusing on the whole employee and not just on productivity or goals. This would mean a greater focus on physical, mental, and emotional well-being. A workplace needs more authentic work relationships - where the aim is not just driving positive business outcomes, but enabling employees to be the best version of themselves, so that they can have a positive impact on customers, managers, shareholders, and the society at large. This means personalised, long-term and contextual view of an individual's performance. And with the right system and technology, this can be tracked with as much ease!
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