Earl Nightingale's famous quote goes: "Success is the progressive realization of a worthy goal or ideal." This is the idea that every business starts with, but do they sustain the value implied in the quote? Industry experts will agree that every company, like a machine, has its own rhythm or flow, understanding which is vital in order to design a suitable performance management system (PMS). It can be started by asking some relevant questions. What does the organization want to achieve? What behavioral shifts does the company want to enforce to achieve desired outcomes, and how can that be driven? How will the company maintain employees' motivation levels to sustain high performance? Reflecting on these questions and following the below principles for implementing an impactful PMS will be a good start.
Values Form the Character of an Organization
The performance strategy guided by the manager-team exchange theory establishes transparency and trust in a system. Therefore, leaders are recommended to strengthen employee-manager relations through their performance management practices with the objective of infusing positive social change. This, in turn, will improve leaders' potential to improve teams' job satisfaction, retention, morale, quality of life, and productivity, resulting in enhanced economic and social stability within an organization.
Company objectives state where the company wants to reach; they are not meant to describe how the team will get there. Sangramsinh Pawar, Group HR Head at Atos, said, "A dichotomy exists between expecting people to function within watertight perimeters and processes and having an objective to create a boundaryless organization." Giving workers flexibility empowers them to push the envelope, design working methods suitable to them, and devise innovative solutions to thrive.
Pawar concluded, "The so-called 'good place to work index' is nothing but the trust index. Therefore, a PMS design should be simple and transparent, inducing trust." PMS must not just evaluate but also drive performance.
Learning & Development Keeps a Business Relevant
The churning of process and performance at each milestone shall be taken as the opportunity to skim out skills gaps and shift human behavior. The effectiveness of a performance management program is pegged on its capacity to promote employee growth and morale while being adaptable, personalized, and firmly focused on sustaining ongoing productivity. Priyanka S., Vice President-Human Resources of IDBI Capital Markets & Securities, insisted, "A PMS must support continuous learning and enable employees to cultivate psychological skills like empowerment and decision-making abilities." The system is impactful if it offers chances for continuous skill enhancement and advanced means of obtaining reliable and relevant knowledge.
Rewards Unlock Performance Blocks
Ideas are easy, and strategy is essential, but everything hinges on execution. The three crucial levers in the execution of PMS are setting goals, assessing milestones toward progress, and measuring outcomes. Each phase holds humans as a vital force in executing any plan to sustain a high-performance culture within an organization. Pawar stated, "A good performance management plan focuses on employee assessment, individual development, and rewards & recognition." Rewards and incentivization are the required nudges to channel individual efforts enthusiastically toward meeting their respective targets.
Pawar further suggested the principle of Behavior Economics called hyperbolic discounting for managing rewards effectively, which implies people's tendency to increasingly choose a smaller and more frequent reward over a larger and later reward. Pawar mentioned, "Hyperbolic discounting phenomenon plays a vital part in keeping GenX motivated and charged. Spot recognition and tangible but smaller rewards help to drive required behaviors and keep the morale intact." The principle is based on human behavioral economics and establishes that humans feel motivated by rewards and gains at regular intervals, not just once a year. The reward aims to bring out the best in every employee and align it with the organization's long-term vision and mission.
Stretch Goal Induces Excitement
When executed well, goal setting is a powerful tool. Consider making at least one of the key results (KRs) a stretch goal to challenge yourself and your team. A stretch goal is deliberately difficult, and it is okay not to be confident about achieving it. A stretch goal aims to induce a thrill at the workplace and boost the sense of accomplishment when it is achieved.
Progressive Feedback Sustains Productivity
Progressive and real-time feedback empowers managers to steer the workforce toward desirable output and performance. Priyanka, acknowledging the increasing awareness of employee motivation, stated, "Current performance management methods, in particular, the real-time feedback system / OKR, have emerged to fill the gap left by the conventional methods and cater to the need for validation and demand for instant gratification of the newer generation of workforce." An ideal PMS framework accurately assesses performance indicators, offers constructive feedback with transparency, and facilitates overall improvement. An effective performance evaluation process is free from bias and holds teams and managers across levels equally accountable for achieving their objectives.
Ineffective performance management can inhibit organizational growth, leading to business failure. HR leaders are at the forefront of successfully delivering a turnkey performance management project, maintaining high-performance standards.