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Viewpoint: A New Way of Looking at Performance Management

A laptop with graphs on it in front of a desk.

There was a time when annual performance reviews made sense and served to ensure ethical labor practices, as well as normalize performance and compensation. But over the past few years, we've seen an abundance of research that tells us performance management processes are over-engineered and time-consuming, and they tend to demotivate employees while hindering candid and honest conversations. Not to mention, they're typically deplored by employees and managers alike. 

Times have changed, and so should our notions about employee performance. After all, an annual performance discussion is kind of like waiting a year to tell your spouse what you appreciate about him or waiting until the start of the next school year to offer suggestions to your teenagers on study techniques that could help them be more effective. It just doesn't work in a fast-paced environment where agility, retention and engagement are key to a competitive advantage.   

So, is "continuous performance management" the answer? We've all heard about the importance of frequent, informal performance conversations and focusing on employee strengths and development. These techniques can be good, but are they enough? Performance management should enable employee effectiveness, improve employee engagement, develop talent, and ensure retention of top performers through career transparency and growth opportunities. It's going to take more than telling managers and employees to meet on a more frequent basis and focus on strengths and development. These actions will move the needle, but, if you really want to make a shift, it's going to take a more strategic program. 

HR professionals at Pilot Flying J, a chain of truck stops in the U.S. and Canada, are making the necessary changes within their technology to equip managers with the tools needed to retain top talent. "Making our company a great place to work is a top priority for us," said Mike Rodgers, the company's chief strategy and information officer. 

The best place to start, say talent leaders, is by putting the emphasis on developing leaders who have the tools, skills and incentive to engage, develop and ultimately retain employees. 

"We want to be able to empower people to move through the system with alacrity, to be contemporary when it comes to technology, to meet people where they are—and then move them along through their career," said Lisa Abbott, CHRO of Lifespan, a health system in Rhode Island. 

She says HR needs better technology and tools to give leaders insight into their employees' skills and behavioral competencies—the kind of intelligence that helps the manager more effectively engage with the employee. In turn, employees need improved "career transparency" so they have a clear understanding of where their career could lead; what skills and competencies they need to develop; and how the organization values their experience, skills and contributions.    

What Performance and Talent Management Could Be

Imagine if instead of telling workers that they are "meeting or exceeding expectations," you are giving managers tools and insights to help them be more effective in their conversations with employees? You could guide managers to recognize an employee's competencies and skills, identify a potential flight risk, offer suggestions to retain high-performing talent, incorporate key questions for the manager to ask the employee, and provide insight into what skills the employee needs to advance to his or her next desired role. 

Employees need feedback on how to grow in the organization, recognition for their contributions, suggestions for mentors or coaches, opportunities where they could play a key role, and learning content both internal and external to the organization. All of this is much bigger than a continuous performance discussion; it's really about a broader talent management strategy. So, where to start? 

Define ownership across multiple groups within your HR and IT organizations. All too often performance management falls outside a traditional HR function, or it gets divided between several groups owning small uncoordinated components of the process. Compensation wants to own the annual increase, organizational development wants to own the leadership development, chief learning officers would love to own recommended learning but all too often learning isn't integrated with performance, and HR generalists own compliance of the process. HR technology is many times best-positioned to navigate cross functional programs, but too often managers here don't want to take ownership of the HR business process, and so they manage the technical components alone. 

Rethink this model and develop a performance steering committee where these groups can come together and look at how the organization effectively manages employee engagement, performance, development and retention. Agree on a targeted objective for performance management. Some organizations have strong project management officers that have the program management skills to develop complex processes and technology solutions. 

State Your Goals

As you build out the "performance management process," really think about your company culture. How is your HR strategy aligned to support that culture and overarching business strategy? Instead of asking what makes a successful performance management process, ask what it takes to drive organizational performance. What is the business challenge that performance management is trying to solve?

"The employment lifecycle must align to the business strategy. If you aren't sure what your company's strategy is, then you don't really know if anything you are doing is anchored to the imperatives that will advance the organizational mission," Abbott said. "Your employee engagement strategy must align with institutional objectives and cascade through the employee population." 

It's OK to set objectives and use performance management tools to capture feedback, but don't make this the only objective. Ensure any internal branding or marketing focuses on the developmental aspects of the program as well. And, most importantly, stop using the performance tool as a compliance tool. It feels punitive and complex and reinforces the wrong behaviors. Strengthen and simplify complimentary talent management practices. Look at the beginning-to-end process of developing an employee, retaining talent and rewarding performance. 

Develop Leaders and Employees

Ensure throughout the process that you're providing managers and leaders with the right toolset for success: Give them insights into employees, inclusive of basic job data as well as talent insights. Use a strong behavioral assessment tool as a framework to guide managers through thoughtful questions and meaningful conversations. Help your employees visualize their career path; if you're not giving them a career path, LinkedIn and your competitors will. Create career transparency by showing them what actions will help them grow and what roles they are being considered for. Show them who to connect with for coaching/mentoring, and serve up recommended learning, including both internal and external content.  

If your HR technology strategy isn't that mature, start with toolkits that provide 'a "manager curriculum," as well as quick tips for driving the conversation. 

"Agile development and solid customer service requires agile performance. Aligned goals and open, honest and timely feedback are key to helping fast-moving companies serve customers more effectively and keep pace with the rate at which they must iterate products and new releases. Without this culture shift and the process to support it, organizations can't be successful. As new and challenging business models emerge in every industry in this era of digital transformation, it's hard to think of any company that can afford not to move in this direction," said Anne Benedict, senior vice president of Human Resources at Infor. 

Switch the focus for managers to developing their employees versus giving them "feedback." Make it a discussion about development, but don't label it a "development plan," or your employees will think they are being placed on a performance improvement plan. Establish talent review processes to coach managers through normalization, career-pathing conversations and coaching to employees. And make sure you reward and recognize leaders who effectively do these things. 

Amber Lloyd is the global leader of human capital management strategy and customer engagement for Infor HCM in Denver. With more than 20 years of experience, she translates market opportunities, competitive threats and customer needs into tangible features and functions that drive product strategy and vision.

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