Organisations the world over are engaged in a constant search for methods and techniques to boost employee performance, enhance productivity, drive engagement and reduce staff turnover. Companies that work towards introducing and maintaining a healthy, efficient performance management system can see these results manifest in the long run. This is why ‘performance management’ has remained an HR buzzword for years, and why it is still seeing such a rapid evolution.
Despite the many benefits that suitably-tailored performance management systems may afford, they often fail to deliver. As with many things in life, however, this is less to do with the overall concept of performance management and more to do with errors and missteps that have taken place during its conception. When a performance management system is not designed with careful consideration, it can result in frustrated employees, confused managers and, very importantly, a significant amount of time lost.
Below are just a few examples of how bad things can happen to good performance management, including ideas on how you can improve upon your existing system.
Too much emphasis is placed on performance ratings
HR professionals will be well aware that numerical measurements of employee performance have come under fire in recent years. According to Accenture, 65% of employees believe that ratings fail to fairly and accurately reflect performance(1). 58% of employees also agree that the existence of ratings creates an entirely negative experience for employees, with the notable exception of extremely high-performing staff. Alarmingly, such ratings can even evoke a flight-or-fight response (2) that decreases overall performance.
Marc Farrugia of Sun Communities Inc. has expressed his concern that “ratings are doing more harm than good (3)”. He claims that they can be misused, with managers awarding higher scores to individuals they fear losing and allocating average scores to the remaining employees due to, for lack of a better word, laziness.
Top organisations are abandoning numerical rating systems in droves, with a recent and notable example being Goldman Sachs, (4) who have revamped their traditional nine-point rating system for one that will instead address individual employee strengths and weaknesses. Prior to Goldman Sachs, IBM (5) overhauled their annual and mid-year appraisals, as did Adobe, General Electric, Accenture and Gap. All the companies mentioned above had finally come to appreciate how dreaded the annual review process was for everyone involved and how a more continuous, tailored approach could reinvigorate their organisations.
Communication is weak or non-existent
As society evolves and progresses, so should the way we operate in our working environments. Feedback is a necessary and expected aspect in nearly every part of our daily lives, so this constant communication should certainly be reflected in the office. In a recent survey, 85% of millennials stated that they would be much more confident in their role if they had access to more regular performance conversations (6) with their managers. This is a fair demand that could stand to seriously benefit organisations in terms of engagement and productivity.
The idea behind continuous performance management is that regular feedback and recognition is both necessary and an investment in future performance. Frequent check-ins can be utilised to ensure that employees and managers are on the same page with regards to progress and goals, giving managers the all-important opportunity to reward and recognise where appropriate, resulting in employees who feel integral and valued as a member of a team.
The increasing acceptance of continuous performance management as an effective HR strategy has seen a reciprocal increase in the use of software to keep up with the demands of regular, honest and productive feedback. Not only can managers use this software to arrange one-on-one meetings with their staff, but employees can utilise performance management software to interact with one another, exchange ideas and build up a sense of camaraderie.
Objectives are not clear and understood
An employee without direction or concrete goals simply cannot be a valuable asset to an organisation. Regardless of drive or determination, if an employee does not know what is expected of them, or what to work toward, they will flounder and your lack of guidance will cost your organisation. To prevent this from occurring, as part of your performance management system, ensure that your employees are given SMART — specific, measurable, achievable, relevant and time-bound — objectives that are regularly re-addressed and discussed.
To get the most of your workforce, always ensure that your goals meet the SMART criteria. HR executives that fail to pay enough attention to this aspect of the performance management system will likely see a loss of productivity and morale(7). It is also important to outline to employees how their objectives feed into overall corporate goals; this will lead to employees feeling part of a well-functioning team, rather than simply being a sole worker.
You have failed to keep it (ridiculously) simple
Michael Armstrong, one of the UK’s leading researchers and authors on performance management, has stated that an optimal performance management system must be “ridiculously easy to understand (8).” The entire process should add value and be as efficient as possible, all the while making use of automated tools to ensure processes are streamlined and reliable.
Remember that at its heart, performance management is simply about constructing a straight-forward system to help managers and employees track and meet specific goals to increase productivity. Don’t fall victim to needless ‘improvements’ that only serve to make your existing system overly complex and time-consuming. Whenever this begins to happen, it is time to re-assess, re-adjust and get back to basics.
About the author: Stuart Hearn heads up Clear Review, a company that designs innovative performance management software. He has been working in the HR sector for over 20 years, previously working for Sony Music Publishing and co-founding PlusHR.