Published On: Mon, Dec 5th, 2016

How to ditch annual reviews, make performance management perform

Dr. Roze Phillips, Managing Director for Accenture Consulting

Dr. Roze Phillips, Managing Director for Accenture Consulting

By Dr. Roze Phillips, Managing Director for Accenture Consulting

Organisations continue to spend millions of rands and thousands of hours on performance management that is neither supporting the workforce of the future nor the performance of the business itself.

If today’s world is digital, why have performance management processes remained so analog? Survey data from Accenture confirms what some organisations already figured out and what most employees have felt for some time – that performance management practices in their current form don’t work. Sixty-six percent of all respondents believe their current performance management approaches aren’t effectively supporting the delivery of business objectives.

It’s time for performance management to perform, and for organisations to change their performance management practices to meet the needs of the workforce of the future. Work is becoming faster, more collaborative and more networked, whereas the workforce is increasingly diverse, desires transparency and expects coaching and professional development. To reinvent performance management processes, organisations should consider the following:

Develop people through constructive conversations and coaching. Performance management is about more than the formal assessment of performance. More employees are looking for development and coaching opportunities – and leaders are beginning to recognise that they spend too much time on formal documentation and too little time on the ongoing conversations employees are looking to have. Some organisations are working to ensure that feedback is focused on building strengths rather than correcting weaknesses. These conversations tend to not only focus on revisiting goals but also include development with a forward-looking focus.

Hyper-personalise performance management across the workforce. More than three-fourths of respondents believe that personalising performance management practices to individuals or groups is mandatory to meet the needs of the workforce of the future. The process should be focused on the vital information employees need from their leaders and from one another to develop to their full potential. Organisations should continue augmenting processes to customise coaching and feedback, the goal-setting process and types of rewards and compensation based on the needs of each individual employee or segments of the workforce.

Move people decisions closer to the people. Conventional performance management has long relied on ratings as the basis upon which to make decisions. Though, many believe that a one-size-fits all approach has a negative impact on the process. Now many leading organisations are removing rankings or reducing their role in determining rewards and advancement. In doing so, they are essentially moving away from HR-led decisions to business-led decisions, placing more decision-making power in the hands of leaders – or, sometimes, in the hands of people themselves. More supervisors are given flexibility in allocating rewards based on sound insight that reflects the business strategy and budget.

Embrace openness and transparency. Employees are rightfully suspicious – and become unmotivated – when performance management is treated as a “black box” where both inputs and outputs are obscure and inconsistent. Business leaders and employees alike believe that making performance management transparent is expected and even required in an era of open information sharing. Some organisations are therefore already sharing performance feedback, goals, rewards and more.

Clearly define high performance and then track toward that vision. With increasingly digital work, the networked economy is causing organisations to radically rethink the very definition of exceptional performance. Many organisations lack confidence that they are able to align employee performance with business performance, and many leaders feel performance management does not adequately identify high-potential employees. New approaches redefine high performance to take into account collaborative work, or the ability to quickly learn new skills, as well as cultural criteria they want to encourage.

Although there are signs of change, organisations need to move faster to revitalise performance management to adequately support the workforce of the future. To do so, organisations should take heed of what employees want from their performance management practices – to be personalised, transparent and focused on real-time conversations and coaching. Only then can organisations move beyond “managing” performance to “improving” performance, of both its people and the organisation as a whole.

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