When I say the words "Performance management," what's your first reaction?
Maybe you immediately flash back to uncomfortable annual reviews you've had - ones where you sat, pensively, opposite an intimidating boss who was trying to encapsulate a year's worth of performance into a single, summarized statement.
Or maybe you're that boss, and instead of flashbacks of your own reviews, you're thinking of the burden annual reviews place on your time - from the effort needed to fulfill HR's rules and requirements, to the difficulty of finding the right words to appropriately sum up an employee's year-long efforts.
In any case, they're rarely positive thoughts. When we think of performance management, we think of rules, forms, rating systems, procedures and policies. That's a huge problem. Not only are we investing time and resources into systems that nobody likes, but an increasing amount of evidence suggests that dated performance management practices do little to keep employees happy and engaged.
Where Traditional Performance Management Goes Wrong
We can't talk about employee performance management without talking about Millennials. As the largest generation in the workforce today, their expectations and standards regarding work performance and feedback vary so wildly from past generations that they're disrupting HR practices that have been in place for decades.
In fact, according to Chris Rhatigan of TINYpulse, "The vast majority of Millennials think the performance review process needs a complete overhaul." Of particular issue to younger workers is the frequency of performance reviews: annual exchanges just won't cut it anymore.
A TriNet Perform study of 1,000 full-time Millennial employees found that "74% frequently feel 'in the dark' about how their managers and peers think they're performing at work," thanks to the infrequent nature of feedback. Furthermore, "Nearly nine out of 10 (85%) would feel more confident in their current position if they could have more frequent performance conversations with their manager."
Frequency isn't the only issue at hand. Though the revelation that Millennials prefer feedback to be structured a certain way will likely be taken with eye rolls from older workers, it's an important realization, according to Jay Gilbert, contributing to the Ivey Business Journal.
In his article, Gilbert referenced advice given by the late Joanne Sujansky on providing feedback to Millennials, which stated that traditional strategies fall short because they leave young workers unclear on what to do with the information provided.
Sujansky reported, "Instead of feeling appreciated, however, the few short accolades of 'good job' were overshadowed in the employee's mind by the more frequent criticisms he received - without guidance as to how exactly he could improve." The conclusion drawn by Gilbert and Sujansky transcends generational differences:
"Whether positive or negative, feedback needs to be structured in a way that leaves no room for misunderstanding. Feedback needs to be clear and specific to be effective."
Setting New Standards for Performance Management
Based on the data shared above, you can probably come up with two of these new standards on your own:
But what else can you do to drive performance management's intended results of workforce engagement and professional development, rather than the fear and frustration we've all come to know? The following are just a few of the suggestions being proposed by HR experts.
Find a middle ground
Despite the examples I gave at the start of this article, I'm not entirely against performance reviews. In fact, while plenty of big-name companies dropped them altogether for a time, many are adding them back, incorporating a "middle ground" approach that draws on the best of both worlds.
Peter Cappelli and Anna Tavis, writing for the Harvard Business Review, share two of these examples in their article on "The Performance Management Revolution":
"Deloitte has backpedaled from giving no ratings at all to having project leads and managers assign them in four categories on a quarterly basis, to provide detailed "performance snapshots." PwC recently made a similar move in its client-services practices: Employees still don't receive a single rating each year, but they now get scores on five competencies, along with other development feedback."
Performance reviews don't have to be "all or nothing." Identify the parts that are working for your company, and drop the ones that aren't.
Take a broader look at performance incentives
One of the major gripes about traditional performance reviews is that they've often been used as the deciding factor in the raises or other performance incentives employees will receive at the end of the year. Understandably, that leads to significant anxiety for workers - stress that can be removed if broader performance incentives are put into place.
There's growing evidence that suggests increased recognition - whether or not it translates directly to increased compensation - improves employee satisfaction and performance. Data from CareerBuilder suggests that "50% of employees believe increased recognition would reduce voluntary turnover," while Badgeville reports that "40% of employees who don't feel meaningfully recognized will not go above their formal responsibilities."
Give recognition and feedback in the moment. Think of compensation not just in terms of annual raises but as rewards given periodically that recognize great performance. You'll remove the stigma associated with traditional performance review processes, while still giving your employees the feedback they need to be successful with your company.
Help employees thrive
Ultimately, when considering any approach to performance management, the question must become, "How can I help my employees thrive?" That doesn't mean throwing out systems meant to avoid discrimination complaints by inserting objectivity into the review process, nor does it mean putting your employee's feelings on a pedestal above everything else.
Companies are spending billions to increase employee engagement, and they're doing so because they know happy, engaged workers perform better than those who have disengaged.
Today's new standards of performance management must take this reality into account, whether by offering more frequent feedback, helping employees translate this feedback into meaningful professional development pathways, decentralizing performance incentives or taking any other steps needed to engage employees in the performance management process. The future of your workforce depends on it.
How has your performance management approach evolved? What other steps have you taken? Leave me a note below sharing your thoughts: