It’s a fast-paced, challenging world, and it’s tough to keep up. In the last decade, business has taken on unprecedented complexity: we’re managing four generations of employees, countless technologies are changing even the most basic everyday tasks, and more companies are competing for the same piece of the pie. In this battle for competitive advantage, talent is the main piece of the arsenal. And that puts us on the line.
While technology is evolving and the workplace is changing – mainly several generations working from anywhere and anytime, the process of developing employees remains stuck in neutral. Traditional performance appraisals are yielding no value to companies or employees. According to a Deloitte University Press article, only eight percent of companies state that performance management processes are driving high levels of value, while 58 percent said they are not an effective use of time. The research also showed that “leading organizations are scrapping the annual evaluation cycle and replacing it with ongoing feedback and coaching designed to promote continuous employee development.” No longer are today’s performance management events enough to keep employees engaged and productive.
Annual performance appraisals need to go away and eventually, maybe soon, they will. To ensure we are maximizing the value of our talent, we need to have continuous conversations focused on development. It’s no longer about past performance. It’s about developing skills and unlocking potential. In short, what we need is a good plan for performance development.
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From performance management to performance development
Whereas performance management was mainly a tool for the company, performance development should be a tool for the employee and the company. Companies aim to bring in the best talent, retain the best talent, and maximize its contribution to the company. Employees want to be developed, recognized for their work, and able to see a career path within the company. Performance development can be a win-win if adopted effectively. Four things to keep in mind:
- Goal setting: We need to start by aligning the entire organization towards a consistent set of goals. By doing this, successful employees know what is needed to meet broader organizational goals, allowing them to take ownership of their own career development. Setting goals is the easy part, the challenge for companies is to ensure these goals not only align to the goals of the company but also to the employee’s career path.
- Continuous feedback: This process should focus on informal, frequent and developmentally focused conversations. Social technologies are helping facilitate this process, by improving dialogue and providing continuous coaching opportunities through mobile access. But there is still more to be done: performance management would benefit from numerous adjustments. For example: instead of being a top-down procedure, it should be collaborative. Instead of handling performance using scattered paper forms, companies need to provide employees and managers with access to the tools and information they need to provide continuous feedback and coaching.
- Separating compensation from the performance conversation: Performance should be focused on the employee, developing his/her skills, and unlocking potential. In the traditional performance management world (we are all very familiar with ‘exceeds’, ‘meets’, and ‘doesn’t meet expectations’ questions) ratings are lined to salary increases and bonuses (i.e. merit increases). The most effective way to focus performance processes on development is to separate them from compensation decisions. According to the Deloitte University Press article “compensation decisions should be based on the critical nature of an employee’s skills, the cost of replacing them, their value to customers, and the external labor market.”
- Employee experience: Employees deserve to get more out of the performance management process. Ideally, it should track their goals, gauge their strengths and developmental opportunities, and give them the recognition they deserve. Companies should strive to simplify the process, create shorter feedback loops and design streamlined processes that will obtain better, more reliable data. Simplicity and recognition can be supported by a strong technology platform. Companies should evaluate engaging technologies that employees are more likely to use every day. The employee portal should not just be a place where they change their address, alter their payroll tax elections, add a dependent to the benefits plan or request time off. It should evolve into a gateway to track goals, have conversations about them, get recognitions, and interact with managers and colleagues to help achieve them. It’s hard to force people to change, but we should find any way we can to make these conversations part of their everyday work life and technology will go a long way to achieve that.
For the most part, employees and managers are dissatisfied with their current performance management process. We need to shift the way we think about employee performance by putting the ‘employee’ back in the process. Nonetheless, there are a lot of inherent challenges that come with the task of moving from performance management to performance development. The challenge still for employees, managers and HR is corralling that feedback and tying it back into career path decisions. The best way to address is to ask in each phase, ‘how will this help the employee?’ Goal setting, simplicity, and regular discussion are key. Companies can take advantage of new technology by opting for systems where employees are able to view and participate in their performance conversations every day, the same tools they access their pay, schedules and complete other common processes. So I ask you, are you ready to move from performance management to performance development? If not, your employees may be the ones making a move.