How to make performance management perform

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But there’s mounting evidence that traditional annual appraisals, particularly when tied to pay reviews, don’t actually benefit performance.

Last year, Wendy Hirsh, principal associate at the Institute for Employment Studies, told HR Magazine: “Don’t expect a conversation that ends in a rating, especially if used for reward, to also be an open honest, motivating, and developmental conversation.” 

An eyebrow-raising stat from Gartner’s CEB; only 23% of HR executives believe their performance management processes accurately reflect employee contributions.

What’s gone wrong? 

Well, many performance methodologies have a 20th century hangover. The term ‘performance management’ was coined in the 70s but had been designed decades earlier to measure large industrial workforces, using hierarchical approaches less well suited to today’s knowledge-based work environment.

As a result, multiple behaviour frameworks are shoehorned into an annual appraisal model. Systems have become complex, over-engineered.

Amongst this complexity, we somehow lost sight of the point. The evaluation of a performance management process, its success or failure, became about how many people had completed a form. HR found itself nagging people instead of having strategic conversations about quality and positive developmental outcomes. 

So how do you fix the performance of your performance management? 

Bring the focus back

Performance management is about people. If that sounds obvious, remember that the individuals most personally effected by the quality and experience of the review process are not senior management, but front line employees. 

Managed well, a performance management process has the potential to vastly improve employee wellbeing and engagement. Their experience of it is paramount. 

Get line management on board, let them steer

Line management should be bought in to this, it’s fundamental to how their team meets goals and deliver increasing business value. They should have a steering hand in how it’s devised and applied, integrating directly with the details, processes and behaviours that make up the bread and butter of their day to day working lives. In our experience, when HR relaxes its grip on the wheel, we see managers engage with the process proactively and enthusiastically. 

Replace annual appraisals with continuous feedback

Expert opinion is virtually unanimous. Continual two-way feedback benefits businesses and their people more than annual reviews. 

Regular conversations are now an accepted part of management best practice. And data from Gallup suggests that regular one-to-ones significantly improve engagement, which in turn boosts productivity and innovation. 

Plus, insight gathered regularly throughout the year is far richer and more illuminating than from a traditional once-a-year session (under the shadow of a salary review). 

With a fully integrated digital system to manage this process, setting goals, tracking and reminding, it’s easy to help managers schedule and keep to a regular meeting timetable. And because of their regularity, the meetings are generally short and informal. 

In our experience, once the benefits become clear (improved visibility, happier, more productive team members, improved communication) stakeholders are keen to embrace the concept.  

Use technology

There’s a plethora of business tools that can revolutionise vertical collaboration and communication within a business. We all use consumer equivalents of tools like Slack or Yammer in our everyday lives, and this familiarity can be incorporated into performance management strategies. 

Bringing the concept of constant feedback and communication into the virtual world often results in conversations and insights that would not happen through traditional channels. 

Thanks to cloud software, small and medium sized organisations can access sophisticated performance management systems, tools and processes that would’ve been out of reach. As a cloud vendor, you’d expect us to say that. But also as a cloud vendor, specialising in HR and Payroll systems, we work with hundreds of businesses that have been transformed by the time-saving, rich reporting and improved user experience our systems deliver. 

Simplify, simplify, simplify

Complexity is a barrier. The worst thing a performance management process can be is overly complicated, both for HR and at the point of delivery, so choose a system that fits your business and its people. Make sure it’s accessible, intuitive and flexible – because businesses change and objectives shift. 

Simple is not the same as basic. Complex functionality like delivering multiple customised forms; or automating 360 feedback, reports, alerts and reminders; none of this means that the user experience should be anything less than streamlined and simple. 

We know that our well-designed, easy to use interface significantly boosts completion rates, freeing up time for HR to concentrate on the things that matter. 

Best practice tech is attainable for normal organisations

If you follow industry conversation on performance management trends, you’ll know that large corporates like General Electric and Accenture were abandoning all annual performance reviews back in 2015 in favour of more regular conversations between staff and line managers. 

Now, thanks to the prevalence of cloud-based software, smaller businesses can access tools that put them on the cutting edge of performance management best practice. 

To talk to one of our experts about how we can help you solve your performance review challenges, click here.