How to Modernise Your Performance Management

Performance Management has been a point of contention in the workplace for some time now. In 1995, Keith Grint stated that ‘rarely in the history of business can a system have promised so much and delivered so little’. In 2010, Culbert & Rout concluded the performance review was a ‘pretentious, bogus practice’. Now, after a number of significant cultural shifts in the workplace, from remote work to The Great Resignation, recent research has found only one in five employees found their performance reviews to be transparent, fair or inspire better performance.

It seems performance management has been scrutinised for a long time yet consistently remains behind the curve, and overburdened HR teams often share the dissatisfied sentiments of employees. Read on to learn how you can make data-driven, research-backed updates to your performance management processes.

How to Modernise Your Performance Management

One Size Does Not Fit All

In 2018, The Guardian claimed ‘the appraisal is dead. Long live the catch-up’. Shorter feedback cycles and an informal environment are both found as advice in a good portion of the research into this issue.

Running your own internal poll or survey will be good practice to confirm if this is the case for your people as well. It will be important to specify in your survey how your organisation has chosen to define ‘shorter feedback cycles’ and ‘informal environment’. Is a shorter feedback cycle once a week or once a quarter? What creates an informal environment – a loose agenda, shorter meeting times, more open-ended questions?

This may open the opportunity for HR to collaborate with line managers to create a flexible template for performance reviews (or catch-ups). This can operate as a guide for all teams across your organisation, catering to the varying needs they might have expressed in the survey.

Flexible technology will be key in supporting these bespoke processes. A performance management tool that can be tailored to employees and manager’s taking collaborative ownership, configured to an evolving workplace culture, and create custom development plans will enable efficiency as well as quality.

Reducing Stress, Increasing Reward

The Person-Environment Fit Approach plays a significant role in research into stress. The Psychology Society describes it as taking ‘account of employee motivation, goals and values, weighed against resources available in the job context, as well as the match between workers’ skills and abilities compared with job requirements. Where there is mismatch, there is strain.’

With only 45% of employees saying they know clearly what is expected of them at work, clarity should be the aim of all performance management conversations, whatever form they take. Clarity around goals can help employee’s focus their motivations, understand what work is aligned to their values, and know whether they have the required resources to achieve them.

The Person-Environment Fit Approach influenced the development of the Effort-Reward Imbalance Approach, which weighs employee effort against paid and unpaid rewards. Where efforts are high and rewards are low, negative consequences for both psychological and physical health have been recorded.

Paid rewards will also play a role in improving financial wellbeing, especially as global and national economic uncertainty continues. If HR is operating on a very slim budget, non-financial rewards can still play an important role in your performance management strategy. These could include:

• Extra leave
• Volunteering leave
• Flexible working arrangements
• Awards
• Focused time for preferred projects / learning

Working with employees to understand what would mean the most to them is important for reward to play a meaningful role in performance management and enable HR to increase wellbeing and retention.

Recognise and Address Bias

Every year, new research is published around the on-going issues of bias in the performance review process, which inevitably has a ripple out effect on promotions, career progression and internal innovation.

Most recently a study revealed three quarters of women were labelled as ‘emotional’ in their performance review, signifying a persistent issue with the different language prescribed to women and men, as well as the connotations surrounding that language.

McKinsey’s Women in the Workplace Report for 2024 found women are far less likely than men to attain their very first promotion to a manager role, making it incredibly difficult for companies to support sustained progress at more senior levels. The situation is even worse for women of colour, who represent only 7% of C-suite positions.

To improve the performance management process in your own organisation, it’s critical to face up to the bias that may exist. To get an objective, holistic understanding of this, data will be like gold dust. Utilising Reporting & Analytics tools to dig into your HR data will allow you to dissect where bias may be interfering with a fair performance process.

Some tips for how you approach this include:

• Check the accuracy of your data first. Is it all coming from a single source of truth, or is it different across separate systems? Are there areas where data is old, or only reflective of one segment of your workforce?
• Don’t just look at a few isolated metrics. Bring your data together and interrogate how different factors may link up.
• Visualise your findings to make any reports you share with leadership or managers easy to digest.

Performance management is a process that must reflect the goals and values of it’s respective organisation. An approach which takes into account the sentiments of your own workforce, seeks to nurture long-term retention, and is open-eyed to existing issues will enable HR to craft a truly effective performance strategy. In the digital age, the right technology will be non-negotiable in supporting these efforts.

Learn about the xcd performance management module and how it has supported success for our customers.