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 the significant cultural shifts accelerated by symptoms of the pandemic, 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 seems to consistently remain 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 a casual environment are both found in many of the advisory articles and employee surveys as suggested improvements to the performance management experience.

Running your own internal poll or survey will be good practice to confirm if this is the case for your people as well. Following this, it will be important to work with line managers to clarify exactly what their team members definitions of these are. Is a shorter feedback cycle once a week or once a quarter? What creates a casual atmosphere – a loose agenda, shorter meeting time, more open-ended questions?

This will vary for each individual and may open the opportunity for HR to collaborate with line managers to create a flexible template for performance reviews (or catch-ups) that can operate as a guide for employees who have expressed no strong preference or enjoy the structure but can also work as a starting point for conversations which go down a different path.

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, the identification of skills gaps, and 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, 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, internal innovation, and so on.

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.
• HR is already strapped for time, so technology that will support not just an accurate and in-depth, but also a seamless reporting process will be crucial to acting on your data in good time.

“The reporting side of xcd has been really helpful. Things like gender pay gap reporting were taking a huge amount of time before. We wanted to provide better reporting functionality across the whole charity which, without the system in place, was just impossible to do.” – Anna Haldane, Change Management Lead at CAP

Read our case study with CAP to learn more.