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July 2017
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July 2017
Newsletter Article

Reinventing Performance Management

An effective performance management process can help leaders face rising pressures to engage talent more effectively and efficiently, execute better on business strategy, and do more with less to remain competitive. Yet traditional performance management practices continue to fall short through unclear expectations, infrequent feedback, and biased evaluations. A Gallup study shows that only one in five employees strongly agrees that the way they are managed motivates them. Many companies cite performance management as a waste of time, and some, like Adobe, General Electric, and Netflix, are actively taking steps to overhaul existing processes. 

The consequences of poorly structured performance management processes are significant. Misaligned individual performance goals and business strategies deplete time and resources. Morale suffers if there is no differentiation in performance ratings, development opportunities, or compensation between high and low performers. Inconsistent evaluation criteria and rewards can result in lower productivity, reduced engagement, and higher attrition. Decisions about learning and development priorities, along with decisions about learning resource allocations, can suffer if performance information is unavailable or difficult to access. Last but not least, legal issues can occur without proper documentation related to performance.

On the other hand, those organizations that have effectively integrated performance management with learning, leadership, and career development, are reportedly up to

• three times more likely to report good employee results
• 55 times more likely to report strong overall talent management results
• 100 times more likely to report strong business results.

Finally, effective performance management processes allow organizations to develop managers who can better deliver what top talent wants most—a coach, not a boss. 

While most organizations have performance management strategies that include some element of coaching and developmental planning, few feel confident that managers demonstrate effective performance coaching and feedback. To provide meaningful, ongoing coaching conversations, managers must be skilled and trained to provide clear direction and feedback that is both timely and actionable. Learning leaders play a key role in developing managers into coaches, which often does not come naturally or easily to even the most motivated.

Emphasize ongoing coaching conversations

Informal, daily “quick connects” lasting 5 to 15 minutes can help employees and managers better understand expectations, workloads, priorities and roadblocks. Coaching may also involve weekly or monthly 30-minute check-ins where managers review short- and long-term goals for the employee and the organization. These conversations build relationships and foster engagement by letting employees know that their manager cares about them, knows what they’re working on, and is available to support them if necessary. 

Some of the greatest challenges in manager–employee coaching conversations involve managers’ focus around employee weaknesses, past mistakes, or existing skill gaps. A strengths-based approach, combined with honest feedback and recognition, keeps the focus on personal growth and future performance. Effective approaches for building managers’ coaching capabilities in these areas include the combined use of self-reflection exercises, 360-degree feedback, mentoring, action learning, and online learning platforms, such as massive open online courses and game-oriented simulations where participants are placed in real-world scenarios. Organizations that take the time to invest in managers’ coaching development are more likely to benefit from engaged leaders and increased bench strength.

Take a systems view

Tools and training are only part of a viable solution to ineffective performance management. Learning leaders also serve a vital role in helping revamp their organization’s performance review process. Consider how three forward-thinking companies have done it.

GE replaced its annual formal review process with a personalized and timely approach aimed at reflecting the speed, flexibility, and collaborative spirit that drives the GE culture forward. The new approach emphasizes frequent conversations, coaching, and continuous development. Leveraging advances in mobile technology, GE enabled the process with a simple app to log priorities, capture conversation notes, and share feedback. 

ConAgra is testing a new ratings-free performance review process, which replaces a rated review with a series of conversations designed to engage managers with the projects employees are working on and how they are achieving their goals. In this way, managers become more like coaches than judges. 

NY Life Insurance Company created Real Talk learning programs as a way for managers and employees to engage meaningfully on performance management. Since the program’s implementation in 2012, managers and employees have begun to set fewer but more strategic goals. Additionally, performance management favorability has increased 11 percent on employee satisfaction surveys.

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Use peer feedback

Many organizations have found value in peer-based performance management. For example, Ceridian, a Minneapolis-based human resources software provider, developed Conversations, a system that allows feedback to be solicited and gathered in real time, as opposed to traditional 360-degree feedback models that operate on set times for collecting feedback. Because traditional feedback approaches can be colored by experiences that occur between project completion and project review, in-the-moment peer reviews can collect performance feedback that is closer to what actually occurred.

Despite its potential for improving current performance review models, there are key challenges to keep in mind when using peer feedback. These include:

• Determining the rating criteria employees should use when evaluating a peer’s performance. Many experts recommend eliminating a rating scale altogether so employees can focus on comments about behavior instead of numerical values.

• Ensuring employees are trained to provide credible performance feedback. However, some thought leaders like Marcus Buckingham contend that managers or peers are not credible or reliable raters of other people’s performance, even with training and time.

• Identifying how to roll out the new peer review approach to the entire organization. GE rolled out its new performance management process using an iterative framework. Hearsay Social, a San Francisco-based computer software company, is on a five-year plan to integrate peer feedback into its performance management process.

Summary

Performance management practices must evolve to keep up with rising demands for more agile goal-setting, continuous feedback and development, and timely recognition for achievements. While there are many exciting things happening in the world of performance management, it’s important to remember that what works for one organization may not work for another. As with any change in organizational structure, changes to a performance management process need to fit with organizational culture and senior leaders’ strategic goals. 

By helping to develop managers’ coaching skills and improve performance management processes, learning professionals can drive the kind of collaborative, frequent communication that engages talent, builds and distributes leadership capabilities, and boosts performance. Finally, by focusing more on aligning the entire performance management system to organizational strategy rather than relying too narrowly on the annual appraisal as an isolated performance lever, learning leaders can also enhance their role as a value-added business advisor.

References

“Development: The Cure for Turnover at Vi,” by Sarah Sipek, June 1, 2015, Chief Learning Officer.

“Pillars for Performance: Integrating Learning and Talent Management,” by Katherine Jones, October 28, 2011, Bersin by Deloitte Research Bulletin.

© 2017 ATD, Alexandria, VA. All rights reserved.

About the Author
Holly Burkett, SPHR, CPT, has more than 20 years’ experience helping diverse, global organizations achieve strategic change impact with workplace learning and talent management initiatives focused on leadership development, succession planning, career development and coaching, and performance improvement. Formerly with Apple, she is now principal of Evaluation Works, a performance consultancy in Davis, California.

She recently wrote the “Talent Manager as Change Agents” chapter in ATD’s Talent Management Handbook and was a contributor to the Human Resource Certification Institute’s (HRCI’s) The Rise of HR: Wisdom From 73 Thought Leaders, an e-book distributed to more than 1.5 million HR professionals around the globe.

Holly holds a doctorate in human capital development, along with a master’s of human resources and organizational development, and is a frequent conference presenter, international facilitator, and writer.
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