Successful performance management is key to the long term success of any business. Traditional approaches to performance management included annual planning combined with annual reviews. It typically involved a performance appraisal with a self-evaluation form followed by the annual review. However the workplace has changed since the advent of this original model. Employees no longer work in the style of the industrial era that produced this management tool. Is this traditional approach still fit for purpose? Or are there more effective ways to manage performance in the modern business?
The reality is that few managers or team members enjoy the process of annual performance reviews and appraisals. Both parties find its purpose confusing and the process frustrating. More importantly research indicates that the traditional process delivers unpredictable results that are also difficult to measure.
Much of the frustration with performance management and appraisals comes down to the questionable link between productivity and performance, while many managers and team members find performance reviews time consuming and frustrating. The changing nature of work in modern businesses is also mismatched with the industrial era model of traditional performance management systems.
The concern for management teams of course is that if we simply cancel end of year performance reviews, what will happen to team and business performance? Will performance drop? How will high performers be compensated? How will low performers be motivated better?
An interesting example of a large company moving from a traditional model to a more modern performance management model is Adobe. Adobe based its decision to move away from traditional performance appraisals on the fact that the annual process required 80,000 hours of time from its 2,000 managers, the equivalent of 40 full-time employees. Additionally, their internal surveys suggested that the workforce felt less motivated and inspired after each appraisal.
Instead of annual reviews, Adobe implemented regular update meetings during which managers provide coaching and advice. The objective is to help employees gain clarity about what is expected from them, guide them through performance improvement and assist in their overall career progression.
Netflix is another large company that no longer measures its employees against annual targets. This is because its objectives change so rapidly that annual performance reviews simply cannot keep pace. Google is also famous for creating its own proprietary performance management system and processes.
So what does the future of performance management look like? In the Performance Management Certificate offered by the Institute for Performance Management one of the biggest changes that is highlighted is that companies are starting to break the link between performance and compensation. Instead companies are focusing on employees that are either at the very high end of performance or at the very low end and are focusing on these segments instead.
Probably the biggest change is that companies are moving from annual performance reviews and appraisal to a model of continuous coaching and feedback. This in turn leads to a more engaging model of employee development rather than the traditional, and somewhat cruder traditional model of performance management.
The future of performance management will center around continuous goal setting, continuous reporting, and continuous feedback. Employees want to understand their place and their contribution within the overall organization. By providing them with ongoing feedback it helps provide them with a sense of purpose and meaning for their role.
Replacing the traditional top-down managerial approach with a more engaged coaching approach yields far more effective results according to many observers. Jointly setting and agreeing goals, continuously reviewing progress towards those goals together, and ensuring that everyone is accountable for their results is the key to building high performance teams in the modern business. Frequent communication between manager or team leader and the rest of the team as individuals is a cornerstone of this success.
All feedback no matter how critical must be focused on helping employees develop in the future rather than creating fear about what was done in the past. Staff need to know that their manager is invested in their future development and is also accountable for their success. Similarly managers should seek constructive feedback from the individuals on their teams to ensure that everyone is moving in the same direction.
In conclusion the future of performance management will revolve around coaching via continuous feedback rather than annual performance management appraisals and reviews.
About the Institute for Performance Management:
The Institute for Performance Management is dedicated to teaching and certifying best practices in performance management globally. The Institute delivers the Performance Management Certificate, a training and certification course in performance management that leads to the designation of Certified Performance Management Professional.
More information: https://www.certifiedperformance.org/