December 10, 2015
Performance management processes have come under regular fire for being ineffective, time consuming, and quite frankly not fit for purpose. And it’s no surprise to discover exactly why employers are so justifiably disappointed in outdated performance management processes. Recent research from Towers Watson demonstrated that only 36 percent of companies consider their performance management process to be valuable, and some companies have even decided to scrap performance management altogether. While many of us don’t disagree that as a whole performance management processes aren’t producing the results that they should be, that doesn’t mean companies should be eliminating performance management from their organisation altogether. Instead, companies need to take steps to find a performance management process that gets positive results.
Performance management has been criticised on the following grounds; it’s ineffective, employees don’t see the value in it and it’s time consuming, particularly for managers. Below we present an analysis of successful approaches to performance management, and how they have worked in practise for a range of companies.
The ineffectiveness of performance management is due to the long standing issue that a one size fits all approach just isn’t as effective as a tailored approach which takes into account a company’s specific goals. The lack of measurable results and the de-motivating feeling which is often attached to traditional performance ratings is what has led managers and employees to see performance management as lacking in value.
Finding a performance management system which works for your team is the first step to an effective strategy and positive results. If employees haven’t bought into the performance management process then setting goals and reviewing progress will be obsolete. Managers need to be on board with the process first. According to the Towers Watson report, 45% of managers say they don’t see the value in performance management. If your managers are not invested in the processes, then your employees won’t be either.
The average manager spends over 200 hours each year on performance management, according to figures from Personnel Today. Yet in spite of this, an overwhelming 90% of HR leaders don’t believe that the process yields accurate information. This shows that a) the system is too time consuming and therefore most likely overcomplicated, and b) information isn’t being effectively recorded or communicated even if managers have the best intentions.
Collaborate with managers to develop a process that works for them without eating up huge amounts of time or over complicating their work life. Avoid a box-ticking mentality by keeping things simple, and provide managers with training on how to have effective performance and development conversation. When Adobe decided to revamp their performance management back in 2012, they spent months obtaining feedback from employees and managers to create a system that really worked for their people.
There are some considerations every company should make when rethinking performance management, including how to set goals in order to achieve targets, how to inspire and support self-improvement for all employees and how to minimise paperwork to make the process more time efficient for both managers and HR.
Many companies are already using SMART performance objectives to set clear goals for individual employees. SMART goals are based on five criteria: they are specific, measurable, achievable, relevant and time-bound. Goals should challenge and stretch employees but still be realistic, otherwise managers risk de-motivating employees through impossibile standards. New performance management trends advocate aligning these goals with the company strategy. This not only helps to achieve the overall organisational goals, but also ensures employees can see how their goals are contributing value to the company as a whole.
Ongoing coaching is another important aspect that companies should not overlook. Performance management shouldn’t be about just setting aside time for annual reviews, but making this a continuous process. Companies such as General Electric, Microsoft and Deloitte, have shifted towards a process that is based on ongoing coaching and in-the-moment feedback from managers. Considering that 70% of employee learning and development happens on the job, many companies are finding this to be an effective management technique. Additionally, many companies are rethinking their use of performance ratings and many are scrapping them completely as a means of increasing productivity.
In order to simplify and speed up performance management processes, an increasing number of companies are introducing performance management software. Companies like General Electric use an app which works like an online notebook for recording and viewing feedback and comments. It can be accessed by managers and employees on their device at any time. Added to this, HR are able collate data on the training and development needs of the whole organisation in just a couple of seconds by running a single report on performance management software.
When it comes to effective performance management, change is definitely on the agenda. Rash decisions to scrap performance management altogether may cause more harm than good in the long run, and the companies that will experience positive results are those who have successfully planned and implemented a performance management process that takes into account both the needs and values of the company and their employees.
Stuart Hearn is a leading performance management specialist who has been working in the HR sector for over 20 years. Stuart is the CEO of Clear Review, performance management software for small and medium sized businesses.