It is remarkable to consider how rapidly the world has changed in the past few decades. There have been extraordinary advances in technology, software and psychology, all of which have affected the way our organizations operate. It is only natural that these evolutions should dictate the way we manage employee performance. Ignoring such changes would only mean limited success and stunted progress.
In recent years, the pace of business has been impacted considerably by social media and our changing attitudes toward information and feedback. This is a cultural shift that we need to bear in mind when constructing our performance management systems, performance reviews and goal setting. Let’s look at how the increased pace of modern business has impacted notable areas of the performance management process.
Millennials thrive on constant communication
Modern technologies have not only affected the way we retrieve information, but also the way we communicate with one another. Social media is a notable example of how we have grown accustomed to real-time, instant access interaction. It is an everyday part of our private lives. As such, we have come to expect equal levels of authentic communication in our workplace, both from our colleagues and our managers.
Forward-thinking entrepreneurs have utilized social media sites to bring team members together and create an open dialogue between colleagues. This encourages an exchange of information, ideas and increased interaction that has a direct bearing on morale and engagement. Conversely, a lack of adequate communication results in organizational inefficiency that has huge costs in terms of productivity. Most performance management software has adapted to provide an arena for employees to engage, interact, give feedback and provide encouragement, all the while replicating familiar social media platforms.
Changing times demand regular feedback
Not long ago, annual performance reviews were regarded not only as standard, but as the best way of providing employees with feedback on how they are operating. Changing times has resulted in a shift away from yearly reviews, prompted by the realization that they were dreaded by employees, time-consuming for managers and generally ineffective.
In a US poll of 2,677 professionals, it was revealed that 98% found the annual performance review process futile. In a UK study conducted by the CIPD, it was found that most business leaders found the process to be a mere box-ticking exercise. Despite this, reviews are not something we can do away with entirely. After all, employees need to know how they are performing, and how they can do better in the future. This is what prompted the move toward continuous performance management.
Continuous performance management is a new process that demands more frequent feedback. Many large organizations such as Accenture, Microsoft and IBM have made the transition. A notable benefit is that managers can deal with employee issues as they present themselves. Bad habits can be addressed promptly rather than waiting for an entire year, by which time the habits have become well-formed. Catch-up sessions need to be regular and scheduled, but the results are increased communication and familiarity between management and the workforce.
Employees require — and deserve — effective feedback
Continuous performance management is excellent in theory, but it is no good unless it is backed up by quality feedback. It is both the quality and quantity of feedback that is essential for a successful transition away from yearly reviews.
Statistics reveal that managers need to step up their game with respect to feedback. 62% of millennials claim that they have felt “blindsided” by performance reviews in the past. This is likely due to the fact that they had been given inadequate advice or direction until the point that their performance was critiqued. Even worse, 74% of millennials have said that they were clueless about how their managers thought they were performing. This is not only unfair to the employees, but an ineffective strategy if your company wants to improve and succeed. Remember that employees need to be told not only that they are doing a good job or a bad job; they need specific details. How are they exceeding expectations? In what areas can they stand to improve, and how can the company assist in improving their skills?
If you are looking to revolutionize your performance review process, consider rejecting the use of performance ratings. It has been shown that labeling employees with a numerical rating creates a “fight or flight” response that is detrimental to their success or their ability to learn from a performance review. Companies like Goldman Sachs and Morgan Stanley have moved away from performance ratings, and the trend is becoming ever more popular.
Modern businesses need to offer clear career progression
The increased pace of everyday business has had an effect on the expectations of ambitious employees. More than ever before, employees are expecting to be informed of opportunities for advancement, and they are unlikely to stay with a company unless there is scope for progression. 91% of new millennials have cited career progression as a top priority. When you factor in that, according to Forbes, job hopping is the new normal, it is clear that personal development is something that has become a big issue in recent years.
Performance management systems are required to constantly evolve
Clearly, large companies remain relevant and successful by constantly adjusting their performance management systems based on current trends and the needs of their employees. This is the only way for a company to thrive long-term. A performance management system that is never readdressed is stagnant and ultimately ineffective.
A great example of an organization that has renewed its performance management system after a long period of inflexibility is General Electric, which recently put an end to its forty-year old processes, cut out ratings and long forms and instead moved towards regular and effective feedback sessions.
Performance management is likely to see further trends and changes in the coming years. Like any good managerial concept, performance management is forced to take into account changes in the environment and adjust to modern ways of thinking. Given the decisions and adaptations made by large companies, it is exciting to think about what the future has to hold for HR and performance management as a whole.
About Stuart Hearn:
Stuart Hearn heads up Clear Review, a company that designs innovative performance management software. He has been working in the HR sector for over 20 years, previously working for Sony Music Publishing.