Game Changing Performance Management Trends
Modern organisations have transitioned from their transactional & process-driven nature towards becoming more employee-centric. This exciting paradigm shift has prompted organisations to muster up the courage to try out new things and shake up their existing performance management systems. Listed below are a few performance management trends or predictions for the next 12 months
1. Focus on quality of feedback and discussions.
Performance management shifted from being a disruptive HR trend and became primarily recognised as one of the most effective approaches for performance management. Organisations of varying sizes noticeably shifted from annual appraisals cycles towards regular ‘check-ins’. Also, they seemed to rely more on real-time feedback. In fact, most blue chip, companies rate redesigning of performance management one of their top priorities for almost around 79% of executives. With organisations embracing this novel approach, the focus is shifting towards making the performance conversations more meaningful. To achieve this, organisations will need to:
- Provide a framework for managers and employees to support high-quality discussions for providing effective feedback. Performance management frameworks or systems need to encourage focused futuristic developmental dialogue supported by offering qualitative feedback.
- Cut down the form filling effort and bring about changes to the existing bureaucracy trends.
- Offer required training to the managers about day to day coaching skills.
- Separate performance measurement from feedback and performance improvement discussions.
It’s important to address these points since employee experience has been one of the top performance management trends. Managers and organisations have understood the significance of this trend as the present market is an employee-driven one. If organisations fail to focus on employee development and growth, they will automatically fail to retain their top performers.
2. Performance management systems are evolving towards simplicity.
To improve the performance of employees at work and to be more employee-centric, organisations need first to simplify their existing work processes. A performance management system should be easy to use, and businesses seem to be now getting this. In the last few decades, performance management has become quite complicated. Organisations focused more towards measuring performance and linking it to their salary/pay structure. However, organisations have now realised that such processes do not produce reliable data and in fact end up negatively impacting employee performance and engagement. Moving forward, companies are more likely to follow in the footsteps of Accenture and Adobe. These two organisations have ruled out complex processes such as ratings, annual appraisals, competency assessments, and calibration meetings. They are focusing on quality and regular performance driven feedback and conversations. According to the data collated, 96% of organisations who have adopted this approach have realised that their processes have simplified. Also, 83% of organisations have expressed that the quality of discussion between managers and employees also seem to have gone up. Organisations also need to consider simplifying their software. They have realised that their existing performance management software does not seem to fit in an agile performance management scenario. Hence they are on the lookout for HRIS software that is rules driven but flexible as well as easy to use, and can support feedback and meaningful discussions in comparison to their existing performance management systems which merely captures data and automates the appraisal processes. Companies mostly prefer simplified software as it needs almost little or no training and it also encourages meaningful discussions instead of preventing it.
3. Organisations are striving towards changing the manner in which they manage their performance-related bonuses and salary structure.
Organisations have begun to do away with the existing annual appraisals and employee ratings. This is quite a welcome move as it makes their employees feel valued. It also results in creating a much more productive workforce. It is likely that more and more organisations will do away with performance-related pay structure in the next 12 months. They are likely to base their pay-related decisions on responsibility and the market rate. They will also link bonuses based on organisational or team performance. There is also a possibility of organisations adopting the approach that is recommended by McKinsey which focusses on identifying and rewarding only the top performers instead of everyone.
4. The focus of performance management is shifting from completion rates towards manager impact.
Now that organisations are transitioning from performance measurement approach towards performance improvement, there will be changes in the type of data that they would need. The predictive trend says that organisations are more likely to evaluate the quality and impact of performance management discussions that take place between employees and their respective managers. With this shift in trend, HR professionals will now need to closely monitor the frequency of these performance check-ins and the frequency of the feedback as well. They would also need to notice the impact that these interventions on the overall performance and morale of the employees at large. This will enlighten them as to who are the best managers and which managers need any additional training and support to develop their respective teams.
4. Organisations are opting for continuous performance management software over appraisal software.
While the principles of continuous feedback and regular check-ins are quite simple and managers also seem to prefer this approach, these new habits will take some time to develop. So if you have HRIS software in place which encourages this shift of focus in managing performance, it is likely to remind people of what needs to be done and when. It also offers visibility to the HR of who is doing it right and who isn’t. Many organisations who have tried to customise their existing performance management software to support a more agile approach, have not met with much success, unfortunately. Hence it is more likely that organisations will purchase purpose-built continuous performance management software instead of buying the regular annual appraisal software.