New world of work calls for rethink in performance management
MANY ORGANISATIONS are still dependent on traditional performance-management processes because they provide a consistent way to evaluate employees and give rewards.
Year after year, supervisors follow a repetitive process: Fill out goal forms, track progress, fill out more forms, then conduct a formal annual assessment. However, when it comes to increasing employee productivity, motivation and engagement, these conventional processes seem increasingly obsolete.
This is because the way work gets done has changed dramatically over the last few decades. What has not changed is what leaders and employees want from performance management in order to drive improvement in business results through individuals.
Over the past few years, we have been observing three fundamental changes that are causing a huge shift in the way companies need to think about performance management.
First, organisations are increasingly facing performance pressures. Our research revealed that the “topple rate” – the speed at which companies lose their leadership position – continues to rise. This faster turnover of leadership positions underscores the need for firms to commit to a relentless pursuit of improved performance.
In this situation, companies need to figure out how to bring out the best in every employee. Many organisations fail to create a tight alignment between the individual’s work and the organisation’s objectives because of unclear expectations. If employees do not fully understand exactly what is expected of them, it is impossible for them to contribute to overall performance of an organisation.
Second, the new generation of talents have big demand and high expectations. As baby-boomers retire, Gen Y employees – generally defined as people born after around 1980 – will comprise 75 per cent of the global workforce by 2025.
Social, gaming and mobile technologies from the consumer digital world have upped their expectations for work tools with real-time, remote collaboration and feedback functions. In this real-time collaborative culture, on-the-spot improvements based on immediate feedback can have a large impact on performance.
Leading organisations are adapting their old-school processes to serve the needs of this new generation of talents effectively. They are questioning whether annual assessments are still sufficient to provide feedback in a meaningful time frame, given that business priorities seldom follow the annual evaluation cycle and individuals’ goals are increasingly tied to project cycles that could last from weeks to months.
Third, a classic 1:1 employee-supervisor relationship is disappearing as organisational structures flatten. In this new world of work, teams are often formed and dissolved. Employees often switch between multiple projects under various team leaders. In many organisations, employees and immediate supervisors are no longer bound together by place. Leading organisations are scrapping the importance of immediate supervisors’ feedback and supplementing it with on-the-job feedback from team leaders.
Where can your organisation start?
In a world where employee retention and workforce capability are important indicators of success, organisations worldwide are questioning their performance-management models. Potential starting points include:
Define clear outcomes and expectations. An organisation needs to make crystal-clear what “good” looks like in terms of expected performance. The key is to make your employees fully understand what is expected of them in order to help the organisation achieve its objectives. Creating tight alignment between the work of the individuals and the organisation’s objectives can dramatically enhance the performance of both the employee and the company’s business. Additionally, clarity of expected outcomes acts as the foundation for employees to build skills necessary to reach the next level of achievement within the organisation.
Use social tools to provide on-the-spot feedback. To compensate for the lack of frequency in the annual performance assessment, which is often based on old feedback, many organisations are looking for social tools to provide on-the-spot feedback from peers to promote performance promptly. Peer feedback gathered through social tools can also provide valuable insights to supplement more objective measures. The goal is to provide employees with feedback when needed as opposed to months after teachable periods have passed.
Use team-leader feedback to supplement that from immediate supervisors. Instead of relying solely on immediate supervisors, an organisation should teach team leaders to look for opportunities to provide constructive feedback when an employee is involved in a project under their supervision. The point is to allow team leaders to have productive yet less formal discussions about employees’ performance that will drive continuous improvement.
Organisations should rethink and look carefully at their performance-management model to see if it truly drives performance. In many cases, defining clear expectations, harnessing on-the-spot feedback, and using team leaders to provide constructive feedback will bring noticeable results.
Kessara Sakmaneevongsa is partner in consulting services, Deloitte Thailand.