How to Drive a Culture of Performance Management

January 29, 2020 | 4 minute read
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By Neeraj Narang, Director - HCM Product Strategy

Employees are the backbone of the organization and their happiness directly correlates with happy customers. This is even more important than ever as companies become multi-generational, challenging traditional HR processes including talent management.

Many CEOs cite misalignment of talent process as a top concern in managing the future workforce, especially as their staff view the traditional annual performance evaluation process as a time consuming, excessively subjective, and irrelevant exercise. HR leaders of many organizations have been focusing on improving performance management process for several years, but 82% of HR leaders still believe this process is not effective at achieving its primary objectives.
To keep employees happy, engaged, and productive, organizations need to continuously innovate and modernize. Many of the HR leaders I speak with tell me that they are either deciding or already in the journey of making changes to their performance management processes and  Gartner’s 2019 Performance Management Benchmarking Survey corroborates these conversations, showing that 81% of HR leaders are making changes to this process.

Why Are Organizations Revisiting Performance Management Process?

The most common drivers motivating organizations to revisit existing performance management process are:

  • Heightened demand for simpler processes and experiences
  • Alignment of goals within and across the organization. Two-thirds of companies noted that “aligning employee efforts” to accomplishing company goals is the primary reason to have performance management. 
  • Compensation decisions do not seem to mirror performance
  • Declining employee engagement

Some of these organizations have evolved their performance management processes from traditional annual evaluations to 360 degree reviews in last three decades. As emerging technology and new business models are transforming industries, the timespan to revisit the process has been reduced to few years. In one example, an organization revisited their performance management process thrice in last eight years. Organizations reinventing this process mostly have a hard time, but the exercise also provides an opportunity for them to make the process modern and agile. 

Ongoing Feedback is a Key Component of an Organizations’ Strategy

Ongoing feedback has been identified as one of the key components of an organizations’ strategy. Research shows that forward-looking discussions make performance evaluations more useful than focusing on past performance. Gartner research shows that the usefulness of a performance review increases by 4% when the development of skills and competencies are included, and such forward-looking discussions can increase employee performance by 13%. 

Organizations who adopted forward looking discussions as part of evaluations believe that these types of discussions are useful if:

  • Managers and employees have quality conversations. Managers should know when to have that discussion and make sure it helps employees in their development.
  • Managers act as Connector Managers. These managers ask the right questions during discussions, provide customized feedback, and help employees connect with right resources who can help them grow. They understand the needs, assess skills, and interest of employees and coach them accordingly.
  • Regular training sessions are conducted for managers on how to keep these discussions relevant. Sample recorded sessions and writing assistant tools can also be made available for reference.

Besides above facts, it is also important to make this process technology enabled and available  to employees and managers on mobile device for continuous feedback at any point of time.  

What Do Employees’ Expect From Ongoing Feedback?

Employees like a simple and flexible feedback mechanism, preferring to have an option to choose what to discuss with the manager. For example, employees like to have discussion on their business goals in the beginning of the year, covering specific business initiatives such as customer satisfaction. In the next meeting, they may want to have a discussion on additional goals or new topics such as productivity improvement. Such flexibility helps them have focused discussions on relevant topics with manager with progressing year. 

To incorporate ongoing feedback and coaching culture effectively, organizations also need to build a culture of discussion, feedback, and recognition at all levels. There are many occasions where employees can give comments, feedback or recognize one other. Many organizations miss those aspects in their current process and it is important for HR leaders to provide such a tool, including the ability to provide open feedback with an option to make it visible to everyone or managers and/or employee. These sequence of comments, discussions or feedback build a feedback culture and keep employees engaged. 

Performance management is a constantly growing field within HCM. Learn how our product management team approaches the challenge of balancing employee performance management with consistent results.

Feedback to Realization/Actions

In addition to nurturing an organizational culture of feedback by encouraging frequent and ongoing discussions, it’s also important to make this feedback easily available so that employees can refer to it at any time (for example, making all this feedback available to employees and managers at the time of year end review). 
Effective and timely feedback is a significant component of a successful performance management process. Highlighting shortcomings always obstructs the learning and development of an individual, reducing the importance of positive feedback. It is important to know that the feedback should be relevant and aligned to goals, achievement, and performance of employees. 

Finally, feedback mechanisms should also track the progress and development action plans. The more employees see the actions and relevance of the feedback, more they will become engaged in open to constructive feedback. 

Transform Your Performance Management Strategy

No matter where your organization stands, there's an opportunity to improve how you run your talent management operations. If you're interested in seeing how Oracle can help or want to know about our talent management perspective, contact us today.

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