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  • June 8, 2018

Performance Management in Workplace 2.0

Richard Cheeseman
Director HCM Applications Marketing EMEA

Businesses are realising that in order to grow, they need to put their employees first. Performance management has been placed under the spotlight, with traditional strategies proving to be rigid, slow, and unsuitable for modern businesses. In the era of Workplace 2.0, a new kind of performance management is needed.

Smart companies are embracing the new technologies available to them, using a data-led approach to optimise work conditions and maximise employee engagement. Through a tailored, employee-centric performance management strategy, the individual needs of each employee can be met, enabling high performers to deliver, and turning laggards into more effective employees.

 

Always-on performance management

Employee expectations have never been higher. Thanks to shifting sentiment about the nature of work and a tight labour market, it’s no longer enough for employees to simply deliver for their businesses. In order to grow, businesses need to deliver for employees. With this in mind, performance management needs to shift from a compliance mindset that concentrates on rooting out underperformers, and instead focus on supporting and developing employees.

One way to do this is to reassess the role of appraisals. In an age of personalisation and digital transformation, the traditional annual appraisal model looks increasingly outdated. In fact, in a survey done by the Chartered Institute of Personnel and Development (CIPD), it was found 73% of senior non-HR leaders thought annual appraisals were ineffective.

Rather than subscribing to the annual appraisal ritual, businesses need to enable employee growth throughout the whole year, encouraging constant support and feedback, and forming developmental strategies tailored to the needs of individual members of staff.

 

Combining data with behaviour

Relying purely on sales targets and other metrics to assess performance will never give the full performance picture. Setting goals is still vital, but business growth means broader organisational objectives need to come first, after which they can be cascaded down to employees to help inform their personal objectives.

Employees need to be given a sense of purpose and a clear roadmap for development—that’s revisited regularly—and with recognised support resources that support their strengths and enrich their lives. This should take into account their own roles, their team objectives, and their personal and career ambitions. This is a major move on from the traditional pay check-focused employee, who took their lead from their boss and whose only formal personal development opportunities were formulated during their once-only annual review.

Indeed as automation creeps into many process-driven and transactional jobs, employees’ roles are becoming more complex. An altogether more holistic approach to measurement needs to be taken, focusing less on outputs, and more on behaviours. Behaviours such as being a team player and contributions towards the wider objectives can again be prioritised. This will help support the organisational culture and employee engagement—a trait which is becoming recognised as key for growth. In fact, companies with an engaged culture have been found to have a 65% higher share price and 26% less employee turnover.

By combining smart measurements with strategies to encourage the desired values and behaviours, businesses can create a stronger, more motivated workforce.

 

A smart approach to compensation

In its 2017 Global Talent Trends study, Mercer found that fair compensation was the number one motivator for employees. However, in order for compensation to achieve maximum effectiveness, businesses need a smarter approach. Linking pay to the broad performance conversation risks creating misaligned incentives, and may have a negative impact.

Instead, businesses should be channelling compensation to places that need it, such as talent acquisition, or areas of high staff turnover. Pay should also be incremental, responding to the needs of individual employees, rather than a one-size-fits-all approach.

 

The future of performance management

The year of the employee is not about handing unaccountable power to employees, but rather about finding ways to manage their performance and maximise their engagement. By combining smarter measurement with individually optimised performance management, employers will get the opportunity to develop and grow—both their employees, and their business.

By combining smart measurements with strategies to encourage the desired values and behaviours, businesses can create a stronger, more motivated workforce.

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