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Performance Management

Week 4

The 5 keys to successful performance management

In our previous masterclass guides, we have looked at how to set goals for your performance management process and how to measure its effectiveness in delivering those goals. This week we are focusing on the key principles of successful performance management, based on the latest research and on our own experience of working in performance management over the last 10 years.

1. Encourage continuous performance management

Employees deliver performance continuously throughout the year. So why do so many performance management systems place their emphasis on the year-end appraisal? This contradiction has now been recognised in research, and leading organisations such as Microsoft, Adobe and Deloitte are re-focusing their performance management on continuous feedback and regular one-to-ones (or ‘check-ins’ as we call them) between managers and their team members. Since Adobe moved to a year-round approach, it has experienced a 30 percent reduction in voluntary turnover in a highly competitive talent environment.

2. Equip your managers with feedback and coaching skills

In order for year-round performance management to have an impact, line managers need to have the necessary skills to give quality feedback and to improve their team members’ performance and development through coaching. These skills do not come naturally to most managers so providing skills training for managers is invaluable. Line managers also need to understand that ongoing coaching and development is a core part of their role and not an ‘extra’ on top of their day job. Therefore the training you provide should also emphasise the benefits to them such as a higher performing team, reduced employee turnover, fewer mistakes and increased ability to delegate.

3. Focus performance reviews on the future rather than the past

Traditional performance reviews have tended to focus on discussing and assessing the past. However, in its 2012 research, the CEB Corporate Leadership Council found that high performing organisations simultaneously consider both past and future elements of an employee’s performance, rather than just evaluate past accomplishments.

In practical terms, we recommend that when discussing objectives during check-ins, the employee and their manager should focus on any obstacles that may prevent an objective from being successfully achieved and what mitigating actions should be taken. In formal performance reviews, discussions should consider what has gone well and why, and how that success can be replicated again in the future. Similarly, when things haven’t gone so well, discussions should centre on what can be learned for next time, rather than applying past-focused performance assessments. Performance reviews should also consider what capabilities and development actions are required to achieve forthcoming objectives and career plans. The outcome of any performance review should be a set of specific actions for the future which are then followed up and followed through.

4. Align individual performance with organisational goals

It is generally recognised that effective performance management should align individual performance with the overall goals of the organisation. Whilst this sounds simple in theory, it is difficult to achieve in practice. An approach taken by some organisations has been to ‘cascade’ objectives down through the organisation, starting with board-level objectives being set, then divisional objectives, departmental objectives and finally individual objectives. However, this process is bureaucratic to operate and relies on everyone adhering to a strict timetable, which rarely happens in practice.

A much simpler (and highly effective) approach is to communicate the organisation’s overall goals for the year to employees and ask them to set objectives which support these goals, in conjunction with their manager. This upwards aligning process not only forces the employee to consider how their role contributes to the overall performance of the organisation, it also gives the employee ownership of how that performance is delivered, rather than having objectives forced upon them from above. For this approach to work, you will need to ensure that your organisation’s goals are communicated in a language that employees will understand.

5. Simplify your processes and systems

One of the key findings of the 2014 eReward Performance Management Survey was that processes and systems need to be kept ‘very, very simple’. If your performance review process has a number of different steps, ask yourself whether they are really necessary. If you use performance ratings, ask yourself whether the time and effort involved in collating and calibrating them is actually delivering any benefit in terms of employee motivation or performance. If you use traditional, time-consuming 360 degree feedback, consider following General Electric’s lead and replacing it with a simple frequent feedback facility. Keep any forms as short as possible, and remember that not every part of a performance review discussion needs to be captured on the form. You can simplify things by giving employees an agenda of items that should be discussed, and use the form to capture action points and any information that needs to be collated centrally for analysis.

If you use performance management software, it should be so easy to use that it does not require any training. Additionally, it should not have too many options, otherwise busy employees and managers will find it overwhelming and will be put off from using it.

Coming up in the Masterclass…

Over the remainder of the Masterclass, we’ll be tackling some of the classic problem areas in performance management such as the use of performance ratings, how to encourage staff to set high quality objectives and how to get line managers to engage with performance management. We’ll also look at how to launch a new performance management process and how to take it online.

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