You know that it’s time to transition to the Next Practice of Performance Management. You even know the reasons why it’s the right time to do it now.
The next step once you recognise the warning signs is to discover the key requirements that can help your company improve its performance management.
This usually starts from a concern when it comes to organizational readiness. That is, in order to move forward with performance management there is a need to develop other specific areas/topics (e.g. the grading and integrity of the organizational structure) and the general lack of process within the entire organization must be remedied.
To meet the requirements of a more adoptive and one-size-fits-one solution, organizations have indicated that they need an organic Performance Management system. An organic system asks for flexibility from managers, employees and the organization and places an emphasis on advancing communication and improving the skills of all stakeholders in the organization.
If we had to summarise the common key requirements when it comes to Performance Management, we would pick these seven main areas of focus:
The new Performance Management approach should take context into account. For example, a situation may arise where a manager has a certain objective that has been posted at the beginning of the year and it turns out that very favorable circumstances mean that the target can be achieved without any real effort. Or, vice versa, it could be the case that somebody puts in all the necessary effort but doesn’t succeed in realizing their objective due to unforeseen external influences. In both cases there is a disconnect between the original idea of incentivizing a certain behavior and the real output, which leads to decreased motivation or no impact on motivation at best.
– The new Performance Management approach should be flexible and dynamic. It needs to cover all our businesses and operations.
– The Performance Management cycle should be less rigid. For instance, reviews should be connected to project cycles and the review process should allow for more frequent feedback opportunities.
The reality of our businesses and operations is changing rapidly. Performance Management should be connected to this pace and rhythm in order to deliver benefits.
ALIGNMENT WITH REALITY
A more clear and transparent connection should be made between Performance Management and incentive structure. These two elements are currently misaligned and there should be a willingness to re-examine the weighting of company goals (70%) and individual goals (30%).
The intensity of the Performance Management process should be connected to the scope and importance of the position/function.
Performance Management should provide insight into the professional maturity levels of people. There should be compulsory development steps for employees moving from junior to senior roles.
Performance Management should be forward-facing and a personal development plan of some sort needs to be introduced.
The connection between performance and financial consequence needs to more transparent and embedded.
In addition to objectives, it should be clear what’s expected of people in different professional capacities.
Leadership competencies and competencies in general should be connected to goal- setting.
In communicating the new Performance Management approach it should be made clear ‘what’s in it for the individual employee’.
Feedback for managers should be included as a mandatory part of the system.
Performance Management methodology still requires more alignment with goal/KPI definition and better SMART goal definition.
Each manager/employee/team should be able to update/observe status, scoreboards, general results, feedback and comments from feedback sessions, including comments for managers.
The Performance Management approach should be simple, aligned and able to be audited (go back and validate input to obtain result/KPI).
It’s important to help managers focus on how to provide feedback and coaching in the context of Performance Management. Goal-setting should also be part of the training process. It’s an area that always needs further improvement especially when aiming for a future-proof strategy.
When moving forward there should be aligned developmental initiatives to support the implementation of a new Performance Management system to help build a culture of real feedback.
In establishing a new Performance Management system it’s useful to think about having an ‘owner’ that represents business/operations instead of ownership from an HR perspective.
It’s important to have an automated, standardized system.
Right before the implementation of the new Performance Management approach, a company needs to be absolutely certain that their technological capabilities (Wi-Fi and 4G) are up and running in order to support a cloud- based solution.
About the authors
Nicolien Dellensen, Senior Consultant with Time To Grow Global is a behavioural and research specialist.
Govert van Sandwijk is Managing Partner, specialising in Strategy Facilitation, Leadership development and Organisational performance.
As such both are and have been involved helping our clients reshaping their Performance Management approach.
If you're about to improve your performance management process, we are here to help.