“[Redesigned performance management processes] shift the focus away from forced-distribution rankings and much more toward helping managers coach people to succeed. By changing this one HR ‘ingredient,’ it is possible to affect many others.” – David Parent, Nathan Sloan, Akio Tsuchida, Deloitte [1] 

The performance management of your parents doesn’t work anymore. Changes in the structure of leadership and the influx of varying workforce generations don’t function the same way as they did 50 years ago. What used to be a system of reactive processes to address problems and employee concerns after it was too late, is beginning to develop into a forward-facing, proactive talent entity. Deloitte recognized the need for change and has initiated the redesign of traditional performance management to match the needs of the modern workplace. With the new age of organizational development, best practices have changed.

Tracking Organizational Goals

Even performance management isn’t unaffected by the overarching theme of organization transparency. Companies use this clarity to align their teams to organizational goals through a plethora of tools and assessments that can help determine internal alignment. Organizations that set clear and concise goals for their team are four times more likely to score in the top 25% of business outcomes. [2]

Start by setting the team up for success. Employees want to be involved, and involved employees are more likely to take stock in the organizational values and goals. Effective modern performance management thrives on this delicate positioning. As you evaluate the effectiveness of your performance management system, is there any better time to change the way you set goals with your team? Unfortunately, 43% of employees don’t know their organization’s goals. [3] That means poor transparency and poor communication. There’s no better time to start defining your goals and expectations clearly.

Regular Feedback

Consider the performance review… once reviled and abhorred, it has begun to take a positive turn. Of the respondents to the Deloitte study, 56% believe performance management has positive effects on employee engagement and performance. Young employees are especially keen to regular feedback and career advice.

Old performance management practices largely depended upon the “good” or “bad” performance of employees, and not much in between. However, as Deloitte fuels the redefinition of performance management, it begins to focus more on the development of the team and potential leaders. That’s a large proponent of the changing performance appraisal perspective. The idea behind the performance appraisal is transferring from a pure directive to improve performance to a more developmental initiative so employees and supervisors can work towards meeting goals.

Employee Leadership Development

The challenges with leadership pipelines and leadership readiness was a fault in the old performance management system. As it changes, however, leadership competency quickly becomes less of an issue because there is a greater focus on that pipeline. As managers develop the skills they need to become better supervisors, they then transfer that knowledge and coaching to their team. The study from Deloitte suggested:

“Give managers the authority to recognize and reward employee performance throughout the year. Invest in leadership development that helps managers learn how to coach and develop their teams.”

Deloitte has fueled a drastic change in performance management. They’ve begun the transformation to a developmental tool instead of a benchmarking device. The transitioning workforce needs a performance management system that’s adaptive to their needs while maintaining company performance goals. Best practices for performance management are changing, and it’s time you caught up.

Sources:
[1] – Deloitte – Performance Management: The Secret Ingredient
[2] – HRE Online – Hitting the Mark
[3] – Switch & Shift – 6 Ways to Make Creativity Part of Your Company...

Bio: Chris Arringdale

Chris Arringdale is the Co-Founder and President of Reviewsnap, an online performance appraisal software that allows you to customize performance management, competencies, rating scales and review periods. Reviewsnap serves more than 1,200 customers worldwide including, Penske Racing, CubeSmart, PrimeSource and Nonprofit HR Solutions.