Five reasons why performance management is at the top of the people agenda

For a while now, performance management has been seen as an increasingly bureaucratic process under the control of HR that isn’t adding value to the business anymore. It might be ‘managing’ performance – but it’s not improving performance. But recently I’ve really started to notice a sharp upturn in organisations making changes to their performance management systems.  And I’ve been having some really interesting conversations about ways to make their system more aligned to their companies’ culture and strategy – improving how they engage their employees.  We’ve been working out how their performance management processes can make a genuine difference to overall business performance.

So why now? I think we’re at a tipping point – there are a number of factors that are all converging to make performance management a central focus of organisations. But let’s start by looking at the five factors that are pushing performance management to the top of the people agenda:

  1. The nature of work has changed.  It’s increasingly apparent that the work we do isn’t constrained by an annual cycle. More often than not, we don’t report into just one boss – and, in the new digital age, we often work on global projects in collaborative networks, not just a single team. The conventional model of performance management with an annual appraisal and rating from a single line manager no longer fits.
  2. The workforce is evolving. As employees, we’re looking for a different relationship with our employers, framed around opportunity, development and coaching. We’re less interested in measurement and rankings. Millennials in particular have different expectations and priorities in their working lives. They’re more digitally savvy and expect the technology that they use at home to be mirrored in their working lives. So our current and existing performance management processes need to be updated and modernised to make sure they’re fit to manage our future employees.
  3. Technology allows us to measure performance differently. People working on projects can register their contributions on an ongoing basis instead of waiting until the end of a period. Some organisations now use internal social media and crowdsourcing approaches to recognise individual’s efforts outside of the traditional cycle. Others have found ways to measure genuine value generation and map this into incentives.
  4. Maximising productivity post-recession. As we emerge out the other side of the recession, CEOs have told us that they want to grow their business but keep costs to a minimum. So the need to drive productivity across the workforce is more important than ever. These days organisational distinctiveness is key to a competitive edge.  Employees are crucial to this, so the way performance is articulated and assessed is important.
  5. Embedding cultural change and rebuilding trust. Some sectors - financial services, oil and gas, energy, utilities or mining for example - are under increasing pressure to change aspects of their organisational culture.  Performance management can support this change by making sure that the desired behaviours and goals are mapped into the performance management system. Risks can also be addressed through the process – with clear consequences for those who fail to live by them.

These are some of the core themes behind the changes I’ve talked through with some of my clients around their performance management. But there may be others – please do comment and challenge below.  

 Are you looking to overhaul your performance management process? What’s driving the need for change in your business? If you’d like to talk about this further, please do get in touch or leave a comment in the space below. 

Zsolt Szelecki | Director
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