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Author's profile photo Margit Bauer

Believe it: Effective Performance Management boosts the top and bottom lines

There is a lively discussion going on in the HR community about the value of Performance Management programs, especially performance appraisals.  Appraisals have too often become a tool used simply for documenting employees’ past achievements rather than for supporting employees in their daily work performance and effectively developing them.  Appraisals can even demotivate employees if compensation justification or forced ranking guidelines are connected to performance evaluations.  Plus, not to forget the time and effort invested by managers and employees to go through the feedback process.  On top of all of this, the way people work has changed dramatically in a dynamic way.  Unfortunately, the annual appraisal process in many organizations has not kept pace with this evolved work environment. The appraisal process continues to be top down—the employee and the supervisor meet at the beginning of the year to discuss goals, and then they have both a mid-year evaluation and a year-end assessment.

In light of all of these factors, it appears that the go-to solution is to shelve performance management and evaluations completely.

However, the value that can be gained from effective performance management is still—perhaps even more—important as workforce demographics are changing and as Millennials are beginning to dominate the workforce (by 2016 up to 80 percent of the global workforce will be Millennials).  It remains critical to support the HR business by aligning employees’ goals tightly with the business strategy, managing performance, developing employees, improving employee engagement and collaboration, and reducing compliance risks.

Instead of complaining about performance management practices and how poorly they are executed, let’s start doing them right.  What can be done to address these deficits and capture the benefits of more effective programs?  Think about strategic questions and initiatives such as: Do your performance management solutions reflect employees’ current technology preferences and development needs?  Rebalance program priorities and ensure collaboration between managers, employees, and peers is ongoing, frequent, and focused on employee development.  Utilizing analytics—predictive and integrated with other business data—to truly understand your talent pool and to effectively direct investments will lead to the best results for your organization.  Flexibility—not only to meet local and compliance requirements, but to streamline processes—enables the successful implementation of your performance management solutions.  Lastly, is your HR ready to evolve your current performance practices to improve the company’s individual and organizational performance (which is, of course, influenced by other talent areas such as acquisition, onboarding, succession and development)?

We collaborated with PwC to explore why so many Performance Management programs lack efficiency and real value, as well as to provide tips and concrete steps for getting the process back on track.  In Rethinking your Performance Management program, we make the case that Performance Management can be a win-win for employees and employers by supporting individuals’ development of valuable skills that directly support organizational strategy and success.

Continuous dialog, increased focus on collaboration and development, user friendly tools, and simplified processes are just a few of the ‘fixes’ we recommend.  The discussion on how to make performance processes more efficient and valuable will continue.  What’s your experience—good,
bad or ugly—with Performance Management?  Let me know!

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