Transforming Performance Management for Increased Agility

(Editor’s Note: Today’s post is brought to you by our friends at SilkRoad, a global leader in cloud-based talent management solutions. They were named a winner in HRO Today’s annual “TekTonic Awards for excellence in HRMS Suites.” Congrats to them! Enjoy the post.)

When it comes to agility, there are two definitions. The first refers to the ability to anticipate change and respond and the second refers to an incremental method of design. Performance management needs to do both. Performance management systems need to be flexible and adapt with the times. But they also need to have a logical, methodical flow to them.

But the real challenge in transforming performance management is engagement with the process. The performance appraisal is simply a form: what transforms the process are the people within the organization: senior management, managers, employees, and human resources. According to the 2015 Deloitte Human Capital Trends report, only 10 percent of respondents believe that performance management is driving engagement or high performance. On the other hand, Deloitte’s most recent High-Impact Talent Management research has found that goal-focused, competency-based performance management can predict higher levels of talent management maturity.

Agility in Performance Management

So, how do we get there? In a recent webinar hosted by SilkRoad, Candace Atamanik, manager of talent and HR research at Bersin by Deloitte, shared 5 reasons to consider agile processes when thinking about performance management.

1. Increased competition for talent. We see it everywhere. An increasing number of organizations expressing frustration with the challenges of finding qualified candidates.
2. Growing need to quantify results. The need to speak the language of numbers has always been there. But the popularity of big data and predictive analytics have forced everyone to step up their game.
3. Business need to innovate. There’s some truth to the line often mentioned in the “Pirates of the Caribbean” movie series. The Pirate Code says “Any man who falls behind is left behind.” It applies to companies too. Companies must keep up with market and consumer needs.
4. Globalization. Even local organizations face global competition. We’re not simply talking about products and services. This also applies to talent.
5. Increased collaborative effort. The way we work is changing. Harvard Business Review data indicates that collaborative activities have increased by over 50 percent.

The reasons are compelling and somewhat overwhelming. It also raises the question, what’s the best approach to take? But before exploring that question, let’s look at our options.

Trends in Performance Management

Atamanik identified four major trends happening in performance management. In my opinion, one of the biggest was viewing the process in the same context as net promoter score (NPS.) I’m hearing this term used more frequently in a human resources context. Net promoter score is a management tool used to gauge loyalty, usually in relation to customers. Think of it as a customer satisfaction score.

From an employee perspective, it would relate to employee loyalty (which might translate to retention) and employee satisfaction (and possibly engagement.)

The other trends include having shorter, more frequent performance conversations, shifting the performance discussion from past actions and rating systems to future development, and adding real-time development coaching to the process.

Conduct a Performance Management Assessment

It can be tempting to invoke radical change where performance management is concerned. Human resources and senior management have to ask themselves if the organization can process that type of change.

One way to approach the situation is to conduct a performance management assessment. Let the assessment tell the organization the most valuable changes to incorporate as well as how many changes are necessary. Atamanik recommended the following 5 questions for conducting the assessment:

1. What drives performance management within the culture?
2. How does performance management align with the business?
3. How is coaching and feedback viewed within the organization?
4. What are the company’s current performance analytics?

These answers can help the organization determine the current level of satisfaction or dissatisfaction with the current system and what strategies should be considered.

Getting Performance Management Right Shows Big Results

Every company is going to approach performance management in their own unique way that aligns with culture. So results are going to be different. However, making the right changes to performance management can yield significant outcomes. Adobe is an example. In 2012, they instituted a “check in” program where managers and employees had shorter but more frequent performance conversations. Adobe says that change has created a 30 percent reduction in voluntary turnover. This shows that making performance management changes can impact bottom-line results.

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Deloitte research shows that almost 90 percent of organizations have changed or are planning to make changes to their performance management process. That tells me this conversation isn’t going away any time soon. If you fall into that category, I’d suggest listening to the archived webinar “Redesigning Performance Management for Increased Agility.” Believe me when I tell you, it’s worth an hour of your time.

Image taken by Sharlyn Lauby at the 2016 SilkRoad Connections Conference

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Performance Management Alignment: What HR Can Expect In the Year Ahead