The changing business environment asks from companies to keep up with the latest trends to maintain successful. A reshaped Performance Management can lead to multiple benefits. The reasons for reshaping Performance Management are based on external and internal factors, for instance, trends in the market, brain research insights and the effects of the traditional interpretation of Performance Management on employees and therefore organizations.
One of the most important drivers prompting the reshaping of Performance Management is the sudden appearance of social media and its rapid development. Social, cloud-based and real-time solutions have a far-reaching effect on the way businesses interact with their customers and have almost instantaneously reshaped the way ‘everybody’ sees technology and tools. Obviously, social media stands in direct contrast to the static, annual performance cycle that is often applied. This development can be very relevant to companies with a solid mission of leading lead their customers towards a digital lifestyle.
Another important factor that challenges the status quo of a lot of HR solutions and has had a significant impact on the implications of these solutions is new discoveries in neuroscience. Knowledge about how the brain works shows that to develop skills you need to practice and repeat what you are learning or achieving multiple times; repeating focus points, especially repeating them out loud, increases the speed of learning and the ability to apply learning. In light of this, the idea of carrying out coaching just once or twice a year is almost nonsensical.Performance Management as a tool for creating a learning organization is therefore not met by one to three annual meetings to discuss performance.
Insights offered by brain research also indicate that focusing on problems and what went wrong (appraisals) induces a ‘fear state’. The classic hierarchical conversation that is characteristic of annual reviews often compromises the social qualities of status, certainty, autonomy, relatedness and fairness. Undermining these qualities tends to prompt a freeze or flight response in a person. This situation matches research showing that a lot of organizations experience a peak in voluntary attrition following annual reviews; and those leaving the organization are often not people you necessarily want to lose.
In addition to these influences and insights there is also an organizational need for an improved Performance Management approach. The annual cycle of traditional Performance Management has been subject to a great deal of criticism and many organizations have suffered negative effects due to the current practice of evaluating bonus criteria. For instance, the annual approach organizations often use is sensitive to the recency effect. That is, managers tend to focus on what their employees have done in the few weeks or months leading up to the evaluation rather than on what has been achieved over the full year. Employees also report receiving a lot of ‘surprise feedback’ because the actual behavior requiring feedback and the allocated appraisal meeting can be a long time apart.
Something else that causes dissatisfaction with the traditional Performance Management process are bonus systems, stacked ranking and ranking. Most solutions in this area seem to lead employees to attempt to maximize their individual success, often at the expense of the team. As people seek to outperform their colleagues and the focus is on quick wins rather than long- term growth, the ability to innovate as an organization tends to diminish.
It’s not too late to reshape your Performance Management strategy. All you need is to start mapping the key requirements to take your company to the next stage.
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.
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