Traditional processes may be broken, but not having a performance management system is simply not an option.
There has been a lot of talk lately about how ineffective and outdated traditional performance management processes have become. Management research firm CEB found that 95% of managers are dissatisfied with their companies' performance reviews. Additionally, the same report revealed that as many as 90% of human resources leaders feel their processes do not even produce accurate or reliable information.
As an indicator of the disruption this dissatisfaction with traditional practices is causing in today's enterprises, 6% of Fortune 500 companies now report that they have done away with employee rankings, reviews or performance appraisal processes. One by one, leading businesses around the world are ditching their traditional approaches, including GE, Adobe, Accenture, Gap, Medtronic, Microsoft and Dell, just to name a few.
With all of this talk of the death of traditional performance management, what exactly is supposed to take its place?
One thing is certain, performance management systems are a necessity within every organization. Without one, an organization can only expect to grow and evolve for so long before it will collapse. These processes are the drivers of organizational development. But with traditional practices becoming obsolete, what is a company to do?
Here are five suggestions for how to establish a modern strategy that is both effective for leadership and positive for employees.
1. Work toward organizational alignment.
What often happens in organizations with multiple business units is that they tend to function independently of each other. Each unit has its own goals, strategies and processes. Over time, this independent thinking creates gaps between departments. What's more, it pulls each unit further away from the overall goals, strategies and processes of the company as a whole.
By working first to achieve organizational alignment among the business units throughout your organization, you can begin making strides together. Only as a unified organization, will you be able to create and implement a modern strategy that works for today's employees.
2. Set measurable goals.
While organizational alignment won't happen immediately - it does take some time - there is one thing you can do to help the units of your business begin to come together while also improving your performance review process: Set measurable goals.
Work in a unified manner with all of your company's business units to establish measurable goals. Ensure that these goals are transparent throughout the organization so that each employee, business unit head and leader, alike, knows what every area of the business is working toward.
This action will not only work to make your business more effective as a whole, it will also help bring the business units that once operated independently together as they work toward intertwined goals and shared objectives. Additionally, this effort will help each employee begin to see his or her greater purpose and value within the organization, which, as we will see in the next suggestion, is another important step to take when improving your strategy.
3. Achieve employee motivation by establishing purpose.
Employee motivation is not achieved through tough management or intimidating top-down leadership. Now more than ever before, employees are motivated by purpose; they want to know how their role and daily activities contribute to the bigger picture of the organization.
When employees have clear purpose and understand the important role they play as part of their team and the organization as a whole, the outcome is powerful. There is a noticeable improvement in productivity, positivity and effectiveness.
To help instill a sense of purpose in employees throughout your organization, be more transparent and more frequent in your communication. As you will see in the next suggestion for improving your strategy, increasing communication has a wide range of benefits.
4. Increase employee feedback and make it less formal.
Time after time, research continues to show that employees want more feedback. Regardless of their age, role or industry, they are hungry for more regular communication about their performance. Whether that feedback is praise for work well done or constructive criticism, employees want to know how they're doing - in real time.
To achieve this more frequent feedback, encourage managers to share their thoughts about employee performance with each individual on-the-spot. When they see something great happen, they must acknowledge it with the individual and help them understand why their action had such a positive impact. Likewise, they should take full advantage of teachable moments, that is, opportunities to correct behaviors and improve employee performance as mistakes, missteps, and errors take place.
As we'll see in the next suggested step toward implementing a more modern, more effective performance management process, coaching is a critical piece of the overall strategy.
5. Go beyond the performance appraisals to begin performance coaching.
It's not enough to simply communicate more with your employees. While this transparency and ongoing feedback is incredibly important, it's also necessary to maintain some sort of regular scheduled review. This is because even with frequent feedback, most employees and their employers still feel the need to have a scheduled time to discuss opportunities for growth, areas for improvement and bigger items that may otherwise get pushed off of the priority list.
That said, you want to get more from your review process and so do your employees. So it's time to go beyond the traditional annual review with a dry performance appraisal, followed by a tense discussion of salary and bonuses. These reviews have been proven to be largely ineffective and induce anxiety among employees. Some employees even quit because of annual reviews.
Instead, the performance review should become a coaching tool that provides valuable perspective not only on an individual's performance, but also on the effectiveness of the department and of the organization as a whole. Use it to proactively identify exciting areas for growth and ways your employees can become a greater asset to the company, making a bigger impact on the overall bottom line.
Yes, traditional employee review systems are dying. It's time for your organization make the move to a new strategy that works for both the company and the employees. There are ways to create and implement a process that will help the business achieve its goals while also getting employees excited about opportunities for growth and making a greater impact.
If you're interested in learning more about tools and methodologies to help you make the transition to a more modern, more effective performance management strategy, contact KPISOFT today to schedule a free, no-obligation demo.