Performance management is key to any company’s success. Regular performance reviews ensure employees are given the opportunity to develop their professional skills, while keeping productivity high. But creating an effective performance management program can be a challenge. A Willis Towers Watson report reveals that fewer than half of employees think performance reviews have helped improve their performance, while barely half think their performance was accurately evaluated in their most recent review.
The COVID-19 crisis has made performance management even more complicated. At the beginning of the crisis, as companies were pushed to rapidly adopt remote work, many had to rethink their performance management strategies. Feedback, meetings, and annual reviews had to be adapted to fit the virtual format.
Many businesses are now preparing to transition their teams fully or partially back to the office. Data gathered by Kastle Systems show a slow but steady growth rate in office occupancy across 10 major US metropolitan areas (as of May 2021). However, a return to the office doesn’t necessarily mean things will return to the way they were before. Some companies have made permanent changes to their business structure or moved to a “hybrid” working model, and employee expectations have changed due to the crisis. The performance management lessons learned during COVID-19 will continue to be important moving forward.
Feel like your performance management program could use a refresh? By understanding which performance management frameworks are out there, and what kind of challenges most companies face, you’ll be better equipped to make changes and get great results for your business—for the COVID-19 period and beyond.
What Are the Different Types of Performance Management?
Continuous vs. Annual Performance Management
Is “performance management” synonymous with “annual review”? Up until recently, most companies chose to evaluate their employees once per year. However, the newer model of continuous performance management is quickly gaining in popularity, with the Harvard Business Review calling it a “performance management revolution”.
There are several reasons companies might choose to adopt a continuous feedback model. A continuous process encourages managers and employees to communicate while key issues are still fresh in their mind. And with 96% of employees saying they prefer receiving feedback regularly, it’s fair to say employees appreciate it.
Continuous performance management doesn’t mean annual reviews aren’t important. Structured yearly reviews are still a useful tool for giving and receiving feedback, but the way they are administered is key. Fair, unbiased, and scientific assessments should always be used during the review process. In addition, most businesses now complement their annual review system with additional types of feedback and communication. These might include manager one-on-one meetings, peer-to-peer assessments, and more.
Top-Down Performance Management vs. Peer Reviews vs. 360°/Multi-Rater and Self-Assessments
Performance reviews don’t necessarily need to come from management alone. Peer reviews and self-assessments are also valuable tools for evaluating performance. With access to information from a variety of perspectives, managers can get a more complete picture of each individual’s progress.
360° assessments are a particularly interesting tool. With assessments like Involved 360, you’ll get an analytically-robust picture of strengths and improvement opportunities, including peer and industry benchmark comparisons. This will give you an objective picture of where each individual is, and where they need to be. Couple this with Involved-LINC, and you can pinpoint what to focus on to drive business results right now (and know you can wait on as well).
What Are Some Common Performance Management Challenges?
What Should You Be Measuring?
One major way in which the coronavirus crisis impacted performance management is in the type of frameworks used. Since managers of remote teams can’t see their team members, they often default to an outcome-based framework: measuring employee performance based on the employee’s concrete achievements (projects completed on time, key performance indicators met, etc.). On the other hand, in-person employees may be evaluated on a skills-based framework, relating to how much the employee is developing his or her skills. Normally, this would be more apparent on a day-to-day basis in an office environment.
Both outcomes and skills are important for your employees’ overall development. Ideally, your performance management assessments should be measuring both. They also should test for leadership potential to ensure a robust talent pipeline.
Performance Management in Remote and Hybrid Environments
There may be additional challenges that arise with performance management in remote environments. For example, you will need to ensure that the performance management methods you choose are flexible and can be optimized for digital formats. Moreover, if you’re working with a hybrid team, the performance management framework should evaluate all employees in the same way, whether they are in-person or remote. HR consultants can help you put together a performance management strategy that works for your business.
Choosing the Best Performance Management Framework for Your Company
When developing a performance management process, ask yourself the following questions:
- What is most important for our company to measure?
- Are we measuring both outcomes and skills?
- Are there other key factors we must evaluate?
- Are we using professionally-developed, scientifically-sound assessments?
- This is important to obtain the best results, and avoid any unintentional unfairness or discrimination.
- Are we using top-down performance management, peer reviews, self-assessments, or a combination of these methods?
- What tools and software are we currently using for performance management?
- Do we need to invest in new tools or resources?
How Can People Analytics Help with Performance Management?
People analytics is all about using HR data to get the best results for your company. If you’re not yet gathering HR data, it’s a good time to start—top companies are using people analytics to supercharge their results now. If you have already begun gathering HR data, there may be additional ways to use the data you have.
Here are some of the ways people analytics can help with performance management:
Employee Assessments
As previously mentioned, using professionally-designed assessments will help you ensure fairness in your performance management process. Not only can unintentionally-biased reviews lower employee involvement and morale, they could also potentially open you up to unlawful discrimination claims. To avoid these risks, you’ll want to select an assessment that is valid, accurate, and has a track record of success. Trained people analytics professionals can help with this.
Leadership and Promotion Decisions
Employee assessments can also help you make better leadership and promotion decisions. Did you know that, according to Gallup, managers account for at least 70% of variance across employee engagement scores? Yet, the same report shows that companies fail to choose the leader with the right talent for the job 82% of the time—no wonder engagement is in the tank at most organizations. A streamlined performance management process will help you choose managers with the right skills to be great leaders and drive involvement skyward.
Data Gathering and Analysis
Finally, people analytics is all about gathering data and using it to better understand your workforce. People analytics techniques such as organizational network analysis (ONA) can be used for performance management and talent development. This technique involves using data to create a visualization of the formal and informal communication networks within your company. ONA can help you spot influential employees with leadership potential who may previously have been overlooked. Likewise, LINC uses predictive analytics with machine learning to identify, down to the individual leader, what exactly is driving results—thereby allowing laser-like action plans to boost outcomes. LINC can use a firm’s existing data or utilize new data from scientifically valid assessments.
Conclusion
Although performance management has always been challenging, and remote and hybrid work environments may make it more so, there are still plenty of ways you can improve your process. By selecting the right assessments, offering frequent, multi-dimensional feedback, and making full use of people analytics techniques, you can empower employees at all levels of the organization to do their best work.