Organizations have neglected performance management because they focused on measuring rather than developing. Performance can still be enhanced by improving measurement. However, development is crucial. Measurement must be reformed and enhanced in a way that supports the development and improves performance.
Performance Development is a process of improving the effective management of individuals’ growth and team efficiency in order to achieve high levels of organizational performance. New Performance Management is a Performance Development
Only 2 out of 10 employees strongly agree that their performance is managed in a way that encourages them to do outstanding work, according to a recent Gallup poll. In addition, the international consulting firm Deloitte calculated the number of hours spent on annual performance reviews, and it came out to be nearly two million. As a result, they radically altered their approach to performance management.
- What's wrong with traditional performance reviews?
- The business benefits of Performance Development
- What makes a successful team? The manager.
- How to Accelerate Performance Development?
- Engagement-Focused Performance Development
- To Conclude: Accelerate Performance Development by Focusing on Strengths
What's wrong with traditional performance reviews?
Let's first endeavor to identify the major drawbacks of traditional performance evaluations. There are two big things that come to mind.
Reliability of the results
Because of cognitive biases, assessing someone's abilities results in inconsistent data. According to psychological research, the inaccuracy of assessments taken by others is over 60%. Although the review is supposed to measure the individual being assessed, the assessment is actually greatly influenced by the assessor's characteristics and preferences.
Managers, like all people, are more inclined to value individuals who are similar to themselves. As a result, they may give more favorable ratings to employees with work styles, personalities, or backgrounds similar to their own.
An additional issue is that managers may overestimate the abilities of employees if they excel at just a few critical tasks. When people make mistakes, their future work may be regarded as less competent and subject to more stringent scrutiny than is the norm for other employees.
The presence of personal and unique biases, halo effect, central tendency, leniency and strictness, and spillover effect biases is well-known in psychology. Therefore, assessment results can not be trusted.
Changes in the workplace
The workplace has changed dramatically in recent years, and so has employee perception of work. According to Gallup's research, global workforce shifts have resulted in a significant disconnect between how organizations manage employee performance and what employees believe is necessary for their personal development.
The quantity of available employees in a certain location has altered with the rise in new technology and remote work importance. Employees of the new generation value independence more, and they're an important segment of the job market—for example, millennials currently account for 38% of the workforce in the United States. Younger employees want more feedback and less micromanagement, and they aren't as strongly connected to a firm as older employees. When their demands aren't met, they're content to seek assistance elsewhere.
It's critical to know what motivates employees and what they hope to gain from their job in order to build a successful performance management program. You can connect them to the company in a more permanent and lasting way if you pick up on their interests and desires.
What are employees looking for in a job? They want a manager who cares about them as a person as well as an opportunity to learn and grow. In addition to interesting challenges—projects that alter the world and reflect their personal views—employees also desire interesting challenges. A good manager and a fast approach to productivity growth are required to provide these opportunities.
Employees want performance management to shift away from traditional practices and toward “performance development”, which is customized to their natural talents, performance needs, and sense of purpose.
The business benefits of Performance Development
Employees and managers alike face challenges in today's workplace, where job demands are constantly shifting, technology is rapidly advancing, and teams are interconnected globally. To be effective in these situations, employees must be highly engaged.
The Gallup study confirms this:
- highly engaged teams – top-quartile – achieved higher performance on positive outcomes;
- they’ve also suffered fewer negative outcomes;
- bottom-quartile teams suffered more negative outcomes and achieved lower performance on positive outcomes.
Median percent differences between top-quartile and bottom-quartile units were:
- 10% in customer loyalty/engagement;
- 23% in profitability;
- 81% in absenteeism;
- 41% in quality (mistakes);
- 66% in wellbeing (thriving employees);
- 13% in organizational citizenship (participation).
These are pretty impressive numbers. CEOs, CHROs, and HR directors at the top level of companies, in particular, should pay attention to these new trends.
When performance development becomes part of a company's culture, employees become more engaged and satisfied, resulting in a higher-quality workforce and reduced recruitment and onboarding expenses. It helps them find purpose and see value in staying in one place for longer, which in turn results in a higher-quality workforce.
What makes a successful team? The manager.
Employees want their manager to set clear expectations and help them prioritize the next step, but they don't want to wait for the traditional annual review to provide that direction; they want feedback sooner. A manager must know what the employee is working on and train them to achieve excellence because talented, dedicated workers want to be held accountable for their work.
According to Gallup, manager behavior accounts for 70% of employee engagement, thus emphasizing the importance of selecting the right leaders. Work with your employees to improve your managerial skills so that you may function as a coach.
Employees require good managers acting as coaches if a working performance development strategy is to be successful. Only 20% of employees can “strongly agree” that they regularly speak with their managers about their goals and how to achieve them. Employees also feel that they do not receive the necessary feedback to further their development.
Employees who are motivated and constantly improving their skills benefit your company and lead to better performance and efficiency, but proper guidance is crucial to accomplish all of this. Managers are responsible for providing this guidance, and selecting the right people for these positions is important in this regard as well as for increasing their abilities in this area.
Pillar 1: Establish expectations
The importance of establishing expectations is emphasized in various studies on the subject, including the Balanced Scorecard (BSC), Drucker's Management by Objectives (MBO) method, and the well-known SMART objectives.
Only half of the workers understand their job duties, according to Gallup. Furthermore, only 41% strongly believe that their job descriptions match what they do daily. You must address this issue if you want to approach performance improvement in the proper manner.
Setting goals and objectives is vitally important and can significantly impact employees’ performance by stimulating what is known as intrinsic motivation. Intrinsic motivation is a strong motivational force that arises from within the individual rather than being the result of rewards for good performance.
There are several factors managers need to consider when they set expectations:
- goals need to be clear and specific;
- they need to have the right difficulty;
- employees need to be involved in the process;
- progress needs to be tracked, and feedback offered.
How to set goals properly?
There are a couple of things managers should keep in mind. Here are some useful pointers:
- Make sure that the expectations are clear – According to Gallup's research, employees who believe their job description matches their actual work are 2.5 times more likely to be engaged. Employees and managers should be on the same page when it comes to day-to-day work responsibilities. They should agree on what counts as an achievement or a failure (establishing what counts as an achievement, an acceptable result, and an unacceptable result). Priority activities should also be identified (establishing what is priority). This will help them avoid problems with conflicting demands in the future.
- Align the goals with the team’s and company’s work – By making certain that goals are in alignment with both team and company work, you can ensure that both teams and individual employees are more productive. Whenever feasible, goals for employees should also be linked to the company's overall strategy—this way, you can demonstrate how individual performance contributes to the big picture. Employees who comprehend this are far more likely to invest themselves in their work (up to three and a half times more). The consequences are quite significant. In fact, employees who are assisted in aligning their personal objectives with the company's objectives are 56% more productive on average.
- Consult the employees – Employees should participate in their own development by working together to set goals that are appropriately challenging and well defined. In addition, involving employees in the goal-setting process is beneficial because it makes the goals more personal and motivating. Only 30% of employees think that their managers involve them in the process, but they are four times more likely to be engaged in their work than those who are not.
Pillar 2: Continually Coach
Performance management using annual reviews is one of the biggest issues, particularly when managers rely on them to deliver feedback to their employees. This is a widespread problem, as 47% of respondents in a Gallup study said they received feedback from their managers only a few times a year, if at all.
It is impossible for managers to remain aware of everything that occurs over the course of a year in the context of goals and performance. Continuous coaching is a much better alternative—it enables managers to alter goals and alter expectations as needed, as well as better grasp how workers are performing. It also helps managers and employees establish better relationships. This frequently results in increased performance, and feedback conversations are thus more powerful. If you think about it, individuals are much more likely to heed the counsel of someone they like.
However, providing effective feedback requires more than just words. A meta-analysis by Kluger and DeNisi in 1996 found that badly delivered feedback not only did not improve performance, but actually decreased it.
Managers must make certain these conversations don’t feel like micromanagement. They should also not focus on things that don’t work well. Instead, they should praise team members and express appreciation for their achievements. Only 19% of workers feel that their greatest accomplishment was discussed with their manager, which is why so many people feel their achievements are not properly recognised.
It is important for managers not to focus too much on the past. They should review performance and provide feedback, but the main subject of the conversation should be the future: improving effectiveness and discovering fresh opportunities. This will prevent the conversations from becoming too negative and sapping the motivation of their employees.
Pillar 3: Create Accountability
While feedback conversations can be friendly, they can’t be “just good talks”. There must be clear accountability if the conversations are to bear fruit.
Accountability is, in simple words, the way people take responsibility for their actions. In the workplace, accountability is typically viewed as a negative thing. Because of the top-down approach, employees tend to distrust their leaders, and this often leads to discouragement rather than the opposite.
In order to eliminate the negative connotations, companies must establish a positive accountability culture. This can be done by using the bottom-up management approach. In bottom-up management the goal-setting, project-creating, and task-assigning processes are driven largely by employee feedback. Employees are given the chance to participate by either providing feedback or taking a stake in the decision, or both.
Therefore to create an accountability culture in business the manager/owner should:
- Ensure that the team’s purpose and goals are well understood.
- Explain the significance of the job given.
- Make sure the management and the team are on the same page regarding what constitutes adequate progress and how it will be measured.
- Designate each team member's duties and obligations.
- Define the clear feedback timeline and process.
- Evaluate progress and change focus, based on the employee feedback.
Make sure to accomplish the following when executing reviews:
- celebrate successes – this is what a good review conversation should start with. Point out what works great and praise the employee before you move on to problems
- be fair and accurate – don’t hold employees accountable for things beyond their control, and don’t expect a performance level they can’t possibly achieve
- ground them in data – use qualitative metrics that illustrate the person’s performance and effectiveness in the context of the entire team’s expertise level and the job description. Offer guidance through subjective observations
- consider the employee’s development – the aim is to help the employee grow, so evaluating their skills and the progress toward their development goals is essential
Employees should not see accountability as something to be dreaded or avoided. Only 40% of respondents to Gallup surveys strongly agree their managers hold them responsible for performance goals, yet these individuals are 2.5 times more likely to be engaged. This suggests that there is value in accountability.
It is important to note, however, that review conversations must be a component of a larger continuous coaching program to be effective.
How to Accelerate Performance Development?
Managers should be able to discuss each employee's strengths as well as the strengths of the entire team throughout the whole performance development process.
360 Degree Feedback is a simple but powerful tool that can help you achieve your goals. Employees receive anonymous feedback from their colleagues through this method.
It typically occurs using an online form that requests information about a variety of job skills. The employee fills out a self-evaluation questionnaire in addition to the evaluated person's questionnaire.
This method can assist employees to recognise their shortcomings as well as their strengths.
Strengths-Based Coaching is the way
The impact of Strengths-Based Coaching can be huge for a business. According to a meta-analysis from Gallup in 2016, based on responses from 2.1 million employees working at over 20,000 organizations, there are some substantial benefits.
The study shows that Strengths-Based Coaching:
- results in an 8% to 18% increase in performance (productivity, sales data, performance ratings);
- improves customer metrics by 2-10%;
- lowers attrition by 20-73%;
- raises employee engagement by 7-23%;
- improves citizenship – employee involvement in company-sponsored activities – by 4-10%.
Rather than concentrating on problems and shortcomings, Strengths-Based Coaching emphasizes strengths and successes. Managers should concentrate on their employees' strengths, alter their goals and objectives to fit them, demonstrate how to use those goals to achieve their individual objectives, demonstrate what they are proficient at, and think of methods to improve them. Managers may also use the same strategy when considering their team as a whole—identifying what it is good at and what it requires to ensure the greatest result.
Rather than focusing on problems and shortcomings, managers should emphasize strengths and successes in Strengths-Based Coaching.
Engagement-Focused Performance Development
It is crucial to focus on boosting engagement during performance development. Gallup describes 12 essential elements of employee needs that form the employee management metric called Q12. These needs are organized into four types.
1. Basic Needs
- Employees need to know what is expected of them.
- They also need to have the equipment and/or software necessary to do the job.
2. Individual Needs
- Employees need to be able to focus on what they do best at work.
- They should be praised regularly.
- They want to be liked and treated as a person by their supervisor, manager, etc.
- They should also feel that there’s someone who encourages them to get better and develop their skills further.
3. Teamwork Needs
- People need to feel like their opinions count and can affect the way the company operates.
- They should be able to see their job as important and a part of the organization’s larger strategy.
- Employees like when their team members are committed and engaged, and it helps them feel the same.
- They want to have friends in the workplace (or at least a friend).
4. Growth Needs
- Employees need opportunities to learn and grow at work.
- They also need to be able to talk about their growth and accomplishments (at least once every six months).
It is crucial for a manager to carefully monitor all of these areas during regular conversations with an employee, to assess where the employee stands in relation to each, and to try to determine whether the employee is content with his level of development in the company.
To Conclude: Accelerate Performance Development by Focusing on Strengths
There is no debate that the old performance management systems are broken and do not function as well as they should—Gallup's data and many other studies corroborate this. Rather than concentrating on weaknesses and areas for improvement, you can improve performance by providing more frequent feedback and focusing on strengths. By doing this, you can increase employee engagement and performance and keep them engaged.
Having the right people to accomplish these objectives, however, is critical. Good leaders are those who not only have the necessary expertise in their field but also know how to mentor others and help them learn. This must be taken into account when recruiting. Some employees will be naturally gifted and able to become excellent mentors. They should be the foundation of your performance development programs.
You must help other workers, such as managers you may already have, improve their coaching skills. You should see these skills as crucial in the current job market and design a method for them to learn what they need. By doing this, you will help everyone improve and make another stride towards an environment where individuals can take responsibility for their performance.
Creating a healthy, friendly workplace full of engaged, collaborative people—and achieving this result is easier than you might think—is what Performance Development helps companies accomplish.
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