As an employer or manager, do you feel that you are fully assessing your employee’s talents and abilities with your current performance management process? If not, here are some ways that you can redesign your current system. Even if you answered yes, you may still want to stay tuned in because performance management processes are in dire need of change from the way they have traditionally been conducted.
Does this sound familiar?
- My company utilizes a performance management process that utilizes individual ratings and rankings based upon competencies that don’t fit every job.
- We only conduct performance reviews annually and don’t really provide feedback throughout the year.
- Our managers manage by telling and directing and this is projected in our process.
- The company looks at past performance and what employees have accomplished in the last year.
- We emphasize career ladders and expect that employees know how to build their skill set to progress within the company.
- The total process is lengthy and too administrative, so our managers don’t complete the process in a timely manner, if at all.
- We have low participation and engagement when it comes to our performance management process, as employees don’t understand it.
- Our current performance management process doesn’t tie into our company’s big picture.
- Our current performance management process is not aligned with our culture.
It doesn’t matter if you are a small company or a large company this is how companies have traditionally viewed the total performance management process. So, what should you do to make the switch from a traditional, status quo process to a new view of the performance management process?
First of all, the performance management process should be built upon teamwork and collaboration between the manager and the employee. Companies need to move beyond the forms and ratings and embrace the idea of development and coaching. Performance management is not one-sided and it is the responsibility of the manager and the employee to both participate in the process. Business success often depends upon faster innovation, cross-company collaboration and a highly motivated workforce. So, in order for business to execute a successful strategy, companies need to train their managers on how to be good developers of employees and coaches.
Secondly, the performance management process should not be a stand-alone event. Many companies are moving towards having uninterrupted conversations with employees three to four times per year. These meetings are generally initiated by the employee requesting 15 – 30 minutes of the manager’s time at three to four separate intervals per year. For example, in March the employee and manager may discuss the employee’s goals for the year and how those goals relate to the success of the business and what resources are needed to complete those goals, in June they may report on progress made towards those goals and their overall performance, and then in November discuss their follow-up on goals and potential learning and/or career opportunities. The manager’s job is to listen, provide feedback and recognize great work, which in turn allows the employee to know how they are doing against their goals and their manager’s expectations. This process not only focuses on teamwork and collaboration, but also includes real-time conversations and feedback, coaching and mentoring opportunities for the manager, and it focuses on the employees long-term value and the “what” and “how“ versus just the “what”. During the learning and career opportunities discussion it also is a great time to discuss employees moving laterally within the organization to learn new skills – a career lattice – versus just discussing their ability to move up the career ladder.
With this new system, HR Departments need to provide managers and employees a form to utilize for discussion purposes. The form should be a shared document between the manager and employee to document their conversations and feedback provided. It takes the place of the original performance evaluation form and is generally placed in the employee’s personnel file after the conversation. If there are performance or work habit issues with the employee these should be documented on a progressive disciplinary action form and discussed with the employee at the time of the occurrence. The employee should not hear about these issues for the first time at their goal meeting.
While this new approach moves away from the traditional pay for performance model, how does a company restructure its reward system? In the past pay increases have generally been tied to the performance management process. There are four elements of a compensation strategy that will assist companies with still achieving their desired results.
- Use a group reward plan (e.g., profit sharing or gain sharing) to reward most employees for achieving overall company objectives.
- Adjust base salaries or pay rates for changes in market rates.
- Use cash bonuses or stock to recognize the outstanding results of top contributors and deliver competitive long-term compensation.
- Construct a recognition program that enables managers to recognize employee behaviors that align with the company values, culture and goals.
At Adobe, they used a traditional review system in which employees were ranked from one to four on a traditional review form annually. After the annual review period, Adobe’s HR team saw a massive spike in turnover as disheartened employees left the company. Adobe hired the best of the best, yet within their first year or two were reviewing them as just “mediocre” employees. This led the employees to believe that their talents would be better utilized elsewhere, increasing turnover. Turnover is expensive and can tend to do harm to the company’s reputation. “You were exceptional when you came in, but now, relative to your peers, you’re only average…That doesn’t feel good” says Donna Morris, Adobe’s Senior Vice President of Global People and Places (HR Magazine, April 2015).
Within the past couple of years, Adobe has moved to a new and improved review system that boasts a more comfortable, laid-back, conversation-like approach between managers and employees that no longer include the annual rating system that they previously used. This new performance review system caters to the new era of business that consists of more collaboration and more knowledge-based work, which is more difficult for employers to measure. Also, today’s generation is all about living in the now, which correlates to employees wanting results immediately, rather than waiting annually or longer to get the results of their evaluation.
It takes time for new performance management processes to catch on, but that is part of the change. Employers have to get their employees to be aware of and to buy into the new process. Employers must also connect the dots between pay, performance, and career initiatives so that there is one end goal for not only employees, but also the employer as a whole. Improving frequency and the substance of the new ‘conversations’ that your managers are conducting with their employees will increase employee buy-in as well as create new goals and a new, transparent culture within the company. Even if you think that your company’s performance management process is working, give these new and updated tactics a try. You never know, your company’s evaluations may need some evaluating!
For additional information on the performance management process, please contact us at www.newfocushr.com.
Written by: Kristen Deutsch, M.B.A., CCP