2013 Performance Management Systems: Navigating the New Landscape

By Sanjay Joshi
16/1/2013

The preceding decade has witnessed a quick growth in the adoption and feature set of various performance management solutions (PMS). From focusing on information amalgamation from numerous general records, today these available solutions take into account aspects as diverse as operational analytics, strategy management, risk, governance, compliance, financial reporting and even profitability optimization.

Hello, Reality

Buffeted by a volatile global economy, today companies are striving to create and sustain an affordable and effective attraction, engagement and retention strategy. As organizations seek to curb operational costs, their expectations for higher financial and employee performance are also soaring each passing fiscal. Consequently, employees often find themselves contributing greater efforts without any promise of commensurate rewards. The workforce is working more hours than normal and experiencing higher stress levels, which is leaving them anxiety-ridden, risk-averse and quite apprehensive about accountability, career growth and performance rewards.

PMS: Season and Reasons for Change

Just like an organization wallpaper, conventional performance management systems and traditional talent practices (talent reviews to 360-degree feedback) have subsisted in the background with minimal or zero expectations for any lasting impact. The latest outlook from the stables of Bersin by Deloitte hits the nail on the head, when it notes, “The performance management software market all but disappeared and, after the acquisition of Success Factors by SAP and Taleo by Oracle, is now a “features set” in nearly every offering of HR software. Despite this change, there is major innovation brewing here.

HR experts Marc Effron and Miriam Ort in their famous book One Page Talent Management have asserted at one place that, “perhaps no talent management process is more important or more reviled than performance management.” They went on to offer a simplified and better approach for performance assessment and succession planning, which is grounded in transparency, simplification and behavioral science.

According to a major study conducted by Sibson Consulting and World at Work on the state of performance management outcomes and effectiveness, as high as 58 percent respondents rated the PMS of their organizations as “C Grade or below.” It seems that the changed expectations of the workforce, changes in technology and relationship of employees with technology have been among the prime reasons behind the disjoined state of most PMS today.

The employee expectations in case of performance management have changed not only for the Gen Y segment but also for all constituents of the workforce. Today, every employee looks forward to being an active agent instead of being a passive recipient link. Beyond the usual unilinear download of performance-related feedback, workers wish to be a part of the overall process of performance-relevant data collection. The whole concept of year-end calibration of performance is viewed with suspicion and disapprobation.

Not untinged by winds of change, managers have also understood the futility of command and control tactics for performance and are coping with demands of offering constructive feedback that is balanced and inspires higher performance. Managers need to get out of the way by empowering team members with accountability and trusting them to deliver results.

The talent management technology seems to have hit its tipping point journeying from simple automation to very complex proprietary solutions that leave the managers to grapple with data overload. The deficiency of meaningful information in the face of performance data overload has shifted the focus recently on simplification of process and attention to relevant detail and user-friendliness. Simple performance heat maps are getting popular over wordy and exhaustive reports for immediate insights. The thrust on technology solutions delivering readily digestible insights has rescued the managers from cumbersome processes to concentrate more on driving outcomes.

The increasing presence of Gen Y in today’s workforce has reinvented the relationship of employees with social technologies. Organizations are beginning to feel the need of integrating social technologies with performance appraisal process to sustain the collaborative, social and fast-moving culture of the workforce. The reality of companies that ban or limit social networks at work may not yet be over but their numbers are set to dwindle.

The social approach to managing performance makes feedback much more frequent than an annual ambush, where team members get a chance to seek opinions, feedback and win instant public recognition in real time. Further, there are two more upshots of agile, mobile and social work environment. First, the accelerated rate of change has left little charm in annual objectives and rightfully given way to dynamic goals, which evolve in real-time collaboratively across organization and various teams.

Top 7 Success Factors

Setting up an effective performance management system can be a significant enterprise. Given the uniqueness of each organization, it is naïve to expect any one-size-fits-all approach to click. Though various routes can be taken to design, develop and implement a proper performance management solution, certain basic criteria hold good for all such solutions. The following top seven elements of success are recommended as ground zero for big and small organizations alike.

1. Create and spell out priorities for employees as well as organization.
2. Ensure sync between employee goals and those of the organization.
3. Foster two-way dialogue and frequent collaboration between employers and managers.
4. Occasion top-down and lateral, ongoing and recurrent formal and informal feedbacks of constructive and positive intent.
5. Spot and reward even the smallest employee achievements, including those that may well be tough to quantify.
6. Organize relevant information for management decisions on raises, promotion and terminations.
7. Plan and prioritize ample professional development and mentoring opportunities for all employees.

With innovative implementation strategies for performance management set to roll out, the year 2013 is poised to be a cautiously optimistic year for employees across roles and functions. Besides moderating the complexity of performance management systems and making them more customizable, what is even more required is a substantial reengineering of performance management practices as to empower teams. The journey can be rewarding right from the start if companies articulate a formal strategy, create customized employee value propositions (EVPs) for critical employee segments, deliver EVP promises, and develop total rewards programs – all culminating in sustainable engagement and productive performance.

Sanjay Joshi is an Editor at SHRM India.