Forget everything you’ve learned about performance management. It’s no longer a once-a-year to-do task to check off your list. It’s no longer all about spending time, trying to remember everything your employees accomplished or failed to do for the past 12 months.
The old way, thankfully, is on its last breath.
To illustrate what I mean, here is a conversation I heard recently between two managers:
Manager 1: “All of this effort… months of effort… for a 1 percentage point difference in someone’s base pay? One percent?! There has to be a better way!”
Manager 2: “Yes, and we should figure out how to do merit increased more efficiently. But the thing we really need to do is help people succeed. Let’s focus on that.”
It’s time we move away from enforcing compliance with bureaucratic HR processes to promoting accountability and fast feedback. This shift is a direct result of the concern voiced by many leaders, who tell me contemporary performance management is not an effective enabler of performance that really matters.
According to the latest issue of Harvard Business Review, about one-third of all businesses are doing away with traditional performance reviews. So, what can we do as leaders to fill the void?
There continues to be a great value – burning necessity, really – to double down on development. Research from the Corporate Leadership Council reveals companies see a 40 percent increase in performance outcomes when direct reports believe that feedback has been fair, accurate and, most critically, when it is immediate. And a recent Brandon Hall study found that when done well, effective performance management practices yield a 20 percent increase in retention, engagement and, by extension, customer satisfaction.
Think about it in terms of service-profit chain linkage and the connection between the right investment in employees and apostle level customer loyalty. Now you’re starting to catch the attention of the senior executives when it comes to development.
Performance management works best when it supports striving rather than keeping score on last year or last month.
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