Many employers have adapted their approaches to performance management over the last few years and the COVID-19 crisis is accelerating the shift in how organisations manage and reward employees. It is not difficult to access a range of recent articles and publications challenging the wisdom of ‘traditional’ performance management practices. The common narrative being that the dreaded ‘annual appraisal’ is outdated (think Keith’s appraisal in The Office), that business leaders don’t believe their performance-management system accurately identifies top talent, or employees don’t feel that the process accurately reflects their contributions.
As popular as it has become to make changes to how we manage performance, there is no ‘one size fits all’ solution, and HR leaders need to first consider their organisational context in order to make grounded decisions on what’s most likely to be effective in improving organisational performance. Whilst, at a basic level, many of the established components of performance management still hold true, for example, setting goals and providing feedback, the current pandemic has dramatically affected goals and performance plans. There is also the added complexity of colleagues, working remotely, now being even more reliant on frequent check-ins with their managers to gain feedback on how they are doing.
In response to this challenge, there are a number of important and relevant factors that employers and HR leaders should consider:
Link employee goals to business priorities and maintain a strong element of flexibility.
Managers should have regular conversations with their employees to set priorities in a changing environment. Annual ‘set it and forget it’ goal setting was already seeing declining relevance before the pandemic, given the pace of change and need to adapt. The radical shifting of priorities during the COVID-19 crisis highlights how challenging the annual system has become.
Invest in managers’ coaching skills. Coaching is the heart of managing performance, which is even more critical when workers are remote. Organisations need to invest in managerial skills, and mindsets, around coaching and feedback as a continuous process.
Keep ratings for the very highest (and lowest) performers and recognise the broad range of good performance.
Instead of investing time and energy in making small differentiations in ratings (and pay) for those in the broad range of good performers, organisations should be focused more on having robust, strengths-based development and career conversations with this group.
In addition to the above factors, progressive organisations are now introducing elements of team-based performance management. This case for system change, coupled with teams being recognised as an important unit of the workplace, provide an opportunity to simultaneously improve performance management and transition to a team-based system that reflects the evolved operating model of many high-performing organisations.