How Performance Management has Evolved and Where it’s Going in the 21st Century

A Quick Review of the Old Performance Management Method

Before we explore how performance management has changed recently, it's important to have a deep understanding of the outdated method some companies are still using. We'll break it down to make it easier for you to understand.

Reactive Performance Management

Understanding that performance management software or systems have been reactive for the last few decades, it's important to understand what has changed. Taking into account how HR managers used past data, It's important that they're also proactive and agile enough that employees can use the feedback they receive to make lasting change.

Not Particularly Useful

One of the more crucial aspects of performance management is knowing what you should be doing, why you should be doing it, and the value that each task brings. The old performance management method had no real use; it was only useful if a situation at one time arose again, which just doesn't happen very often.

There's none. With backward-facing techniques, and a span as great as one year in between reviews, there is very little use or value offered to employees. Although a review is only one day and done, it makes employees feel like they're never doing enough to please their superiors. It's no wonder that most employees dread the day called "review day."

Tied to Their Ability to Live

On the surface, it may seem like tying an annual performance review to an employee's ability to earn a paycheck would motivate them more. That's wrong because people do the best work when they feel valued and have control over their work and their time. By giving talented employees freedom, you can motivate them without creating a stressful environment where they are constantly on the clock.

When you tie raises strictly to performance, it tends to discourage employees from doing better and prevents them from stepping up their game. A single misstep once they're at their peak level can erase the raise. However, that still doesn't address the rising cost of living and how employers need to adapt as well.

One issue with tying performance reviews to annual raises is that it creates a lack of loyalty. If an employee believes that you're willing to sacrifice their life and those of their family on what might seem like a whim, how loyal do you think they'll be? How long do you believe they'll hang around waiting patiently for the other shoe to drop? They won't.

A One-Way Flow of Information

Some past performance review methods are causing more harm than good. The manager speaks, and the employee listens. Managers might ask employees how they feel about feedback, but this often isn't a meaningful conversation.

When employees feel as though what they have to offer isn't valued in their work environment, they're going to disengage and become less likely to stay with the company for long.

For the performance management model to work, it had to be backward-facing, punitive and required knowledge of statistics. It did not create engagement or foster relationships that last long-term. Thankfully, changes have been made to the model, and critical benefits such as these are now being delivered.

How Has Performance Management Changed?

Performance management was long overdue for a change. It wasn't able to live up to its original purpose, so managers were never able to encourage better performance from their employees. It took decades for that realization to set in, but it's a brand new world today.

No More Annual Reviews

To stay competitive and constantly grow, companies need to adapt and innovate. The performance management methods of yesterday are no longer relevant in the modern business world. Companies failing to evolve will themselves flounder and ultimately fail.

Performance management didn't suddenly disappear overnight. That's because it requires daily attention. It needs to be part of the company's DNA in order for the organization to have success. Otherwise, it will be an afterthought, and will not work as anticipated.

Actionable, Timely Feedback

Now, modern performance management focuses on actionable feedback. It might seem like this is a shift, but it's actually an old model that's had some primary failures. The once-a-year model for boss-to-employee discussions doesn't work anymore because nowadays, companies have technology and other tools to provide feedback in the moment so real change can be made.

Having a quick feedback cycle is essential to effective feedback. Receiving frequent, short feedback cycles helps managers deliver actionable insights to employees based on things that have recently happened or might happen in the very near future.

Real-time feedback on employee performance and behavior makes course corrections simple and easy. With rapid adjustments, even big changes become relatively minor setbacks rather than potential game-changers that might ultimately affect someone's ability to earn a living.

The benefits of actionable, timely feedback include the following:s of actionable, timely feedback include the following:

• Minor changes to improve performance
• More return on employee efforts
• Employees work better together when people understand how their actions impact the company's goal.
• Improved relevance of feedback
• As a team, we believe in creating long-term relationships and being there for each other. We're committed to meaningful work that leads to a better quality of life.

Frequent Check-Ins

To say that performance management has changed dramatically in the past few years is an understatement. The shift towards frequent check-ins rather than annual or biannual reviews is a big change that couldn't have occurred without additional structure and planning.

In return, we'll provide you genuine content that enables you to meet employees on their level. We work with them and demonstrate their skills to create a safe and space conducive environment for learning.

With a conventional performance review, the scenario looks something like this:

1. The employee is notified of their upcoming review.
2. They immediately become stressed and sometimes defensive.
3. They were penalized.
4. The review is a one-way flow of mostly negative information masquerading as growth opportunities.
5. When facing resistance, try to remember the information you just learned about the way your brain handles discomfort.
6. The review wraps up with a list of action items the employee needs to meet in order to comply with the company's expectations.
7. When someone attends a performance review, their emotions may be heightened. In some cases, they may feel unsupported and stressed from the assessment.

So, let's get this straight. When employees feel undervalued and disengaged and never appreciated for their hard work, productivity might be an issue. It does not mean that there is a true culture of positivity, trust, or happiness in your workplace.

Check-ins can be a fantastic way to keep your customers engaged and therefore easier to serve. See an example below:

1. The employee is sent a notification email about the upcoming check-in, asking for a few things:

• Areas they want to improve
• Areas where they've improved
• The resources and tools necessary for your business to succeed.
• Goals toward which they will work to improve their professional skills

1. The check-in happens and the manager and employee take a break from the desk to discuss things on an even playing field.
2. Employees are independent, but they still have to follow a process. The manager balances the employee's ideas with their own findings to ensure that all personnel and funds are spent responsibly.
3. The two participants take time to discuss things, set official goals, and end the check-in on a positive note.

A social construction of positive behavior is far less harmful than a punitive, negative one. With check-in conversations, you want to create an environment in which your employees perform at their best and are motivated to succeed by seeing that they have the opportunity to be who they need to be.

Creating a Real Conversation

The goal of the new performance management methodology is to create a real, personal connection. In the face of conventional performance management methodologies that focus on using a carrot and a stick, this new alternative is focused on creating a strong sense of community and achievement through the power of communication.

When employees feel that they are being listened to, they feel valued and appreciated. It's about active listening, showing that you care what the other person has to say.

A successful dialogue is built on mutual interest, honesty and responsiveness. If employees feel that they're being listened to, then they are more likely to be engaged in the conversation and more committed to the company. This benefits everyone, as this dialogue fosters trust, which builds deeper engagement. Furthermore, businesses can benefit by these employees becoming even more valuable in their future because they work harder to improve themselves and make their skills even better.

Business owners with more demanding responsibilities can sometimes be too busy to engage their team members on a regular basis. If you're struggling to balance your workload, your managers may not be able to do it alone. Instead of making them devote too much time to it, consider relieving some of that work load. Just delegate it and trust they'll execute correctly.

Benefits of Performance Management When Done Right

When done correctly, performance management offers quite a few benefits. These include the following:

• Increased Employee Engagement: A high-quality workforce does not come about by taking our employees for granted. Engaged, dedicated employees will produce better work and an increased amount of productivity.
• Improved Customer Satisfaction: Companies are always trying to find new ways to boost customer satisfaction. One way of doing this is by improving customer service. When performance management is done right, customers tend to be happier in the long run.
• Improved Employee Retention: Employee turnover is incredibly costly for any company. We've helped our clients reduce employee turnover by helping them build an innovative and effective performance management system that helps sales reps, customer-service representatives, executives, managers, and recruiters get the knowledge they need with the tools they need to perform at their best.
• Ability to Grow Employees: Being able to invest in your team's growth results in increased productivity and the empowerment of your employees. There is great potential for that side-effect of good employee performance management.
• Improved Employee Autonomy: Employees feel comfortable being more autonomous in a performance management system, which means that managers don't need to micromanage employees quite as much. Employees are still under the leadership of their team leaders and come together to complete tasks.
• Improved Workforce Planning: Tracking workforce needs is key in planning for an effective business. With performance management, your team can identify employee strengths and weaknesses, promote from within, close skills gaps, and more.

Frequently Asked Questions about Performance Management

Modern performance management is here, and there are some questions you may have about it. Therefore, we'll address these questions in a bit.

Does performance management need to be tied to financial compensation?

When it comes to performance management, some aspects can be incentivized. However, we don't recommend tying salary increases to incentives. Instead, we suggest creating different alternative rewards that will make employees more engaged and motivated. You might want to consider things like additional paid time off, a cash bonus, profit-sharing plans, physical rewards, recognition in front of the team or department, and more. Remember that employees value other rewards than just money.

How often should we schedule performance management check-ins?

Make sure you have a good grasp on how often mistakes and corrections are made, so you can base your check-in schedule around that. At the very least, we recommend quarterly check-ins, but monthly and even weekly ones work better. Remember that the more frequent the check-ins, the more timely feedback and course corrections will be.

What should companies use in order to serve as a motivating factor for their employees and keep them engaged?

No punitive action is justified even if it seems like an employee just isn't pulling their weight. Employee performance management is all about psychological safety, which promotes productivity and responsibility in the workplace. Punitive measures, such as not receiving an annual wage increase, create fear and apprehension among employees. It's nearly impossible for employees to perform at their best when they're worried that anything they do might cost them financially. We tend to find much better results with a team which trusts each other and works in an equitable environment instead of one which has been built up through fear and negativity.

Performance management is a serious topic. What's the role of peer reviews in modern performance?

Peer reviews can be valuable to an organization, but they vary from company to company. However, in a peer review situation, employees provide feedback and actions to coworkers based on their performance on the job. In most cases, this feedback is anonymized in order to encourage honesty and to prevent employees from leaving out important information for fear of reprisal. Peer-reviews can also be used for negative ends by those with grudges against the employee or other team members who may not see the value of this process and provide less-than-valuable information. We recommend that if you choose to pursue a peer review that you have it well planned ahead of time and create a solid strategy for your success. Reviews are highly beneficial but must be handled carefully.

Should managers be accessible for feedback about their performance?

Yes, managers should listen to feedback from their employees. They hunger for insight about how people feel about the manager's performance and it's crucial to recognize that such feedback is valuable. Practically, feedback is a great way to gauge how well the workplace culture is functioning and if there are any changes that need to be made.

Conclusion

Modern management strategies vary greatly from what might have been done in the past. It can be an ordeal, but there are technological solutions to help you through the process. You don't have to do it alone. At eLeaP, our tech-supported solutions will enable better performance management and learning and development for your company's employees.