Modern Performance Management Rethinking Employee ... ?· Rethinking Employee Performance Management…

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<ul><li><p>12/28/2016 Oracle</p><p>https://www.gartner.com/technology/mediaproducts/newsletters/oracle/13AD8INI/gartner.html 1/8</p><p>Rethinking Employee Performance Management in the DigitalWorkplacePerformancemanagementprocessesarenot"goingaway,"buttheyaretransforminginthedigitalworkplacetosupportmorefrequent,contextualandtransparentfeedback.HRleadersshouldexplorethesenewapproachesandconsidertheirimpactsonrelatedprocessesandtalentmanagementapplications.</p><p>ImpactsHRleadersshouldevaluatethefollowing:</p><p>Increasedcollaborationandtransparencyinthedigitalworkplacerequiresreevaluatingtraditionalperformancemanagementsystemsformorecontinuous,engagingapproaches.</p><p>Changesinperformancemanagementpractices,suchasremovingtheannualappraisalscore,forcearethinkofcompensationpolicies,programsandtools.</p><p>Increasedperformancefeedbackfrequencyandgamificationwillleadtoincreasedusageofindividualemployeeperformancemetrics.</p><p>Recommendations</p><p>Embracenewapproachesinemployeeperformancemanagementthatsupportfrequentperformanceconversations,personalizeddevelopmentandvisibilityofaccomplishments.</p><p>Adjustcompensationpracticestomakenewperformancemanagementalternativesmoreeffective.</p><p>Determinewhatoperationalbusinessperformancemetricsaffectindividualandteamperformance,andactivelymanagehowthosearemeasuredandcommunicatedtoemployees.</p><p>Strategic Planning AssumptionBy2020,20%oflargeglobalenterpriseswillhaveabandonedtheperformancereviewratingscore.</p><p>AnalysisPerformancereviewsarenot"goingaway"anytimesoon,ashasbeenfrequentlypredictedinpressandindustryjournals.Organizationsfundamentallyneedawaytoevaluateandcommunicatewhoisperformingwellandwhoneedstobeletgo,toidentifywheredevelopmentopportunitiesexist,andtodeterminehowtopayemployeesfortheircontributionswithasomewhatequitableoratleastdefensibleapproach.</p><p>However,theeffectivenessoftraditionalperformancemanagementprocessesisquestionable,andsatisfactionlevelsarelow.</p><p>Almost60%ofsurveyedHRleadersareunhappywiththeircurrentperformancereviewandratingprocesses(ratingthemagradeCorless).1</p><p>Fiftyeightpercentofexecutivesbelievethattheircurrentperformancemanagementapproachdrivesneitheremployeeengagementnorhighperformance.2</p><p>Managersandemployeesalikeviewperformancereviewsasawasteoftimethatresultsindemotivatedemployees,3despitethemillionsofdollars(intimeandsoftware)spent.</p><p>Herearesomeofthecommonlycitedproblemsorcomplaintswithperformancemanagementprocesses.</p><p>Goalscovertoolongaperiodandsoarenotflexiblewithchangingbusinessneeds,oraresettoolateinthereviewcycletodriveappropriatefocusthroughouttheyear.</p><p>Delayedfeedbackiscounterproductive,delaystheimpactofcorrectiveactionsandbreaksthelinkageinpayforperformance.</p><p>Feedbackcoupledwithaperformance"score"putsmorefocusonthescorethanthefeedback.</p><p>Thereistypicallyinsufficientfocusonmeaningfulcoachingandemployeedevelopment.</p><p>Stackrankingforcescompetition,notcollaboration,withinteamsitalsodrives"average"performanceeffortwhenemployeesunderstandtheywillusuallyreceive"midrange"scores.</p><p>Rankingsandratingscanmakepeoplefeellikealabel("averageperformer"or"highpotential").</p><p>Theappraisalprocessitselfisoftenneedlesslycomplicatedandtimeconsuming.</p><p>Performancemanagementprocessesoftenresultindemotivatedcultureandperformance.</p><p>Despitetheseandotherchallenges,performancereviewsremainfirmlyentrenchedinorganizations.</p><p>Morethan90%oforganizationsindicatetheuseofsometypeofperformancereview.4</p><p>Modern Performance ManagementWhy companies are rethinking the annual performance review</p></li><li><p>12/28/2016 Oracle</p><p>https://www.gartner.com/technology/mediaproducts/newsletters/oracle/13AD8INI/gartner.html 2/8</p><p>Fortyfivepercentoforganizationsimplementperformancemanagementaheadofothertalentmanagementsuiteapplications,includingrecruiting,learning,compensationandsuccessionmanagement(see"MagicQuadrantforTalentManagementSuites").</p><p>Gartnercontinuestoseesteadydemandforperformancemanagementsolutions,usuallyasthefirststepinabroader,integratedtalentmanagementinitiative(see"HypeCycleforHumanCapitalManagement,2015").</p><p>Inrecentyears,Gartnerhasseengrowingbutshiftinginterestinperformancemanagementprocessesandtechnologies,drivenbothbydissatisfactionwithcurrentsystemsaswellastheincreasingdemandsofthedigitalworkplace,whereamoreconsumerizedworkenvironmentpromotesemployeeagility,effectivenessandengagement.</p><p>Someorganizationsarelookingtoabolishtheperformancereviewratingforitsdivisivenature.Otherorganizationsarelookingtoaugmentorevenreplacetheannualreviewmeetingwithmorefrequentconversationsfacetofaceorvirtual,formalorinformalbetweenemployeesandmanagers.Stillothersarehopingtoleveragemoreconsumerliketoolssuchassocialnetworkingtodriveengagementandcollaborationaroundgoalsandobjectives,toimproveindividualandteamperformanceaswellasorganizationalculture.</p><p>Regardlessofunderlyingdrivers,inthedigitalworkplacetheperformancemanagementprocessisbeingreevaluatedateachofitscomponentparts,asorganizationsseeknewwaystoimproveemployeealignment,performanceandengagement.HRleaderscanusethisresearchtoanticipateandleveragetheimpactsofthesenewperformancemanagementpracticesacrosstheenterprise(seeFigure1).</p><p>Figure 1.Impacts and Top Recommendations for Rethinking Performance Management in the Digital Workplace</p><p>Source:Gartner(August2015)</p><p>Impacts and Recommendations</p><p>Increased collaboration and transparency in the digital workplace requires re-evaluating traditionalperformance management systems for more continuous, engaging approachesTheconceptofabolishingtheannualperformancereviewhasbeendiscussed,adopted,reversed,reinstatedandmodifiedmanytimesacrossthousandsoforganizationsoverthepast50ormoreyears.Theunderlyingconcernisthattheperformancereviewisaprocessthatrequiresconsiderabletime(andmoney)forlittleorevennegativereturn.</p><p>However,despiteitsflawsandoftenreviledstatus,thetraditionalperformancereviewisn'tgoingaway,becauseitprovidesasystemforidentifyingandtrackingperformance,documentingthis,andpotentiallyprovidingguidelinesforassociatedrewards.Regulatoryandlaborcontractcompliancerequirementsarealsocommonreasonswhyperformancereviewsremaininplace.Whatisemerging,however,isaseriesoftoolsthatsupplementthesedocumentationandcompliancerequirementswiththeabilitytofocusonthecontinualprocessofperformanceimprovement,fosteringregularfeedbackandguidancetoemployeesinthecontextofdailyworkactivities.Intheforwardlooking2013researchnote"Maverick*Research:LivingandLeadingintheBrainAwareEnterprise,"Gartnerdescribeda"typicaldayinthebrainawareenterprise"in2020:Annualperformancereviewshavebeenreplacedbyfrequentfeedbackandcoaching,leadersareheldaccountableforemployees'careerprogressionandthecorporatehierarchyhasbeenbrokendowntofostergreaterinnovationandcollaboration.Thisfuturisticscenarioisnotonlywhollyplausibletoday,itisinfactemergingacrossearlyadoptersofnewagileperformancemanagementpractices.</p></li><li><p>12/28/2016 Oracle</p><p>https://www.gartner.com/technology/mediaproducts/newsletters/oracle/13AD8INI/gartner.html 3/8</p><p>Theadventofsocialnetworkingandthehyperconnectedworkplacehasincreasedthedemandforfasterandmorecontextualcommunication,notjustinourdailypersonallivesbutalsowithinthecorporateworkenvironment.Ratherthanfocusingonlongtermlookbackperiods,morefrequentandcontextualfeedbackisbecomingtheworkplacenorminearlyadopterorganizations,asmanagersguideandcoachemployeesregularlyandincontextwiththepatternsofwork.Organizationsareincreasinglyfocusedon:</p><p>Theprocessesthatsupportregularperformancefeedbackanddevelopment</p><p>Alignmentofworkwiththeshiftinggoalsandobjectivesoftheorganization</p><p>Improvedemployee/managercommunicationsaswellasexpandedpeertopeercollaboration</p><p>Increasedorganizationaltransparency</p><p>Improved,sustainableworkforceengagement</p><p>Additionally,acrosstheglobeanddrivenbythedemandsofthedigitalworkplace,theroadmapsofhumancapitalmanagement(HCM)technologyvendorsrevealheavyinvestmentsinnewperformancemanagementapproaches.Theseareaimedattransformingperformancetoaregularcadenceoffeedbackandcoachingwhileimprovingworkforceengagementandcollaborationacrosstheenterprise.</p><p>Thelatestapproachesinperformancemanagementincludethefollowing:</p><p>FrequentcheckinsandcoachingInanerawhereconsumerfeedbackthrough"likes"andretweetsisalmostinstantaneous,newapproachestoemployeeperformancereviewshaveemergedthataddressthisdesireforimmediatefeedbackwithintheenterprise.Theconceptofregular"checkins"andupdatesbetweenemployeeandmanagertofosterconversations,identifyaccomplishmentsandroadblocks,andprovidecoachingforfuturesuccessismanifestinginaseriesofnewapps,deliveredfromnotonlystartupprovidersbutalsolargeERPsuitevendors.Commonfeaturesincludebutarenotlimitedtothefollowing:</p><p>Employeesummaryofprojects,actionsandroadblocks</p><p>Managerreviewandcommentary</p><p>Coachingtips</p><p>Pulsesurveysandotherassessments</p><p>Teamdashboardformanagers</p><p>Personaldashboardforemployees</p><p>Otheranalyticsandreporting</p><p>Withthesesolutions,companiesareshiftingtheirfocusawayfrominfrequentconversationscenteredontheshortcomingsofindividualstofrequentandmorepositiveconversationscenteredongoalsandobjectives,accomplishmentsanddevelopmentopportunities.ProfessionalservicesorganizationssuchasAccenturehaverecentlymovedtosuchamodel,5butotherssuchasCargill6andAdobe7andevengovernmentagenciessuchasJPLNASA8havemadesimilarmovesinthepast.Whattheseandothercompaniesrecognizeisthatemployeesincreasinglywantmoretimelyanddirectfeedbackontheirperformance,without"surprises"waitinguntiltheendoftheyeartoprovidefeedbackespeciallynegativefeedbackiscounterproductive.Regularcoachingandfeedbackfostersbetterrelationships,enablesrealtimecoursecorrections,supportsclarityincareerdevelopmentopportunitiesandmore.Withthisapproach,anyformalizedyearendperformanceappraisalbecomessimplyasummaryofthedocumentedconversations,actions,accomplishmentsandobservationsmadethroughouttheyear.</p><p>Additionally,regularinteractionandfeedbackalsosupportsamoreagileorganization.Thebrainperceiveschangeasathreatchangethatmaycomethroughcoachingorfeedback,orfromnewormodifiedgoals.Organizationscanreducethebrain'sthreatresponsebyintroducingregulardialoguesandcheckinsthatbuildreputation,recognizeexcellentperformance,createopportunitiestodevelopordemonstratemastery,andmore(see"AccelerateDigitalWorkplaceMomentumbyUnderstandingHowtheBrainWorks").</p><p>Relatedcaution:Yourculturewillchangewhenyoumovefromalookback,measurementfocusedmindsettoacontinuousdevelopmentandcoachingmindsetensuretheorganizationiseffectivelytrainedtoembracethis.Specifically,managerswillneedtobeproperlytrainedinprovidingeffectivefeedbackandcoachinginordertoeffectivelymeetemployeeexpectations.Withouttheproperguidance,frequentconversationscandriveevengreateremployeedissatisfaction(forexample,theymaybeperceivedasmicromanagementdisguisedasperformancecheckins).</p><p>SocialemployeerecognitionAnotherformoffrequentemployeefeedbackthatisseeingincreasedadoptionisthepeertopeerfeedbackenabledbysocialemployeerecognitionsoftware(see"SocialEmployeeRecognitionSystemsRewardtheBusinessWithResults").Thesesocialtoolsmakeiteasyforcolleagues(andmanagers)toproviderecognitionandthanksforperformanceorsupportanytime,andmakethatrecognitionvisibleacrosstheenterprisethroughsocialactivitystreams.Theincreasingelementofgamificationinthesesystemsencouragesregularparticipationandcombinesthebenefitsofintrinsicmotivators(achievement,purpose,mastery,forexample)reinforcedbyextrinsicmotivators(cash,pointsandotherrewards).Relatedcaution:Recognitionsystemsarenotanalternativetoequitableandeffectivecompensationpractices.Theyshouldcomplement,butnotreplace,bonusesandmeritawards.Also,culturalacceptancevariesacrosstheglobe:don'tassumethesocialrecognitionmodelyoudeployintheU.S.willworkinothergeographies.</p><p>DitchingtheperformancereviewscoreWhilemostorganizationswillmaintainsomelevelofdocumentationofperformancemanagementconversations(eitherthroughtraditionalreviewprocessesordocumentationofregularcheckinsandcoaching),somehavedecidedveryspecificallytoeliminatetheemployeerankingandperformancescoringprocess.TexasRoadhouse9isanexampleofarestaurantchainthatdidjustthat,maintaining(butimproving)theperformanceappraisalprocessbutdroppingtheperformancereviewscoreinordertofocustheperformanceconversationongrowth,supportandfuturedevelopmentinitiatives,whilebasingfuturecompensationchangesonCOLAanddiscretionarybonuses.Relatedcaution:Ensureyouhaveaclearlydefinedandwellcommunicatedmethodologyforfuturecompensationandbonusadjustmentswithoutaperformancereviewscoreemployeesmaynotbeabletofocusontheperformancefeedback,astheytrytodiscernhowsaidfeedbackwilltranslatetofuturemonetaryrewards.</p><p>Agile(andsocial)objectivesandkeyresults(OKRs)Goalsandobjectiveshavelongbeencomponentsoftheperformancemanagementprocess,buttheycomewithaseriesofchallenges.They'retypicallysetupannually(butmaybeasfrequentasquarterly)withlimitedabilitytosignificantlymodifytheir</p></li><li><p>12/28/2016 Oracle</p><p>https://www.gartner.com/technology/mediaproducts/newsletters/oracle/13AD8INI/gartner.html 4/8</p><p>detailsorevenidentifyrelatedprojects/tasksatadetailedlevel.Mostgoalmanagementsoftwareisdriventhroughatopdowncascadingprocess,intendedtoprovidedirectlineofsightfromthecompany'stopstrategicobjectivestoanindividualemployees'goals.Unfortunately,directlineofsightissometimesobstructed,andemployeesoftenfeeldisconnectedfromorchallengedtofullysupporttheirgoalsandobjectives.</p><p>Newtoolschangethisdynamicthroughthedevelopmentofbottomupgoalsetting,givingemployeesgreaterflexibilityinhowtheirgoalsareaccomplishedaslongastheyclearlyunderstandthehigherlevelgoalsandobjectivesoftheorganization.Additionally,goalsandobjectivesarebecomingincreasinglysocial,allowingemployeestoassignsharedresponsibilityfortheirdeliveryand/ortobroadcasttheirprogressorcompletiontotheenterprisesocialnetwork.Keyresultsoraccomplishments,communicatedfrequentlyandbroadly,helpconnectemployeestotheworkanddevelopmentoftheirpeers,enablefrequentrecognitionandreputationdevelopment,helpidentifyindividualperformancemeasuredinthecontextoftheteamperformance,andcontributetoamoreengagedworkforce.</p><p>Relatedcaution:Whilegoalmanagementistypicallyanintegratedcomponentofabroaderperformancemanagementoffering,therearestandaloneOKRofferingsthatprovidegreatersupportforprojectandtaskmanagement,socialsharing,employeerecognitionandmore.Weighyourneedsforgoal/taskmanagementtransformationagainstthecostsofuserinterfaceandprocessintegration.</p><p>Recommendations:</p><p>Embracenewapproachesinemployeeperformancemanagementthatsupportfrequentperformanceconversations,personalizeddevelopmentandvisibilityofaccomplishments.</p><p>Hiremanagerswithstrongcoachingandcommunicationskills,andhireforanddevelopdigitaldexterityacrosstheworkforcetoeffectivelyleverageemergingperformancemanagementtechnologies(see"DefiningDigitalDexterityTheCoreWorkforceResourcefortheDigitalBusiness").</p><p>Evaluatetheanalyticscapabilitiesofthesenewtoolsfortheirabilitytoprovidemeaningfulinsightsandperformancesupportforemployeesandmanagersalike.Optimizenewperformanceandgoalmanagementsolutionsfortabletsandsmartphones,astheseareincreasinglythedevicesofchoiceforloggingregularinteractionsaswellascapturingvisualsthroughphotosandvideos.</p><p>Changes in performance management practices, such as removing the annual appraisal score, force arethink of compensation policies, programs and toolsManyorganizationshavedecadesoldpayforperformancepracticeswhosegeneralpurposeismotivatingemploye...</p></li></ul>