Performance management, a key organizational activity, has recently become one of the hottest topics not just for human resource professionals, but also for the business world at large—a result of organizations creatively re-defining how to enhance performance management’s impact.
“Traditional performance management sees managers setting individual goals for employees at the beginning of the year, and then coming back together at the end of the year to review success or failure and assess individual performance,” says Brad Bell, ILR associate professor of Human Resource Studies and director of CAHRS (Center for Advanced Human Resource Studies).
“We are seeing many organizations today viewing this method, which is often based on rankings and forced distributions, as limited and not necessarily reflecting reality, therefore, not functioning efficiently to drive employee performance.”
“Because of this, these companies are moving away from traditional performance management evaluations and towards more regular and greater communications between managers and employees, qualitative feedback, and agile objectives,” he says.
According to Bell, this new approach focuses on rich, ongoing feedback and individual coaching to promote employee development by managers, as opposed to traditional forms of performance management based around a process cycle and personnel ranking systems that consume a large amount of time and resources.
“Overall, companies now are trying to make the process more flexible so goals can be revised throughout the year, along with more ongoing and dynamic processes that foster and leverage performance conversations at different frequencies—quarterly or monthly or weekly—to try and make employee performance and development an ongoing discussion,” Bell says.
In many organizations, the focus of performance management is also shifting from the individual to the team. “This type of approach is a key lever to change corporate culture, from individual-focused to team-oriented, where the distinct strengths of an employee are best leveraged towards collective outcomes.”
Human resource practitioners have unique roles as organizational change agents within these new systems, says Bell. HR departments today are focusing on ways to make greater contributions to their organization's bottom line. Few HR initiatives have the potential to contribute more to an organization's productivity and profitability than a comprehensive, effective performance management system.
“In HR, practitioners have to look at the business perspective of what is trying to be achieved—how do HR initiatives align with business goals and support those goals? HR has to also think about how the various HR practices fit together.”
As a process that supports many different aspects of human capital management, it is very difficult for organizations to design the “ideal” performance management system.
“Performance management is one part of a larger system in which you manage your talent. It feeds into and supports development, talent and succession planning, compensation, etcetera, so HR practitioners have to design a performance management system that effectively serves multiple, and often competing, priorities.”
Bell stresses that it can also be challenging to measure the actual impact and change associated with these new approaches. However, companies can leverage both quantitative data and qualitative or anecdotal evidence to evaluate the changes over time. Further, there is no one-size-fits-all equation for updating performance management methods within an individual organization.
“What works for one organization might not fit within another, but HR practitioners are in a unique position to gauge what combinations of these modern performance management practices will work within their organization,” he said.