Managing and improving employee performance is a fundamental pursuit of all organizations. As the future of work changes, performance management must evolve with it. What are the challenges, what are the new trends and what are the characteristics of a truly efficient performance management system?
In today’s business environment, companies work hard not only to attract the right talent, but also to support their growth, performance and development within the company, which they can ensure through investing in performance management systems. Although the efficiency of these systems is often questioned as to whether they can deliver what they promise, under the right conditions and conditions they can bring about significant results, both in improving the performance of employees and companies as a whole.
Companies will have to find new ways to measure and improve employee performance, not just real pay stubs, now focusing on “fresh” and simpler practices that will meet the needs of the times on the one hand and on the other hand the specific needs of each organization. But what do we really define as a performance management system?
It is the process of evaluating, measuring and determining the employee’s performance in the current or previous period against agreed objectives (individual/individual, collective and company) and must be consistent with company goals. It is essentially a dynamic and strategic approach to maintaining a high-performance culture within an organization. Its goal is to bring out the best in each employee and “align” them with the organization’s long-term vision and mission. Performance management basically consists of two elements: The process of determining goals is based on the strategy of each company and the application of a system of indicators to evaluate the implementation of these strategic goals.
- Annual versus continuous evaluation
Although in the past the annual performance review was a common “routine” for the majority of companies, today more and more are turning to the implementation of a more “convenient” continuous performance review system. After all, as research by SHRM showed, the annual performance evaluation is slowly but surely losing its “glamour”, since in today’s reality, as it has been shaped, the only certainty tends to be the unexpected and the changes we experience every day at multiple levels are stormy.
The main difference between annual and continuous performance appraisal is evident from their names: Annual performance appraisal is a traditional approach that involves a formal review of an employee’s progress and is conducted once a year. In contrast, continuous performance appraisal is a year-round performance review process that includes real-time feedback, regular appraisal meetings, discussions about potential areas of improvement, and work preferences.
- A system with multiple benefits
A regular and “consistent” performance review process ensures quick recognition of achievements, keeping employees motivated and engaged. When a company values human resources and cares about their well-being, work stress is reduced. A stress-free work environment and supportive conditions can act as catalysts for improved employee satisfaction and career growth.
An effective performance review process will help reduce conflicts between employees and management. Face-to-face discussions about how employees perform, the obstacles they face, and their strengths and weaknesses can “prevent” negative situations and resolve differences that often lead to conflict. . This builds employee confidence, encourages them to work with a positive attitude, which in turn enhances their effectiveness.
Regular performance appraisal meetings help identify the exact points that each employee needs to improve or strengthen. For example, it may reveal that someone needs to “upgrade” their skills, while someone may need additional training, based on the needs of the market. With this aggregated analysis, managers get help in developing the best training and learning program.
As the Great Resignation continues to hit job markets around the world, organizations are naturally looking for ways to preserve their most important assets, everybody. In this context, effective staff management can make a decisive contribution. Two-way communication between HR and managers helps managers better understand potential problems and find immediate solutions. Furthermore, it helps in setting future goals based on employee abilities and expectations. As a result, it minimizes conflicts (interests and expectations) between management and employees and significantly reduces turnover.
- New reality, new challenges
The fundamental changes brought about by the pandemic as well as the new conditions it “imposed” on the working reality, could not leave the part of human resource management and its effectiveness unaffected. The most important challenge that Covid-19 has brought is the evaluation of employees who now, to a large extent, also work remotely. The hybrid work model strongly differentiates the evaluation criteria of employees as well as all the factors that indirectly influence the judgment of each evaluator. “Upgrading key performance indicators (KPIs) is essential to ensure that remote work (where it exists) is working productively,” he explains, continuing: “On the other hand, most business leaders see technology for assessment as the solution and they consider their work done if they can just implement a performance management platform. “Technology is not going to do the work for you,” said Todd Holzman, Founder and CEO of Holzman & Company, a New York-based leadership consulting firm. “Ultimately you have to have the conversation and have a good conversation.
So, what are the most innovative modern tools, methods and approaches available to companies when it comes to effectively managing their human resources? In this new reality, the focus shifts from multiple tasks, responsibilities, and goals to impact, learning, continuous collaboration, and employees’ ability to remain productive and productive in the face of their dreams and constantly changing. With the new reality, we can develop a scoring system only for high achievers and laggards. Either way, the majority of the group “sits” between these extremes. Instead of “spending time and effort” on small gaps, let’s focus on developing the skills of these groups. Therefore, we need to move to a “results-oriented” rather than process control approach. Adopting a Goal & Key Results (OKR)-based performance system, geared towards consistent results, gives remote workers more autonomy while holding them accountable for their performance and capacity.