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What is effective performance management in today’s context?

Performance management has always been a complicated and often highly contentious part of working life

So, let’s take a look at the facets that are traditionally central to performance management and look at why they perhaps do not hold true in today’s environment and how they can be tweaked to be more relevant.

1. Setting goals

Most traditional performance management has been based on an assumption that annual goal setting is effective in business. But this is no longer thought to be the case. In today’s fast-paced, changing business environment, agility is seen as key to success.

Research has shown that organisations who review and revise goals on a regular basis see higher performance and increased productivity. Goals should be set through close collaboration between employee and manager to reflect the increase in collaboration across functions/geographies. Improved technology today enables workers to share goals and to track progress in real-time.

2. The manager’s role

Traditionally it has been down to managers to provide their feedback on the performance of their charges. However, frequent manager turnover means that effective performance management needs to be more rounded and not rely as heavily on one individual. Additionally, some workers with cross-function roles may have more than one manager.

3. Feedback

360-degree feedback is increasingly popular and allows colleagues, peers, and even customers to have an input (perhaps via satisfaction ratings) when it comes to performance evaluation. Technological solutions are now available to accommodate feedback from multiple sources. Ongoing feedback is preferred by many of today’s workers, in particular, the Millennials.

It helps to keep them on track and to know that what they are investing their effort in is worthwhile and boosting the success of the organisation. They are used to having immediate access to information when they want it and this applies to feedback – waiting for annual performance reviews to hear feedback that maybe 11 months old is neither helpful nor productive.

An annual review meeting can still be useful if used more as an opportunity for a two-way dialogue rather than as a point of information where the manager dominates. And managers need to move more towards coaching rather than managing – providing advice, guidance, and support in order to drive improved productivity and performance.

4. Use of performance ratings

There is an assumption that the best way of letting employees know how they are progressing is via performance ratings/rankings. However, this can be demotivating as most employees believe they are ‘above average’, but the rating process can often be used as a way of keeping employees at the same or similar level to their colleagues. In addition, research suggests that bringing ratings into performance discussions makes that the only focus of the employee.

Nowadays, employees prefer regular feedback and dialogue, as this gives a better understanding of how their contributions are being perceived. Arbitrary ratings, whether numbers or statements are no longer effective or motivational.

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