Performance Management Needs to Be Disrupted

Performance management needs to be re-thought across three key elements that impact both an organization's programmatic and technology choices.

Wednesday, November 4, 2015
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The performance management process can be one of the most-hollow activities inside organizations today. It exposes two fundamental flaws in the discipline of human capital management: the disconnect between business strategy and follow through.

The negative ramifications of this are becoming clear and irrefutable, both in terms of organizational performance and employee morale. The Society of Human Resource Management opens its research paper with this damning abstract:

"Despite years of research and practice, dissatisfaction with performance management (PM) is at an all-time high. More than 75 percent of managers, employees and heads of HR feel that PM results are ineffective and/or inaccurate (CEB, 2012). Additionally, study after study has shown that the performance review is dreaded – it is not only perceived to be of little value but it is highly demotivating to employees, even the highest performers (Culbertson, Henning, & Payne, 2013; Rock, 2008). Between formal goal-setting processes, mid-year and year- end reviews, and often extensive rating and calibration processes, a great deal of time and effort is expended on PM activities, costing organizations millions annually with questionable returns." 

We didn't intentionally head in this direction. To be fair, we've been looking for scalable ways to manage performance as the workforce grew, and somewhere along he way, the human element in human capital management got left behind. 

But this is all about to change.

The employee expects it. 

As individuals, we have become extremely feedback-driven about every thing we invest time and effort in, whether we realize it or not. From digital thermostats, such as Nest, reporting how we consume energy to health tracking tools, such as Fitbit, providing instant feedback on energy expended, to even car diagnostics tools such as Automatic that advise on how to drive in a cheaper and more environmentally-friendly way. These feedback gadgets are getting increasingly good at giving you relative scores against a broad peer set. Feedback is available instantly, right as the action is performed, and benchmarked across a broad base of participants.

As a result, employees are increasingly expecting in-the-flow feedback when they come to work. In a recent global survey conducted by Oxford Economics, in partnership with SuccessFactors, 1,400 millennials told us they want more feedback from their managers.

The market needs it.

Thus far, the proverbial roof just hasn't been on fire to warrant any real change in the enterprise. As I wrote in a recent blog post: 

In a pre-digital world, we "stayed the course," because "slow and steady won the race" and "we were playing the long game..

Well, the roof is on fire. The coming digital disruption around us is real. There is no playbook, yet established industries from banking to transportation to food to hospitality are being uprooted. As organizations adjust to these changes, agility to adapt to change becomes paramount. It becomes important to not only see your changes through, but to also be able to course correct on short notice and execute that change down to the most junior employee. At a foundational level, a degree of re-skilling and "un-learning" of deeply-rooted modes of working becomes key and is at odds with standard organizational functional lines. Jason Averbook astutely said that "performance doesn't care about the org chart" in this excellent post. He's right. I'll go further. The disruptive market landscape doesn't care about it either.

So, where to?

We need to create a work environment where we help employees achieve goals with direct, in-the-flow feedback, and the ability to course correct well before performance review time. Even if only for selfish reasons, your business just cannot absorb a year's work of latency in these disruptive times. In turn, your best employees are waiting for a report card at the end of the year. They want to put points on the board during the course of the year. You can't afford it. And they won't have it.

Performance management needs to be re-thought across three elements that impact both your programmatic and technology choices: 

1. Connecting business strategy to execution goals.

The strategic planning, documentation and execution of goals each happen in very different places. Cascading goals down checks a box in the HR to-do list but just isn't enough. Goals are still locked up in a system of record that is almost never visited or adjusted. What's needed is a technology infrastructure and program that helps employees prioritize tasks to business goals every day and in the flow of work. Systems of Engagement - where you work, like your social collaboration, task management and learning tools, need to be connected to your Systems of Record - your performance management systems, where your goals are stored. The technology is available today. HR owns the former but needs to begin to pay attention to the systems where work gets done if they want to ensure follow through. This is not for IT to solve on its own. This is squarely a call to the HR leadership.

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2. Empowering employees to accomplish those goals

Instead of pitting employees against each other with outdated practices such as stack ranking and ratings on a curve, shift the culture and leverage technology to scale goal execution across the organization. A significant portion of SAP Jam's 21 million subscribers and well-known customers such as Jo-Ann Stores, Marriott International and Cargill have made this part of their work culture and based on our learnings across this use base, you achieve this by employing the right technology and three tactics:

*         First, enable identification of shared goals and empower employees with technology to collaborate on shared goals.

*         Second, re-think the practice of how you administer mentoring and coaching. New technology advancements today help you scale access you to your most experienced professionals in extremely effective ways for both mentor and mentee.

*         Finally, make peer-to-peer learning networks a central element of your learning initiatives, as to complement course-based training. 

3. Constantly improving feedback loops

If the systems where you record goals and where you accomplish goals aren't connected, it's hard to spot when employees are struggling with goals, or for employees to know how far along they are or even if company priorities are changing. If you don't employee the right performance management technology, coupled with collaboration systems, you lose significant agility over the course of a given performance cycle. That's a whole year lost.  

Focusing on these three tactics will get you far ahead of the competition. 

Performance absolutely can't just be "planned, monitored and reviewed" any more. It needs to be driven, mentored, facilitated and elevated during the course of the year by collapsing the walls between systems where we work and where our work gets done. This is how the most disruptive companies operate today and what your emerging workforce expects.

Sameer Patel is general manager and senior vice president of product management and go-to-market at SAP Cloud/SuccessFactors.

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