Performance management programs are ready to be revitalized! Tell me if this sounds familiar: The black hole of making superficial adjustments to performance management perpetuates a system that continues to disappoint employees, managers, organizational leadership and HR. In my last HR Development (HRD) role, I was determined to fix the rampant problem of rating inflation, the under-use of Meets Expectations and the over-use of Exceeds and Outstanding. I camouflaged "Meets Expectations" with the more positive wording of "Solid Performer."
The name change fooled no one. Everyone still knew that the middle category was code for "average performance." Unsurprisingly, rating inflation continued. In hindsight, it's easy to see why this idea failed. No employee wants to be average, and no manager wants to label someone as average. No one boasts about their Meets Expectations rating at the dinner table with family and friends. Let's be honest. Labeling someone as average feels like an insult despite using better wording or explaining for the umpteenth time that meeting expectations really is a great rating.
If you're like me, you've learned that the continual tweaking of ratings, forms and competencies isn't the key to producing a system that works. As you contemplate your next fix, I encourage you to step back from tweaking the existing process to explore some new thinking.
10 tips to modernize your performance management program
It's no secret that performance management is evolving, moving to the continuous conversation model versus reviewing and rating last year's performance.
But what does that mean, exactly?
It means putting the employee and their personal experiences at the center of you performance management program. It means aligning employees' performance, development and growth to the needs of the business. And it means there's room for improvement in all organizations, whether you're still only doing annual performance reviews or have already moved to a continuous conversation model or you fall somewhere in between.
So I've compiled 10 tips you can use right away for modernizing performance management in your organization:
1. Build around the goal of creating a favorable employee experience
When designing, announcing and communicating about your initiative, look at it from an employee's perspective. Use "what's-in-it-for-me" design and messaging, such as in this example memo:
We are setting managers and employees up for success with a system for ongoing, two-way, actionable conversations to:
- Let your manager know what is going well
- Voice your interest in gaining new skills, experiences and sharing ideas for how you want to grow and develop in your career
- Discover what is working now (your good work and positive impact)
- Reconfirm your priorities, expectations and progress
- Communicate to your manager what you appreciate about his/her support and to share how your manager can support you more
By approaching your performance management processes from your employees' perspectives, and inviting them to take a proactive interest in their own performance and development, you ignite employee engagement.
2. Don't leave "conversations" up to interpretation; create a structure with "guard rails"
Set the stage for what the performance conversation should cover by providing a flexible template and guide to ensure continuity across the organization. Avoid a loose system of untargeted, inconsistent conversations, such as, "Meet with your direct reports every month." These exchanges are too general ("How's everything going?") or focused on transactional/task-only topics.
Instead, give your managers training, complete with a guide to successful 1:1 meetings with employees. You can give similar, yet job-level-specific guidance to your employees as well. If your people feel confident in knowing what a successful performance conversation looks and feels like, they'll know when it's off track or not working well, and can make adjustments as needed.
3. Provide flexibility to set the meeting agenda
Provide employees with the ability to shape and direct the conversation so it feels personalized – not prescribed. Allow employees and managers to choose the topics and questions asked and answered during the discussion.
Canned, repetitive questions and agendas won't feel relevant and will, at best, lead to reluctant compliance. Coaching your managers on how to encourage their direct reports to set the 1:1 meeting agenda, adding their input and feedback as needed, and then using silence as a tool in the coaching conversation, are great ways to get the employee to engage in the performance management process, from setting the meeting to actively participating in it.
4. Reshape manager and employee communication
Reorient the traditional manager role of the evaluator of last year's performance to a growth and coach-forward mindset. Create an experience that promotes activate listening, curiosity and asking clarifying questions for understanding.
Set the manager and employee up as collaborators and partners in each other's success by promoting a culture of feedback. Employees need to know that they can have candid conversations with their managers. They need to feel comfortable surfacing challenges they're experiencing, which may impact their performance. And managers need to set the tone as leaders, which they can start doing by simply asking questions. That's when the real dialogue emerges and a true work relationship between managers and employees can begin.
5. Make it fast, but effective
Adopt a framework that is quick, requires little preparation, sets the stage for the exchange of meaningful information, prompts brainstorming, and results in specific actions and takeaways that drive and align performance.
For example, 1:1 conversations between managers and employees don't have to be hour-long marathon chats – they can be as fast, focused and streamlined as when they are 10-minute performance check-in conversations.
6. Current and relevant timing
Get buy-in for a just-right cadence of conversations that are regular enough to focus the discussion on the present and future: Consider what is working now and how to be more effective moving forward. This helps employees stay focused on their performance and development goals.
While it is important to review milestones to glean lessons learned, a significant lapse in time between performance conversations prompts discussions focused solely on the past. (Remember, you are trying to break free from the mentality of reviewing historical performance).
7. Don't rely on technology to be your only solution
Strategically implementing HR and talent technologies can be a tremendous resource within your performance management program. Talent technologies can help optimize your processes, scale your program across international offices and to remote employees, uncover performance skills gaps, and surface employee-specific development opportunities, among many other uses.
But talent technology is not going to help you and your people live up to your potential and unlock high performance without a clear strategy and a strong grasp of the fundamentals of performance management. Make sure that managers and employees are regularly meeting in-person, by phone or with remote conferencing tools. Provide training and tools to help build the skills of managers and employees to engage in productive conversations.
8. Continue tasking managers with assessing performance
Use a system (other than annual reviews with single rating categories) that allows managers to more accurately evaluate and track the performance of their team.
The number one use of assessing performance effectiveness should be to inform targeted conversations that drive and align performance. HR should work with each manager to understand the overall performance effectiveness levels of each employee.
9. Clearly communicate how your organization makes pay decisions
Does your organization use annual reviews and ratings to trigger pay decisions? One of the key questions people ask when their organization unties annual reviews from pay decisions is, "What does this mean for my pay?" or "Will we no longer receive merit increases?" and the like.
People who are uninvolved in the compensation process lack insight into the "unseen" elements of making pay decisions, and therefore think ratings alone drive compensation decisions. As you know, the reality is that there are numerous factors used to make compensation decisions.
You can clarify some of the ambiguity by communicating how salary administration works in your organization: When it occurs, explain some of the factors considered in making fair and equitable pay decisions, such as market data, experience, education, the scope of responsibility, performance effectiveness, budget, and more.
10. Leverage and involve the HR team
While the movement away from annual performance reviews and ratings is no longer a new concept, it requires that HR professionals evolve their thinking and gain new skills to support the organization's transition. Your program's success will largely hinge on establishing HR's supporting role.
Modern-day performance management is more strategic and dynamic than the performance administration process that many of us in HR have grown up with. HR's part is anything but diminished, so establish roles and responsibilities and provide training and support for your HR team as part of your program launch.
How to deliver an employee-centric performance management program
Ultimately, modernizing performance management is about shifting away from a solely annual performance review process. Instead, put the employee experience at the heart of your strategies and practices, while still staying aligned with business goals.
Revamping your existing practices into an ongoing, engaging employee-centric performance management program can be tough when the process itself is such a core element of your people strategy and programs. There's always more you can do.
I teamed up with Saba's Anita Bowness, Principal Product Manager, Customer Success, for a candid discussion around how you can elevate your organization's goal setting and performance coaching practices to create more meaningful experiences for your employees while driving business outcomes. Watch our webinar on-demand to learn how to deliver an employee-centric performance management program!