Performance management is a powerful way to engage employees and improve business outcomes. So why are so many organizations failing to capitalize on its value?<\/p>\n
The first thing to know about performance management is that annual reviews aren\u2019t enough. \u201cIt isn\u2019t adding value if you\u2019re only using it once a year to decide who\u2019s going to get a raise,\u201d says Stacey Harris<\/a><\/span>, chief research officer and managing partner at Sapient Insights Group<\/a><\/span>. \u201cBut it\u2019s really <\/span>valuable when you\u2019re using it on an ongoing basis, and you\u2019re connecting it to what\u2019s going on in your recruiting, operational deployment and workforce planning decisions.\u201d<\/p>\n Harris has spent years leading research into what it takes to optimize HR systems. So we asked her to explain how to take performance management to the next level, improving individual performance and overall business results.<\/p>\n Performance management has many purposes. But beyond the obvious \u2014 improving performance, engaging employees, and driving better business outcomes \u2014 it also generates tons of data for leaders to make better decisions about learning and development, recruiting, time and attendance, and workforce planning.<\/p>\n To make the most of that data, you must know what you\u2019re generating and what you\u2019ll do with it. \u201cHow are you going to integrate that data or use that data to inform other areas of the business?\u201d Harris asks. \u201cThat’s when performance management systems become more than just a once-a-year process used to increase compensation.\u201d<\/p>\n Another factor to consider is when and how you gather data during the process. In a continuous performance management system, data is captured frequently. \u201cThe ones that we\u2019re seeing really get the most employee engagement are those that are more flexible and have more opportunities for the employees to drive the process \u2014 versus some arbitrary timelines put in place by the business,\u201d Harris says.<\/p>\n By customizing the performance management process, you can drive better results and collect more useful, comprehensive data for making better talent decisions.<\/p>\n Taking a big-picture approach to performance management doesn\u2019t negate its value in making compensation and promotion decisions. But the criteria that trigger compensation changes must be multifaceted and clearly defined. \u201cMake sure that compensation is as nuanced as human beings are,\u201d Harris says.<\/p>\n That means moving beyond simplistic performance goals. \u201cWhat we really need to think about is aligning compensation not just to a single metric,\u201d Harris says, \u201cbut to align compensation to the skills someone has, the possibility of how they can grow with the organization, the outcomes they\u2019re achieving.\u201d<\/p>\n Employees need to have a clear sense of their goals so they can outline key results that signal their progress. Clear metrics make it easier to define what triggers raises, bonuses, or other benefits.<\/p>\n A good performance management program takes trial and error to achieve. But that\u2019s not traditionally how we\u2019ve integrated these types of initiatives. \u201cWe spend a lot of time planning really big processes and process changes,\u201d Harris says. \u201cOne of the things that we are learning, particularly when it comes to data analytics, is that iteration and improvement are critical.\u201d<\/p>\n The systems themselves are part of why rolling out performance management has been a monolithic project rather than an ongoing process. Historically, performance management has been wedged between larger system rollouts, such as overall talent management. But vendors are becoming more flexible, empowering you to iterate more effectively.<\/p>\n \u201cAs we\u2019re thinking about how to improve performance, engage our employees, and adjust performance management processes,\u201d Harris says, \u201cone of the things I would say is that it\u2019s OK to experiment, to have different approaches, and see how they work \u2014 to get feedback and then make changes over time.\u201d<\/p>\n There are two types of performance that business leaders measure: Organizational performance and individual employee performance. Usually, these two are kept separate, but integrating them can produce greater success for both. Performance is often the middle ground between operations and HR. \u201cBut HR really needs to own some level of it,\u201d Harris says, \u201cespecially from the enablement perspective.\u201d<\/p>\n To bridge that gap, Harris is calling upon HR leaders to build better performance management bench strength and a more robust capability for how we enable performance in organizations.<\/p>\n Companies already have a lot of the data they need to get started. \u201cPerformance management data sits in a lot of other applications besides our standard HR applications,\u201d Harris says. \u201cAs an HR leader, remember that you have performance data all around you in the company.\u201d<\/p>\n HR and operations leaders can work together to interpret data\u2019s meaning for organizational performance and individual employee performance. By doing so, you won\u2019t stick employees in the middle to analyze data themselves.<\/p>\n With these best practices, you can make the most of performance management and realize the full potential of your workforce \u2014 and your business. \u201cIf you\u2019re doing those things,\u201d Harris says, \u201cthen there\u2019s real value in investing in performance management.\u201d<\/p>\n <\/p>\n\n Collecting Better Data With Continuous Performance Management<\/h2>\n
Incorporating Compensation the Right Way<\/h2>\n
Iterating, Not Just Implementing<\/h2>\n
Bridging the Divide Between Operations and HR<\/h2>\n