As a business leader, chances are you’ve seen the attention the reinvention of performance management is receiving in both human resources professional circles and the business press (Forbes, Huffington Post, New York Times, WSJ, etc.). This might have you questioning whether or not updating your performance management system could have a positive business impact for your organization.
It surely hasn’t escaped your notice that the growing list of companies that have blazed the trail (Netflix, Oakley, New York Life, SAP, Deloitte, and Microsoft—to name a few) are experiencing results such as revenue gain, increased employee engagement and customer satisfaction, outperforming the market, attracting top talent over competitors, and/or increased profitability (Conference Board, 2014).
In considering replacements for your legacy performance management approach, there is no one-size-fits all approach. Replacement re-engineering requires careful consideration of each organization's unique needs. From my work with clients, however, I have seen a set of six best practices emerge as critical fundamentals:
- Cadence of the process is established based on the cadence of your business, not an arbitrary annual occurrence.
- Managers and performers are partners in the process. Performance management is not something done to the employee.
- Process is owned by the business and supported by HR—no longer an HR compliance exercise.
- Organizations have a values culture that is authentic, transparent, and celebrated. This is necessary in order to conduct frank and honest performance-based conversations.
- The process is easy and simple to use. Support tools are easily accessible and are not overly engineered. Tools contribute data for business applications (succession planning, talent management, compensation/rewards, etc.)
- Measurement (formally “ratings”) is focused on “performance impact” and is future focused vs. assigning a “grade/evaluation” to past performance, with the requisite need for wasteful “calibration” meetings.
But, the number one characteristic with the greatest business impact is the presence of fluid conversations. And not just any conversations, but rather, Meaningful Conversations™ that meet the following criteria:
- Are timely (occurring when they can have the greatest performance impact and occur with great frequency, according to the cadence of your business.
- Are a balance of three (MC3™):
- expectations conversations (including effective goal setting that is aligned with business strategy)
- performance conversations (feedback and coaching on current performance to goal)
- career development conversations (integrated and on-going vs. annually/”one and done”)
- Are focused on driving future impact versus documenting, reconciling, and evaluating past performance.
- Are conducted with an InsideOut™ Mindset, meaning they allow the employee to provide feedback first and are approached with the assumption that everyone has potential, thus overcoming the JABS™ of traditional coaching and feedback.
Meaningful conversations are emerging as a differentiator in those companies that excel in agility and innovation. If your organization doesn’t want to be left with an old and outmoded performance management system, it may be time for a makeover.
Learn more about the 7 must-haves for a performance management makeover by downloading the article.