How to redesign performance management in the post pandemic era?
For many firms, performance management is limited to annual or bi-annual performance appraisals – they’re used to review performance and determine training needs, pay increases and bonuses. This method has proven to be popular but, according to a YouGov survey*, only 26% of UK employees find the traditional appraisal process helpful. Furthermore, as we move into a new era of working models, employees could be working from home up to 50%, or more, of the time, potentially making performance reviews more difficult. So, how can you improve your performance management process for a better employee experience and gain a competitive advantage?
Why performance management is important
Performance management should be a continuous process of identifying, measuring and developing the performance of individuals and workgroups; they should align individual performance with the strategic goals of the organisation. During these one-on-one meetings, objectives may be set, but not evaluated or discussed until the next round of evaluations. Lengthy gaps between evaluations without a continuous formulised system to receive and give feedback can lead to employees feeling demotivated and managers may unintentionally find themselves micromanaging.
The impact of coronavirus (COVID-19) caused many companies to put performance appraisals on hold, instead prioritising the wellbeing of their employees. After over a year of working remotely, firms are now embracing new ways of working, including models where employees will have the flexibility to decide where, and how, work will be completed. Now is the perfect time for leaders to assess your current performance management process and ask whether it’s fit for purpose.
Key questions to ask yourself are:
• How can managers provide a fair assessment?
• Do managers have a flexible approach to development?
• How will goals be set and managed?
The right blend
Pre-COVID-19, diversity and inclusion was a priority for many firms; still today, it remains at the top of the list of concerns that firms are actively trying to address. Following the shift in working patterns during the pandemic, it’s likely that employees who are parents, or who have other caring responsibilities, will request to continue to have flexible working arrangements, including working from home.
Slack conducted a study that said that during the pandemic black people actually felt a higher sense of inclusion, higher satisfaction with their job, and that they were able to manage not only stress, but to have work-life balance.
Managers need to guard against not creating a two-tier system where in person teams are given preferential treatment compared to those that are working remotely. Managers will require training so that they become more aware of their own biases and learn to provide balanced objective feedback.
There has long been a misconception that employees are less productive when working remotely, however, as confirmed by a recent report published by Deloitte, 55% of workers believe that their colleagues are just as, if not more, productive now than before the COVID-19 lockdowns.
The standard nine to five working hours have been ripped up. Many employees no longer need, or want, to commute and therefore start work earlier; others are taking time during the day to exercise or drop children to and from school. With this increase in flexibility, managers need to design performance management programmes that are personalised and ongoing. This type of new system will help identify employees that are at risk of leaving prematurely. Your team need clarity and purpose to help understand how their work connects with the company’s overall vision – they must have autonomy and clear goals (weekly and monthly). Instead of monitoring hours worked, managers should become outcomes focused.
Connection energises thinking; your team need to get to know each other beyond the work they are doing. Effective communication will also help to build trust. According to a recent study** people working in high-trust companies reported 74% less stress than those working in low-trust companies. They also report 106% more energy at work, 13% fewer sick days, 76% more engagement, 29% more satisfaction with their lives, and 40% less burnout. All of these factors fuel stronger performance. When speaking with your team, ask questions that will help you to understand what factors would make their work lives easier, and whether there are any ‘pain points’.
Key performance indicators (KPIs) are critical to track the performance of individuals and the business as a whole. For some employees, such as junior team members, it can be more difficult to be motivated, particularly if they are less in the office learning from other senior colleagues therefore objective setting will help to keep morale at optimum levels and drive results. They must be SMART (specific, measurable, actionable, realistic and timebound) but also agile, which means that managers need to anticipate change and react accordingly.
Identifying the best KPIs to track is important to the success of the team. Although hours billed and files closed are essential, there are other success metrics that should also be considered, such as client referral and net promoter score. This metric is often overlooked but should always be tracked because it measures client satisfaction.
Conclusion
A successful performance management process provides businesses with important metrics to inform decisions concerning its people – critically assessing your current system will highlight areas for improvement. With over 80%*** of companies opting for a hybrid model, firm leaders need to realise that they must not only offer flexible working arrangements, but go further to establish a performance management system that provides an employee experience which is engaging and motivating.
*https://www.consultancy.uk/news/17726/uk-employees-losing-faith-in-annual-performance-management-cycles
** https://hbr.org/2017/01/the-neuroscience-of-trust
https://www.gartner.com/en/newsroom/press-releases/2020-07-14-gartner-survey-reveals-82-percent-of-company-leaders-plan-to-allow-employees-to-work-remotely-some-of-the-timetart writing here.
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