For decades, most organizations handled employee performance in a very staid and traditional way: conduct an annual review during which the employee would be evaluated and graded, with scores typically linked to salary increases, incentives, and promotions/continued employment.
But this approach is rapidly falling out of favor. In an oft-cited statistic, business analyst Josh Bersin writes, “70% of all organizations dislike the [performance appraisal] process.”
And no wonder: the traditional performance management approach:
• Addresses issues only after they have hurt the employee and company;
• Emphasizes problem-correction instead of talent-development;
• Stresses and upsets employees, who may become less productive in the aftermath;
• Stresses and takes too much time from supervisors and managers; and
• May fall prey to reviewer bias and misunderstanding.
So, what are organizations doing instead? Here are three major shifts in the world of performance management.
1: Supervisors provide feedback much more frequently.
Instead of providing substantial feedback only on an infrequent basis, managers are increasingly expected to provide ongoing input. For example, software company Adobe revamped its performance management system to emphasize regular feedback and check-ins. The result has been a 30% reduction in voluntary employee turnover.
2: Organizations are increasingly deploying AI and Big Data for performance-related insight.
Businesses are often sitting on far more data about their own workforce than individual managers can consume. Cutting-edge technologies like artificial intelligence can chew through that data to answer questions about both teams and individual workers, drilling down into performance issues and factors affecting performance output. Intelligent software can also eliminate the incidence of rater bias.
3: Managers are shifting from reactive to proactive feedback.
Food producer and distributor Cargill Inc. has also renovated its performance management system over the past few years, shifting to daily conversations with both feedback and encouragement. The company has since reported that it has seen “measurable improvements after managers began giving constructive feedback that was forward-looking, instead of reviewing what had happened in the past.”
CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with HR administration, benefits, payroll, and compliance. To learn more about our ability to create a strategic HR function in your business that drives business growth potential, contact us today.