How to make new performance management models work

New research shows a shift away from traditional performance management processes towards more a more agile, dialogue-based approach, so how should organisations respond? Nadine Smart, head of talent at Cirrus, finds out the answer.

Almost every organisation I talk to is redefining its approach to performance management.

There is widespread dissatisfaction with the traditional tick-box approach and many have already embraced much more flexible models. Others are finding that the techniques of old are so ingrained that making a shift is proving quite difficult.

As part of Cirrus and Ipsos MORI’s Leadership Connections 2016 research, senior executives from major UK organisations were asked where HR teams contributed most to the business. In their opinion, the top contribution areas were talent attraction for 55% and performance management for 46%.

When we discussed this finding with HR, talent and L&D professionals, many felt this represented a great opportunity for them to influence the culture of their organisations.

There was an overwhelming desire to move away from traditional performance management systems towards a more holistic approach to improving individual and organisational performance.

Beyond appraisals

The vast majority of organisations researched agreed that performance management should go beyond appraisals.

They feel it should encompass wider elements of personal and career development in order to improve both individual and organisational performance, in line with organisational values and goals.

Recent Redefining Performance Management research from Cirrus found a widespread belief that performance management is – or certainly should be – an important and valuable tool for driving business strategies forward.

It would be fair to say, however, that no one feels they have perfected performance management quite yet.

Most existing systems are some way off being able to deliver real value. The research highlights strong dissatisfaction with performance management in its current form, which is driving major organisations to change, adapt, and seek alternative solutions.

Many are questioning the fundamentals of their systems in search of new, agile and sustainable solutions.

The research shows that organisations have a strong desire for change and are aware of the external developments in this area, which is driving a shift in approach.

How do we change our approach?

Many have reviewed their current approaches at a deep level to understand what is and isn’t working, and to understand how performance management influences culture.

Those who are looking to change are seeking a shift away from rigid processes towards a more dialogue-focused approach face significant challenges. Arguably, the biggest performance management issues facing organisations today are:

  • The dreaded process. A clear finding across all our respondents was poor engagement with the process of performance management, in particular the more rigid, bureaucratic and box-ticking approach.
  • A numbers game. Many people felt that the ratings system are one of the biggest sources of dissatisfaction, particularly systems which force fit people into distributions to allocate bonuses.
  • The move online. We are seeing a widespread adoption of digital performance management systems.
  • Business led. There is a move towards really understanding what each business needs and creating bespoke, multifaceted approaches aligned with purpose, rather than a “one-size-fits-all” solution.
  • Conversation is key. It was highlighted across all our research that a focus on building capability to have great conversations is the foundation of successful performance management.
  • Responsive not rigid. There is a widespread desire to move away from rigid systems towards a more flexible model where more regular and more ad-hoc performance conversations take place.
  • Introducing the human touch. Many organisations are thinking more deeply about what motivates and drives performance rather than a linear view around money.
  • “How”, not just “what”. There is an increasing trend towards incorporating values and behavioural measurements alongside more traditional objectives in order to balance the “what” and the “how”.

Some of these are the same challenges organisations have grappled with for decades. For example, the desire to move away from form-filling and box-ticking can be hampered by line manager capability.

Today, more and more organisations are investing in capability building, creating clear and straightforward guides and information packs to bring everyone to the same level, and offering support on approach, objective setting and ongoing conversations.

Investing time with managers to establish a shared and consistent understanding of expectations is a good starting point.

Ultimately, there is a definite shift away from traditional performance management approaches towards a more agile, “light-touch” approach.

Instead of formal appraisals or twice-yearly reviews, many organisations are seeing real performance shifts as a result of regular, supportive conversations. There is a move towards really understanding business needs and creating bespoke, multifaceted approaches aligned with purpose, rather than “one-size-fits-all” solutions.

Making this shift can be tough. It often requires real cultural and behavioural change. The results however, can have a deep and lasting impact – not only on individual employees, but also across the entire organisation.

About Nadine Smart

Nadine Smart is head of talent at Cirrus, a leadership and talent consultancy.
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