How to improve performance management in 6 steps
If you think that all is well with your current performance management approach, think again: more than half of managers (58%) dislike their own organization’s performance review system and would give it a grade of C or less (source: Sibson Consulting). This data points to a significant issue in the way most companies are managing performance.
Specifically, the problem is that instead of focusing on the improvement and development of employees and their performance, the old ways of performance management have emphasized ineffective motivators, such as salary-based incentives and other unproductive practices.
The solution is to develop a continuous performance management system that focuses primarily on improving and developing employees. Here’s how you can achieve that in six steps:
1. Oust ineffective, traditional performance reviews.
There are multiple issues with traditional, yearly performance review models. For one thing, assessing performance once per year is ineffective and doesn’t provide ample opportunities for employees to improve. There is little actionable feedback provided, and moreover, it’s not given in real-time, so the underperformance or bad behavior has already gone on unnoticed for far too long. That’s bad for both your company and your employees’ performance.
Secondly, traditional reviews are often measured against the Normal Distribution, i.e., “The Bell Curve.” This is problematic because the majority of employees (those who are just getting by and falling within the average of the Bell Curve) aren’t inclined to change when their performance is judged against this curve. Worse yet, two in three performance appraisals done this way either result in no change at all, or a decrease in performance (source: Forbes).
2. Identify and praise exceptional talent.
As indicated above, appraising performance against the Bell Curve is problematic. But when it comes to identifying star performers, the Bell Curve can be helpful. In most cases, 10% of employees make up the lowest rankings, and 10% make up the highest. It’s in your best interest to take notice of those outlying employees—those who aren’t buried in the middle of the Bell Curve, but are forging their own paths to success as standout, dedicated contributors.
Once you’ve identified them, you must do all that you can to retain these devoted high performers. Ensure proper resource allocation to provide continuous opportunities for your top talent to grow and develop, and keep communication open with an ongoing feedback loop (see #4 for more information on this).
3. Use OKRs to effectively align individual objectives with corporate goals.
One of the most efficient ways to improve performance and make it easier to manage is by linking individual’s contributions to the highest company priorities. OKRs (objectives and key results) promote cascading alignment by ensuring that CEO-level goals are being accomplished because each employee’s efforts are supporting those business goals.
With OKRs, employees see for themselves how their efforts are making an impact on goal execution. That helps boost performance organically, and with a measured way of tracking goal progress, managers can assess performance on an ongoing basis and in real-time.
4. Develop a continuous feedback loop.
To exchange feedback on performance regularly, you must communicate with your people on a weekly basis. Part of this exchange can be a weekly check-in. Weekly employee progress reports are also a great way to keep the lines of communication open.
With an employee progress report, you can ask questions about weekly wins, potential roadblocks, and any pressing concerns your employees may be facing. That allows you to get a snapshot of performance every single week, and you can provide your own comments to their reports to give actionable feedback in real-time.
5. Turn your managers into coaches.
All managers should be focused on improving their employees’ strengths through coaching. Unfortunately, almost half of managers spend less than 10% of their time coaching their team. It’s no surprise, then, that only 28% of employees feel that their managers hold effective discussions about performance (source: Forbes).
To be good coaches, managers should keep performance feedback focused on the future as much as possible. Punishing for past mistakes or underperformance doesn’t facilitate future development. Effective coaches give frequent, specific feedback about what employees can do to start improving right now. To ensure that your managers are coaching their teams, encourage them to ask: “What are you going to get done this week?” And, “What do you need from me?”
6. Develop an effective way to measure success.
Once you’ve replaced the annual review with a continuous approach to performance management, you’ll still need a way to answer these two questions: Is performance management happening, and is it working effectively?
If you’ve chosen to implement weekly progress reports, it should be easy to identify whether or not performance management is happening regularly. If reports are being completed and there is an ongoing exchange about performance among managers and their direct reports, then it is indeed happening.
But is it working? To answer that question, you must first have a set of standards in place against which performance is measured. Remember, the goal is not to gauge all performers against a blanket set of criteria (i.e., the Bell Curve), but instead, you must clarify what is expected of each employee in his or her own specific role. Then, you can assess performance against those pre-established expectations. Consider having more frequent appraisals to formally discuss how employees are performing against your expectations, and if needed, develop strategic, individualized plans for improving performance.