Performance management: do’s and don’ts

by L&D28 Oct 2016
In a fast-changing, knowledge and skills-based economy, talented employees are key to an organisation’s success.
However, the current employment landscape suggests some significant challenges for organisations who are striving for higher employee retention rates.
In an article published in Training Journal, Nina Mehta, a Talent Management Consultant for Halogen Software, pointed out that job satisfaction is now at its lowest level in more than two years and almost a quarter of employees are looking for new jobs.
To retain their best employees, Mehta says, many businesses are focusing on fostering engagement through growth and development.
“The latest best practice in performance management supports this approach. Traditional performance management in the form of the annual appraisal is too infrequent to meet the needs of today’s business environment,” she said.
“Workforces are now not only more global, they are made up of multiple generations with diverse cultural backgrounds, and the increasing reliance on temporary and contract workers adds to the complexity of how organisations can best support their people in delivering outcomes that matter.”
Traditional approach to talent management ‘no longer works’
Performance management has shifted as a result, no longer top-down but rather, reflecting emerging flexible structures within organisations.

According to Bersin by Deloitte Predictions 2016:

“Companies today are turning into ‘networks of teams’ so many of the traditional management practices we developed over the last 20 years are open to debate," the analysis stated.
“Careers are more dynamic, young people are asking to be promoted into leadership much faster, and the worlds of recruitment, performance management, and training are now driven by the employee.” 

Yet many employees do not feel able to fulfil their career aspirations in their current organisation – more than a third (36%) saying it is unlikely or very unlikely that they will be able to do so, while only a third (33%) believe it is very likely or likely.
Flexible, not fixed
The performance management process must shift from the once-a-year, rear-view perspective approach of the annual appraisal towards being a more flexible process that mirrors the rhythms of the business. Performance management must also reflect the rate of development of individuals. It is no good providing an annual appraisal when an individual has changed job roles three or four times within that period. 
Manager/employee relationship 
The manager/employee relationship is now at the heart of the performance management process. Some sources say that up to 70 per cent of employee engagement is impacted by their relationship with their manager. Managers play a key part in ongoing performance management, understanding what motivates their employees and providing them with the right level of challenge to motivate and engage them. 
Focus on strengths
The traditional performance management process tends to focus on skills gap analysis. Today’s performance management approach gives more weight to strengths-based development. In other words, as well as identifying areas for improvement, the process identifies areas where the employee is particularly talented that could be developed still further. It also looks ahead, focusing on meeting future requirements rather than addressing past shortcomings.
Supporting other talent programmes
Performance management should be fundamental to supporting other talent programmes. First, it should have strong and clear links to the organisation's competency framework. How work gets done is just as important as what work gets done.
Ongoing performance management
Instrumental to the success of every organisation is the people. When performance management evolves from being an isolated HR-driven process to an intrinsic part of the everyday business rhythm, organisations are better able to drive engagement, productivity and results.