Most important trends in performance management

The past couple of years have seen an enormous amount of discussion around performance management.There
were numerous conversations and debates around organizations across the globe debunking the age old and
traditional annual performance reviews and following the paths of category leaders like GE, Adobe, IBM and
the like.Discussions revolved around how performance management needs to be a continuous process, with no
surprises along numerical rankings for employees on an annual basis. The preferences are changing as are the
employees at work.

It is clear that companies who participate in and embrace these changes are the ones which are going to benefit
from this revolution. Only this can help employers keep their employees motivated and engaged and also retain
the best of talent. At the same time, it has also been realized that performance reviews are not going to die.

A recent global research by CEB which surveyed more than 9000 managers and employees across 18 countries
found that not having evaluations is actually worse. The survey found that by eliminating performance
reviews, the overall results and productivity can drop significantly, by up to 10%. This can make employees
much more likely to leave the company.

With such new developments taking place, here is a summary of the most important trends in performance
management that HR experts believe will dominate the future:

1. Reinventing the Annual Review Cycle

Even though the wave is around phasing out of the annual review cycle, there are many organizations across
the world that are still deciding on adopting a more flexible and continuous approach to performance
management. They are still not convinced of debunking something that has been going on for generations or
adopting completely new technology that helps track performance. At the same time, organizations have also
done surveys which bring about interesting trends on what is actually desired by employees.

For example, Facebook analyzed its performance management system by conducting focus group discussions
and a follow-up survey with more than 300 people. These initiatives revealed that – 87% of
employees wanted to keep performance ratings. On the other hand, Accenture only had the rating numbers
hidden from the employees, but they had managers using the ratings internally for compensation planning
purposes.

Hence, the new system is not the complete abandonment of ratings. Instead, it will identify new ways of
making performance reviews a continuous and transparent process, without letting go of reviews. The wisdom
of 2017 is to use modern performance practices for focusing on employee learning and growth, while also
keeping the scope traditional reviews open.

2. Coaching And Personal Development

The whole idea of performance management will also focus on helping employees get access to resources and
mentors to help them give their best. Assigning a number as a rank once at the end of each year does not really
help anyone grow. Instead, in most cases, it ends up demotivating employees and turns annual cycles into a
scary affair.

The future will also witness performance management systems placing more emphasis on personal and career
development. With millennials going to constitute more than 50% of the active workforce by 2020, HR leaders
need to engage in activities that help motivate and empower employees to keep working harder. Training,
development, coaching and constant feedback are going to assume topmost priority in organizations.

3. Feedback Will Gain Momentum

Companies with highly engaged employees outperform the competition by 147%.

~ Gallup

To keep employees engaged, interacting with them on a regular basis and making them feel important is of
utmost importance. All businesses have always relied on big data to make strategic decisions that impact
revenues. In 2017, this is going to shift inward as employee feedback is going to get viral attention. The trend
has already started.

Businesses will be found investing in tools that help them capture feedback of employees around various
issues and companies can use the data to gain insights into making decisions. Feedback tools will help capture
manager feedback on a regular basis, employee feedback on various issues as well as peer to peer feedback.

4. Professional Training Is Going To Be Paramount

In today’s competitive and highly technical job environment, being updated about everything that is changing
so rapidly around is the least we can do for better career opportunities. Perhaps this is why Generation Y want
their companies to help them grow. In fact, 87% of them state professional or career growth and development
opportunities as a critical aspect when they look for a job.

Hence, training and investing in their professional development could be a major way in which organizations
can help retain their talent – by helping them grow. Giving access to a wide pool of knowledge and using
mobile learning as a strategy will see a rise. Classroom training courses will see a decline and a replacement
with anytime, anywhere learning on mobile devices.

5. More Transparency
64% of employees believe their company leaders aren’t transparent about their goals.

~ BetterWorks

We live in a world where a prospective candidate can check the reviews of an organization before joining it
and make a decision accordingly. Nothing can be hidden as reviews exist for everything and one small mistake
can cost organizations heavily. Being transparent is what is valued today by employees as it is seen as a sign of
trust.

The same will be true while setting goals for performance management. There will be open communication on
what is expected and leadership needs to transparent in spreading this message among employees. Hence,
organizations will focus on telling employees how important their individual and team contributions are and
what it can potentially mean to employees.

6. Rise Of Performance Management Tools

Making sure all of the above is achieved is not going to be easy on a manual basis. Organizations are looking
for software that can help them set achievable and ongoing goals, provide regular feedback as well as that
empowers employees to keep learning. This year will see organizations adopting performance management
tools that enable employees to receive and request feedback in real time, send automated reminders for regular
check-ins with managers, chat features and peer to peer interaction. All the data can be captured to make
decisions that impact businesses and give a clear view of what is it that employees want.

The coming years will see organizations adopting performance management tools that enable employees to
receive and request feedback in real time, send automated reminders for regular check-ins with managers, chat
features and peer to peer interaction. All the data can be captured to make decisions that impact businesses and
give a clear view of what is it that employees want.

5 Game-Changing Performance Management Trends for 2018

At Clear Review we are talking to HR professionals day-in day-out

about performance management and each year we write our hugely
popular annual summary of the latest performance management
trends.

We covered the performance management trends of 2017 12 months

ago, and we have watched as organisations have become increasing-
ly employee-focused and less process-driven. In this exciting climate,
we’re witnessing change and seeing that companies are having the
courage to shake up their performance management systems and try
new things.

As the year draws to a close, we’re excited to announce our predic-

tions for 2018.

1. Attention will move from quantity to quality of conversa-

tions and feedback
2017 was the year that Continuous Performance Management moved
from being a disruptive HR trend to being widely recognised as the
most effective approach to managing performance. Companies of all
sizes are shifting away from annual appraisals to more regular ‘check-
ins’ and frequent real-time feedback and the redesign of performance
management is now a high priority for 79% of executives according to
Deloitte.
As organisations embrace this new approach, attention is now being
turned to how to make performance dialogue more meaningful. To
achieve this, in 2018 companies will need to:

 Provide employees and managers with a framework for having

high-quality discussions and giving effective feedback. Perfor-
mance management frameworks or systems should encourage
future-focused, developmental dialogue supported by in-the-
moment, qualitative feedback.
 Minimise form filling and bureaucracy (see Trend 2 — Simplici-
ty — below)
 Provide training for managers in everyday coaching skills
 Decouple performance measurement from performance
improvement conversations and feedback

Addressing these issues is vital considering that employee experi-

ence has been a top trend in 2017 and that managers and employers
are having to come to terms with the fact that we’re living in an
employee-driven market. If we don’t focus on employee development
and growth, we’ll fail to keep hold of our top performers.
Revolutionise your Performance Management Practices in 2018
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2. Performance management systems will strive toward

‘simple’
If we are increasingly concerned with employee experience and how
to improve performance at work, we need to start with the simplicity of
our workplace processes. Michael Armstrong said in his Handbook of
Performance Management that a performance management system
should be ‘ridiculously easy to understand’, and this is something busi-
nesses are now waking up to.

Over the last decade, performance management became increasingly

complicated as organisations focused on measuring performance and
linking it to pay. However, we’ve now come to realise through
research that these processes do not actually result in reliable
data and actually damage employee performance and engagement.

So as we enter 2018, companies will follow the example of global

giants such as General Electric and Microsoft who have stripped out
complexity such as annual appraisals, ratings, calibration meetings
and competency assessments, focusing instead on regular, quality
performance conversations and feedback. Deloitte’s 2017 Global
Human Capital trends found that 96% of companies who have done
this say their processes are now simpler and 83% say the quality of
conversations between employees and managers has gone up.

Simplicity will also be a huge consideration in terms of software. As

a company that prides itself on having the simplest performance man-
agement software system on the market, organisations are approach-
ing us every day saying that their current performance management
software is no longer fit for purpose in the new world of agile perfor-
mance management. They are now looking for software that is sim-
pler, lighter touch, flexible and which supports meaningful discussions
and feedback, rather than a system which just captures data and auto-
mates outdated appraisal processes.

Companies no longer need feature-rich technology as it is more

expensive, less reliable and acts as a barrier to good performance
management. Simpler software, on the other hand, requires little to no
training, and encourages purposeful dialogue rather than preventing it.

3. Companies will change the way they manage perfor-

mance-related pay and bonuses
As we predicted in our previous year’s performance management
trends blog, companies are continuing to discard annual appraisals
and employee ratings. This is a great step forward and leaves employ-
ees feeling more valued. On top of this, it results in a more productive
workforce.

That said, some companies are struggling to understand how to han-

dle performance-related pay and bonuses under a continuous perfor-
mance management model. Because of the inadequacies of perfor-
mance ratings and the fact that there is little correlation between rat-
ings and actual performance, we predict that some companies will
abandon performance related pay entirely in 2018, and instead, base
pay decisions on market rate and responsibility and bonuses on team
or company performance. This removes the subjectivity inherent in
performance-related pay and saves everyone significant time and
effort.

For many organisations though, this is a step too far. Therefore, these
companies may adopt the approach recommended by McKin-
sey whereby efforts are focused on identifying and adjusting reward
for only the top performers and the under-performers, rather than
everyone. As McKinsey puts it, “it’s a fool’s errand to identify and
quantify shades of differential performance among the majority of
employees, who do a good job but are not among the few stars.”

Performance related pay is a big topic and we don’t have time to cover
all the options in this article, so we have written a dedicated eBook
on How to manage pay with Continuous Performance Manage-
ment which you can download for free here.
Book a Personalised Demo of Our Software

4. The focus of performance management data will shift

from completion rates to manager impact
Traditionally, performance management data has focused on perfor-
mance ratings and appraisal completion rates. However, as organisa-
tions make the transition from performance measurement to perfor-
mance improvement, the data they need will change. In 2018, compa-
nies will increasingly be evaluating the quality and impact of perfor-
mance management dialogue between managers and employees.

Given that managers account for up to 70% of variance in employee

engagement and that only 22% of employees agree their performance
is managed in a way that motivates them, HR professionals will need
to be monitoring how often performance check-ins are taking place
and how frequently feedback is being given. HR will also need to
understand the impact these interventions are having on employee
morale and performance. This will provide them with the insight they
need to understand who their best managers are and which managers
need coaching and support to better develop their teams.

5. Businesses will opt for continuous performance man-

agement software over appraisal software
As we mentioned earlier, annual performance appraisals are falling
out of favour and regular one-to-one performance discussions and
feedback are becoming the de-facto way of managing performance.
What we’ve noticed during 2017 though is an increasing number of
organisations approaching us who have tried to move informally to
a continuous performance management approach, without using dedi-
cated software, and have failed to get traction.

The principles of continuous feedback and regular check-ins are sim-

ple and managers like this approach, but new habits take time to
develop. So having software that actively encourages these ways of
managing performance, reminds people of what they need to do and
when and provides visibility to HR of who is and isn’t doing it is essen-
tial for success.

We’ve also spoken to many companies who have tried to customise

their existing appraisal software to support a more agile, continuous
performance management approach and it hasn’t worked. When soft-
ware is changed to do something that it wasn’t originally designed to
do, it ends up feeling ‘clunky’ for users and becomes a barrier to good
performance management.

For these reasons, we predict that in 2018 there will be an accelera-

tion of companies procuring purpose-built continuous performance
management software rather than annual appraisal software.
4 Future Trends in Performance Management

The future is always a lot closer than it actually seems. That's especially true in
today's business environment, which is continuously being reshaped and disrupted by
technology. Even human resources has felt the impact of new software and ways of
thinking about performance management. It's been a steady evolution: The Harvard
Business Review noted that where once accountability was the dominant theme in
performance management (ratings, rankings and annual appraisals), organizations are
increasingly adopting new structures that allow them to marshal productivity while
also focusing on workforce development and engagement.

This burgeoning trend has fostered the popularity of human-based approaches to

talent management, like continuous performance management (CPM). Employees
crave feedback and communication, not only to get their day-to-day jobs done, but
also for career direction and personal improvement. CPM, and other like-minded
approaches are used to balance the practical requirements of office management,
while also giving employees and managers tools to their own success.

This is important because the trends driving CPM dovetail closely with those in
overall performance management. Here are four future talent management
considerations to look out for:

1. Corporate social networks

Social media has already proven to be highly useful to brands looking to engage with
consumers, and the same effect carries over to companies and their employees. The
National Business Research Institute said up to 60 percent of companies have their
own social networks, and used Microsoft's Town Square and Best Buy's Blue Shirt
Nation as examples. These networks can have a big effect by facilitating
communication and employee recognition. Building a bespoke social network from
the ground up isn't the only option, however. Workplace by Facebook', for example,
offers employees a familiar interface, and corporate users a way to customize their
network to reflect culture.

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2. Greater generational diversity

Millennials are already the most represented demographic in the workforce, but
they're far from being dominant. Gen Xers are still very much in the mix, while Gen Z
talent (those born around 2000) is starting to graduate college and enter the labor force
in droves. This generational mix is also impacted by the fact that more baby boomers
are staying on in their jobs because of financial factors. What this all adds up to for
businesses is an office rich in generational diversity, which is at once a good thing and
a complicated balancing act. While companies can depend on older employees to
mentor younger ones, for instance, divides in cultural thinking and professional
practices of different generations could prove difficult to address. Managers will need
to become more aware of mitigating these differences, as well as leveraging the
strengths of a diverse workplace.

3. Employee experience
Most of the time, it's the customer experience that gets attention; but the new trend in
performance management worth looking into is the employee experience. This catch-
all term relatively refers to the very first interactions an employee has as a job
applicant with the company through to their continued employment. The experience
encapsulates the culture they encounter, the environment they work in, the recognition
they are given, the people they work and socialize with and the personal gains they
can derive from their job. Shaping a high-level employee experience means at
different times catering to individuals (done through more frequent check-ins) and
creating an atmosphere that everyone can take part in and enjoy.

4. Linking HR data with non-HR data

Companies generate massive amounts of data in every corner of their operations,
including HR and talent management. On its own, that data can be valuable in
benchmarking performance and helping address individual needs; when combined
with data collected from all other areas, businesses could potentially unlock new
benefits and insights. The un-siloing of companywide data was recently brought up by
TechTarget, which said combining HR intelligence with data from ERP or financial
systems could allow leaders to more proactively manage talent and drive performance.

Whenever looking forward to the future of HR and performance management, there's

always one constant: software. Digital solutions are needed to support CPM initiatives
that emphasize greater communication and more frequent feedback. For more
information on what improvements your business may need to make to IT
infrastructure, contact BetterWorks today.
New Trends in Employee Performance Management
Employee performance management techniques have long been a staple in most business
organizations. It has historically been used as a tool for qualifying and measuring performance,
judging performance metrics and deciding if stated goals and objectives are being met. Recent
trends in performance management are moving away from this antiquated annual review format
toward implementing more employee-friendly measures.

Ongoing vs Annual Performance Evaluations

One of the recent trends in performance management is that managers providing employees with
regular, ongoing performance feedback rather than conducting annual or semi-annual reviews.
Using protocols, such as regular check-ins and brief 1:1 meetings, managers can discuss
performance issues at the moment and redirect behaviors before undesirable performance issues
become ingrained and difficult to change. Formal evaluations may still be conducted for big-picture
analysis and goal setting.

Self-Evaluations

Although employee performance management has previously included a self-evaluation

component, the latest trends in performance appraisal include an expanded version of this
practice. Staffers have an opportunity to highlight what they believe are their most notable
achievements and accomplishments, as well as outline the goals and professional development
objectives they would like to strive for in the coming year. Employees may also be asked to share
their challenges or improvement needs. With this new performance management system,
managers, then, have an opportunity to review the submissions in advance of an evaluation.

Management Evaluations

Managers are typically responsible for directing the actions of their direct reports. As such, the
performance of an employee can be linked to the supervisory skills of their managers. A new
performance management system allows staffers the opportunity to evaluate their managers in
key areas. This is a useful tool for department heads and leaders, as well as for higher-ups in the
company who oversee and direct middle managers.

Eliminating Metrics

Historically, employee evaluation forms and software programs have worked by way of a point
system, evaluating how employees perform in key areas on a scale of 1 to 5. Studies are showing
this is not an effective form of measurement, particularly in environments in which the quality of work
is subjective rather than measured. Recent trends in performance management include
evaluating engagement, contributions, problem-solving and teamwork initiatives that contribute to
the health of the company.

Removing the Link to Pay

Traditionally, performance evaluations have been linked to pay increases. Perform at a certain level,
you get a certain percentage of an increase in pay. Much like the evaluation metrics that are
evolving, many companies are modifying or eliminating this process as part of the new
performance management system. Instead, they’re giving cost-of-living increases, basing pay on
contributions and issuing bonuses and profit-sharing options to reward high performers.

Although there is no perfect or foolproof system for uniform employee performance management,
more and more employers are moving away from staid old-school practices in favor of more
progressive processes.