Performance management in the 'new' new world of work - Overwhelming or opportunity?

If you do a quick web search on “Performance Management”, you will often find a definition like this “...Performance management is the supervision and oversight of employees, departments, and organizations with the objective of seeing that milestones and objectives are reached in an efficient and effective manner. This niche aspect of overall management involves defining what effective performance looks like.”¹

Well, I don’t know about you, but I hardly find this definition relevant or compelling in today’s world! The past practice of continually tweaking the ratings, forms, and competencies falls short of producing an effective result or moving the “needle” on impact and results. In fact, it has become such an eye roller that over the last five years, many companies have shifted from “annual reviews” to the 360 Degree reviews, to the rating-less reviews, and now to the continuous reviews.  And yet, the controversy regarding what is the best performance management system trudges on unabated.

44 percent of millennials say they are more likely to be engaged when their manager holds regular meetings with them but only 21 percent of millennials meet with their managers on a weekly basis

Many argue that the changes in performance reviews have been driven by the millennial generation of workers, but the “rise of the millennial” is over — the generational shift is here, and the millennials have cracked the shell. The rest has simply followed.

However, this shift is driven by all of our expectations and it has had a real impact on us as we try to steer the conversation towards focusing more on quality and not just quantity, a far more admirable goal because it validates the “impact”. However, it presents challenges where the nature of workforce includes the contractors, consultants, freelancers, and contingent workers, as well as the generational shift. Organizations require talent strategies and performance conversations that suit the diverse needs of not only the generations that are or will become part of the workforce but also those who are not “statutory employees”.

This breaks down into three areas that we need to consider:

1. Continuous Conversations - Elevating the conversation
2. Compensation Implications - Annual reviews can’t be about the score
3. Supporting new worker types

Continuous Conversations

Perhaps what seems the simplest can be the hardest for us. “Continuous Conversations” are a part of a new strategy and skill of all stakeholders of an organization, and managers, employees and HR practitioners all play a role in making this approach successful. This is one thing we need to get better at because research shows the critical nature of it. 44 percent of millennials say they are more likely to be engaged when their manager holds regular meetings with them, but only 21 percent of millennials meet with their managers on a weekly basis.²

For what it’s worth, I see this as not a “millennial” thing but a “human” thing, it crosses all generations. Having regular communication has no downside but in our current consumer-driven era, we all expect clear and crisp communication regardless of the generation. Words matter, intent matters, and ownership matters.  We in HR can help with some simple techniques by coaching both, the managers and employees.

Words: Championed by a Principal on my team, Dr. Tom Tonkin, we suggest the simple change in phrasing from “Why” to “For What Purpose”.  The “Why” requires justification, and “For What Purpose” implies value, and aspiration.  Coaching our leaders to think and converse in those these terms improves the quality of conversations.

Intent: Distinguish between “talent mobility” and “career mobility”.  Talent mobility implies supply chain thinking and is employer-centric. Champion the notion of Career Mobility is an approach which suggests a shared mission and responsibility of both the employee and the employer. Conversations, results, technology tools and evaluations should be focused on common outcomes because of that emphasis.

Ownership: Finally recognize that we all must own our part of this.  

• Managers need to practice as they shift their roles from being evaluators to coaches. This means new skills of active listening, curiosity, and being able to ask clarifying questions like “what development can be included in the next steps?”  Ensure that the conversations include such aspects and the hard goals – it can’t just be about the work.
• Employees need to come prepared and to talk about what is going well.  Focus on areas where new skills and experiences are to be gained, and ensure that growth path and development in your career. , ensure you communicate your priorities, expectations, and personal progress.
• HR needs to coach our audience to insure that employees are coached on holding consistent conversations and that such conversations have merit.  We need to provide a useful framework, and the skills coaching to our leaders, THEY are the multiplier effect we seek.

Compensation Not Tied to an "Annual Review" Number

Guidelines are generated from the classic approach in our tools, and the performance management annual scores. Having continuous conversations doesn’t mean that they can’t roll up into an annual score however, they don’t have to.

1. Historically, the annual review has been tied neatly to the compensation conversation and even supported the notion of “differentiated comp” which mean that the scores were intended to reward the highest performers.  Another principal on my team, Jeremy Spake often cites the fallacy in this...
2. A new notion has sprung up though, the idea of separating the compensation conversation from the annual review. Instead, it should shift it to the high performer/high potential talent review step. The notion is simple and powerful at the same time.

Although this takes a little more work in its execution, it is mostly an effort on the part of HR practitioners. The strength of this approach is that it is a continuation of the conversations that should have been occurring with the manager and with the employee. It also forces good thinking for those same managers AND their leaders in terms of its focus on developing and supporting people.

Depending on whom you ask, the rise of the contingent worker is either upon us or is overhyped

Supporting multiple worker types (The "Gig" Economy)

Depending on whom you ask, the rise of the contingent worker is either upon us or is overhyped.  Recent research from McKinsey cites a key trend, predicting that 50 percent of all workers will be freelancers by 2025.³

The term ‘gig’ came from the music industry and there are defined characteristics and traits of a ‘gig’: It implies that an individual can keep up with trends in their role, have their  own tools,, understand the lingo, is prepared, and knows what is expected of them., They know what is considered good work vs. bad work, and can articulate and defend their position to the toughest critic. 

If we use this as our definition, then it makes sense that this would also include multiple generations and the older workers might like this type of arrangement even more so than any other group. 

Regardless of this, it appears it is here to stay. Interestingly, in Europe, social advocacy is blurring the lines between gig economy workers and traditional ‘employees’.  This year, the Foodora platform (online food delivery) established a European works council and signed an agreement with trade unions in Germany and Italy. Riders who use bicycles to deliver the food are formally recognized workers and one rider is a trade union representative on the company’s supervisory board.

The point of bringing up this 3rd pillar is that the first two items we talked about apply here as well. Thus, having continuous conversations focused on outcomes and development, and tying compensation to something other than an annual review will prove especially useful as the “lines blur” with new worker types. As humans, we all still crave feedback and rewards for our work.  These simple techniques support such conversations regardless of statutory status.

In 2019, performance management is continuously evolving – as most of our craft is.  We are seeing rapid changes from the traditional to the emerging which are driven by new expectations, reflecting the new demands of the work, and supporting many people types and worker relationships.

It’s a great time to be HR, and our team(s) need us more than ever.

Reference:

1. Investopedia Terms
2. Gallup,  Research on Millennial Engagement
3. How disruptive technologies are opening up innovative opportunities in services – McKinsey 2019