Performance Management is one of the most critical processes in any organization; however, a survey by Watson Wyatt showed that only 3 out of 10 employees agree that their company's performance management system helps improve performance. So, what is it that aids the performance management process in organizations? In today’s world if organizations want to truly drive a performance driven culture then it’s time to make performance management a true developmental exercise which is focused on developing people rather than merely managing their performance. An effective and efficient performance development system focuses on honing skills & competencies for diverse roles thus creating a future ready organization that fosters innovation & collaboration and ultimately results in creating a win-win for the organization and its people. 

How can organizations transition from a Performance Management System (PMS) to a Performance Development System (PDS) approach? 

Focus on learning: One of the key components for organizations to transition to a performance development plan is to invest time and resources in growth & learning of people.  The need for constant learning has become even more critical with the pandemic challenging everything we know. It’s important to promote cross-functional assignments where people are encouraged to move out of their comfort zone to learn something new. This cross-over thinking aids in reskilling and upskilling which not only helps an individual develop but also the organization by preparing a workforce that is future-ready and ready to scale up in uncertain situations. In fact, organizations should formulate a learning strategy which is not only aligned to business but also rewards people who learn and adapt in quick time

Focus on Competencies: While functional skills and knowledge are undoubtedly important for individuals to succeed, competencies is what sets people apart and a true performance development system focuses on the same. Competencies are the standards of excellence for current & potential future roles and a differentiator between performers & super performers. People managers should work on developing these in their team members to prepare them to take up higher responsibilities. It is important for people to know what are the behaviors that they need to exhibit to excel at their jobs and what they should do differently if they want to move up the ladder. Hence, organizations must follow a three-step approach:

• Define core competencies for a job
• Create avenues for people to develop competencies
• Differentiate and reward people who exhibit them

This also augurs well for organizations when faced with unprecedented situations as they have a workforce which is competent to take on any challenge

Freedom to create: One of the best ways to develop people is by giving them autonomy and freedom to do things. Performance development encourages individuals to take risks and go beyond their usual KRAs and KPIs. This becomes even more vital today, when we look at the world around us that is uncertain and ambiguous. Most forward-looking organizations don’t just stumble upon innovative ideas by chance. Behind it is a framework which is built over the years that supports creativity and innovation. Giving people freedom to try new ideas and delve into unexplored territories keeps the curiosity and hunger to innovate alive. One more reason for people to stick to organizations where they can move out of the mundane and experiment 

Team-focused performance evaluation: One challenge that we see in a traditional performance management process is that goals are usually set at an individual level, though percolated down from the top via a common objective, but often broken down into tasks each member in the organization must individually achieve to be rightfully rewarded. This doesn’t aid collaboration. However, now, as organizations are becoming flatter & more dispersed, we see more cross functional teams collaborating on various projects and initiatives. Hence, team-focused performance management is the next milestone in the process of transition to performance development. Organizations should start incorporating team-based behaviours into their performance framework and evaluate employees on both their individual contributions as well as their team-oriented behaviours

Equip managers to give continuous feedback: Whether performance management system or a development focussed process; regular, honest, and constructive feedback takes precedence over everything else. People managers must be habituated to giving consistent developmental feedback to their teams so that people can actually focus on developing themselves and not really view the feedback exercise as a part of the process that eventually leads to a salary increment. Often these feedback conversations that happen during the annual performance appraisal time are centred around the increment %, ratings and promotions, rarely do people care about getting true feedback. Thus, if we can decouple them, the real value of a feedback conversation can be leveraged. When you learn to give feedback in real time, either in context of work or an individual’s career development, it becomes more meaningful and not only helps individuals become better at their job but set them up for long-term success

Leverage Technology: Last but not the least, a robust performance development plan must leverage technology to develop people. Right from goal setting, to tracking performance to aligning performance development with competencies and learning plans; organizations need to go digital. I see two major reasons for this; one, the amount of data and metrics which are used for measuring performance are so huge that it cannot be processed manually and two, it helps both managers and team members off load mundane tasks so that they can focus on meaningful discussions. New age performance management tools give a 360-degree view of individual performance, functional performance, and organizational performance, creating a clearly visible track to march on

Moving to a culture that fosters performance development is not cakewalk. Effective performance development requires unwavering commitment of leadership team & people managers.  Successful workplaces use a performance development approach to truly build a culture where each individual and teams are engaged in their roles and aim their efforts to accomplish organization goals.