One of the greatest contributions of COVID-19 to the corporate world was a ‘mindset change’ fueled by absolute necessity. We always knew that flexible working from home (WFH) using digital technology was possible. Microsoft teams, Zoom, Skype and the likes have been used for years to conduct virtual meetings. The fear of performance deterioration is what prevented many organizations in implementing it. However, it took just over 24-48 hours for the IT industry to reinvent themselves and start operating out of the employee’s homes when faced with a country wide lockdown. The current debate about the efficacy of the work from home model or a hybrid model may continue for a while, but one lesson that we have learnt is that resilience and innovation is essential to survive any crisis. 

One of the tactical areas that plays a crucial role for all organizations to be successful in any model of work is an effective Performance Management System (PMS). The PMS is not to be confused with the annual performance appraisal/evaluation/assessment that almost all companies conduct on an annual basis. 

Performance management is the process of identifying, measuring, managing, and developing the performance of the employees in the organization. 

Performance appraisal, on the other hand, is the ongoing process of evaluating employee performance. 

It would be more appropriate to sum up performance appraisal as a smaller piece of a larger jigsaw puzzle, the performance management system. 

As is the case of WFH, many organizations are hesitant to switch from their traditional performance management systems which are largely driven by the managers directly measuring employee productivity and trying to manage their performance accordingly. Even prior to the pandemic many organizations had initiated the task of overhauling their existing PMS, which they understood were rigid and ineffective to meet the ever-changing needs of a dynamic environment. However, with the pandemic all norms have changed, where managers have realized that the only way to measure employees are now to purely depend on the results that they produce and the impact that it has on the business. The current scenario calls for a complete overhauling of the traditional system, and to design processes that focus on metrics that drive business impact. 

Gallup in their research paper, ‘Re-Engineering Performance Management’ has stated that, only 2 in 10 people strongly agree that their performance is managed in a way that motivates them to do outstanding work. Their analysis reveals that the reason behind the employee’s aversion towards the traditional PMS are tied to five primary obstacles: infrequent feedback, lack of clarity, manager bias, adverse reaction to evaluation and feedback, and too much focus on pay incentives. All the factors point out to the importance of understanding the difference between performance management and performance appraisals-that development is key to improving performance. Of course, measurement must still happen, but not as an end by itself but as a means to an end. 

What we need to achieve this change is primarily, embracing a digital mindset, or having the right set of attitudes and behaviors like agility, adaptation and collaboration that enable people and organizations to foresee the possibilities and work towards achieving it. This is a major shift from the Gen-Xer’s question of ‘what’ and the Millennials question of ‘why’ they need to get it done to ‘how’ to get it done?

Managing performance in this model then would translate to: 

1) The managers co-creating agile goals along with the individual employees in short sprints of a month to a maximum of a quarter and taking accountability for the same with complete focus on results that impact business 

2) Create matrices which can directly relate to actions which help improve performance

3) Managers shifting from their traditional roles of managing employees to coaching them on how to achieve those results that impact business through on-going feedback discussions

4) Leadership that ensures the agile individual and team goals dovetail into organizational goals that produces results that impact business 

5) Organizations providing the training to both managers and employees on how to identify the right opportunities, and build the required skills and competencies for the future

6) To shift from a performance management system to a potential management system, where the entire focus would be on building and managing employee potential, wherein performance would be a natural output

With the pandemic creating a fully remote workforce, or the emergence of a hybrid model, it becomes essential to shift to this model. Engagement would be the key factor to create/develop a digital mindset and empowerment and collaboration would pave the way for both the organization and the employees to foresee the possible opportunities and work towards achieving it. This model of performance management is sustainable as it is developed and modified as per the needs of the dynamic business environment and would adapt to the market and workplace changes. 

Confucius, the Chinese philosopher summed it up beautifully on where to begin the journey to create a culture of organizational performance - personal excellence “The will to win, the desire to succeed, the urge to reach your full potential…..these are the keys that will unlock the door to personal excellence”