Performance management is a system that almost every organisation will, in some way or another, implement to motivate, engage and encourage employees to do their best work. Why then, is it a process that almost always feels outdated and can sometimes even have the opposite effect of its intentions – leaving employees feeling deflated, frustrated and unmotivated?



Many companies have systems in place that are more than three years old, and the cracks in some of these systems are becoming increasingly evident, with top talent becoming harder to retain. More employees are being stood down, working remotely and applying for casual work than ever before.

A growing number of organisations are beginning to understand that their performance management systems need to change if they want to maximise their employees’ talents and improve retention to be competitive in the current market.

So, just what are some of the most common mistakes when it comes to performance management, and what can managers and HR professionals do to implement successful strategies?

Performance management is an ongoing process

A common mistake many organisations make is believing that performance management is simply based around the annual appraisal or, even worse, simply providing criticism of performance without any structure around it at all.

This generally not only leaves the employee feeling deflated, but also undermines the importance and value that well-administered feedback to an employee can provide. This means that when this criticism is registered as, for example, an offhand comment, there is little chance the employee will take it seriously, or know how to address the issue in their performance.

Instead, companies are increasingly realising that performance management should be recognised as an ongoing process, with the formal appraisal only one component of what is a much greater whole. Quality performance management, therefore, should see managers communicating regularly with employees about their performance.

How often is enough?

Studies show that employees do best with feedback on a monthly or quarterly basis, with regular check-ins serving as a zone to problem solve, adjust goals as necessary, and to refresh their focus on the goal. In fact, companies where employees meet to review goals quarterly or more frequently are almost 50% more likely to have above-average financial performance.

It appears that companies are beginning to realise the importance of more frequent check-ins with employees, with a 2019 Workhuman study reporting a drop in annual reviews from 82 percent in 2016 to 54 percent in 2019. This shows that employers seem to be recognising that regular feedback affirms employees and their work, keeps them on track with their goals, and shapes their work effectively.

It’s not about praise vs. criticism

Following an article written by psychologists about the performance appraisals performed at General Electrical, the company discovered that criticism by a manager actually has a negative effect on the recipient. In fact, criticism generates defensiveness on the part of the subordinate, which in turn leads to poorer performance.

Interestingly however, it was found that employees do want more information about their performance, which poses an interesting conundrum for employers: how exactly to critique employees without damaging relationships and having an adverse effect on their performance.

Agility

With rapid innovation a source of competitive advantage, organisations are increasingly needing to pivot and adapt to their changing industry landscape. In this way, outdated performance management systems do not really allow for the kind of agility required from employees, as they set goals and targets on an annual basis.

In our fast-moving world, organisations will not necessarily want employees to continue doing the same things they were at the start of the year if it’s not conducive to new business goals or priorities. Projects are increasingly short-term and tend to change along the way, so employees’ goals and tasks can’t be plotted a year in advance with much accuracy.

After noticing this, in 2015 General Electricals adapted its performance management system with techniques that allowed for greater agility and flexibility. Though supervisors still had an end-of-year summary discussion with employees, they also conducted frequent conversations that revisited two basic questions: What am I doing that I should keep doing? And what am I doing that I should change? This was first implemented with a pilot of about 87,000 employees before being rolled out to the entire company due to its success.

In this way, employers should consider replacing annual goals with short-term, project-based priorities that allow for conversations with employees to occur when projects finish, milestones are reached, challenges pop up, and so forth—allowing people to solve problems in current performance. This not only increases motivation and develops skills for the future, but takes the focus off performance that was too long ago to take any meaningful action on.

It’s not only employees that need training

Coaching and offering good feedback are not easy jobs, which is why it can be important for managers to be trained in how to perform these effectively, so as to achieve best possible performance management.

Research has shown that managers can often be reluctant or resistant to conducting performance appraisals, despite believing they are necessary. Oftentimes this is because they have a very normal dislike of critiquing an employee, and they feel they lack the skills needed to do so effectively without damaging the working relationship.

Ideally, a manager will be trained to assist an employee in relating his or her career planning to the needs and realities of the organisation. In the discussions, the manager can use their knowledge of the company to help the employee establish targets and methods for achieving them which will (a) lead to increased knowledge and skill, (b) contribute to organisational objectives, and (c) test the worker’s appraisal of themselves.

This can be challenging for time-poor managers to learn correctly without guidance, which is why it can be effective to hire a third-party recruitment company to assist with your performance management and training. Such assistance will ensure that performance management is being effectively and regularly performed, so that company objectives are being met and employees are maximising their efforts.

If you need assistance with performance management for your workforce, contact Bayside Group today and speak with one of our Consultants.