Performance Management: Are Your Company Processes Serving Your Strategy?
As the financial year is coming to an end, it’s time for the company’s annual review; what employees are contributing to your organisation’s goals, where is there room for improvement? Is your method of performance management effective, or in need of an overhaul?
The Deloitte Global Human Capital Trends 2015 report found that 48% of surveyed companies stated that their procedure for measuring performance management (PM) is not an efficient use of management’s time. Only 1 in 10 respondents said their appraisal system yields high performance and drives employee engagement.
If businesses are going to successfully transfer from traditional performance management processes to a more modern approach, it will require substantial contribution from their CEOs. In this article, we will look at why a new approach should be considered and what upper management’s role should be in restructuring the current PM processes.
There are many arguments in favour of rethinking performance management. When considering that traditional PM processes often involve long hours spent holding meetings, completing forms and assessing performance based on company goals. A case study found that the time spent on annual reviews and performance management totaled 2 million working hours per year.
Furthermore, traditional PM processes are often focused on past performance rather than feedback that determines an employee’s potential performance. The same Deloitte study also found:
• Only 12% of businesses give feedback to employees about their future potential.
• 27% differentiate between performance and an employee’s base salary.
• 25% award promotions based on competencies, performance and quality.
To improve these shocking statistics, many companies are drastically rethinking the values that motivate their Performance Management efforts. They are changing their approach to identify team members’ strengths and encourage their development, within the company and in real time, supported by relevant data, using a simple and consistent procedure.
This requires asking yourself and your department honest questions, which is critical to any successful PM renovation. Being clear on the specific measurements and goals that are important to a particular organisation enables them to effectively measure the progress of the appraisal effort.
Key questions to consider:
• How much is our PM procedure costing the company annually?
• Could higher levels of team performance convert to an enriched company financial performance?
• How does the company generate data used to assess an employee’s performance?
• How do we translate performance data into making employee evaluations?
The answers to these questions can help your company make informed, well founded decisions on how best to correlate it’s values with its culture and policies, which is an essential step before starting performance management process overhauls, or any other company decisions for that matter.