As you consider different approaches, it’s important to evaluate your organizational culture and needs. Traditional performance management may provide helpful boundaries and guidelines for writing and delivering feedback, making it easy for managers to follow a process. More modern approaches may introduce more flexibility in how and when feedback is delivered, but perhaps require more skilled leaders to make it work. Performance Management is a crucial process for organizational success, and no matter which path you choose, Flex HR is here to help you make the best decision.

The Reliability of Traditional Performance Management

When it comes to traditional performance management, the most common practices typically involve written reviews during a specified time of year. The written feedback reflects upon past performance, may involve a performance rating system to allow for distinction among employees, and typically is written and delivered by the employee’s manager with support and involvement from an HR team. There are many reasons traditional performance processes are beneficial, but here are five to consider:

1. It provides clarity and transparency for employees. One of the biggest drivers of employee engagement is transparency. Employees want to know where they stand in the eyes of their leaders, and a performance review process affords employees with a consistent time of year during which they are evaluated, a written assessment, and dedicated time with their manager to discuss.
2. It forces leadership to evaluate and discuss performance. It’s easy to let performance discussions slide until they become an emergency and having a dedicate process ensures they happen. Better yet, many performance management processes will involve evaluation meetings where a group of leaders gets together to discuss employee performance. This can be a helpful practice, as it brings different perspectives into the room and allows leaders the opportunity to identify areas for employee improvement as well as to celebrate successes. It may also be a time where leadership can collectively agree on promotions, and promoting from within has significant benefits for employees and organizations. “Instead of changing employers to gain a promotion and raise, employees who work at companies that frequently promote from within are more likely to stay” (BuiltIn).
3. It supports compliance efforts. An effective performance review process can offer organizations protections when it comes to making difficult employee decisions. When performance reviews are written, a record is created and allows performance objectives and feedback to be tracked. This record can be crucial when having difficult employee conversations, as it allows managers to reflect back on written feedback. This written record is a helpful tool both in employee development conversations as well as when exiting underperforming employees.
4. It allows leaders to proactively identify training opportunities. A dedicated performance review process can highlight skills gaps in a workforce and allow leaders and HR teams to proactively identify training opportunities to address those gaps. Training does not always have to be identified to fill a gap – it can be a retention tool as well. A performance process can identify up-and-coming employees, who may benefit from training as a matter of upskilling.
5. It promotes career development and progression. In the absence of a dedicated performance process where employee development is specifically discussed, it can be challenging to properly identify professional goals and align them with opportunities for employee development and progression. “Employee development is a long-term investment that can help retain and grow your talent. Just over half of U.S. employees were satisfied with their jobs overall in 2023, and 44 percent were satisfied with their opportunities for training and skills development. So dedicating resources to employee retention is more important than ever” (BuiltIn).

 

The Modernization of Performance Management

There is a revolution happening across many organizations, where traditional performance management is being revamped to ensure performance management is an active, ongoing process. This modernization may require less involvement from traditional HR and more from individual leaders. As any modern process does, it utilizes technology to its advantage. But – why the change?

According to a Gallup poll, “only 2 in 10 employees strongly agree that their performance is managed in a way that motivates them to do outstanding work”. In a decade that has brought us the “Great Resignation” and “quiet quitting”, re-evaluating performance management strategy has become critical for many employers. Here are five things to consider when deciding whether your company’s performance management process needs to be modernized:

1. It may increase the frequency of feedback and/or reviews. You read that right! One might argue that increasing the frequency of reviews would be considered counter-intuitive. However, advocates for modernizing performance management suggest that more regular reviews allow for ongoing feedback on which the employee can react and evolve. Reviews can take many forms – they might be written reviews, they might be scheduled conversations, or they may utilize certain technologies to conduct performance surveys or pulse-checks.
2. It introduces cutting edge technologies. Advocates for change in performance management are often the first to suggest the use of technology to support its goals. AI is one technology that has become an incredible tool to assist with gathering and analyzing vast amounts of data, and this capability can be hugely useful when it comes to collecting feedback. Leaders can use AI algorithms “to process and analyze feedback from multiple sources, including peers, direct reports and supervisors, to provide a holistic view of an employee’s performance. These functions can allow for better reflection on employees’ progress toward their stated objectives throughout the year” (Forbes). AI’s ability to streamline data can support delivering feedback more frequently, as it requires less time from individual leaders to do so.
3. It is data-driven. In addition to utilizing unique technology to streamline performance discussions, modernized performance management uses data analysis to support its decisions, both as an organization and for its employees. “Organizations gather and examine performance data to find patterns, advantages, and opportunities for development. This data-driven approach makes setting reasonable and doable goals easier, allowing for more objective evaluations” (SHRM).
4. It focuses on skills vs. performance metrics. Traditional performance processes often have specific performance metrics on which employees are measured. In the new world of performance management, performance is focused on the mastery of specific skills. In other words, performance is focused on identifying and nurturing the skills an employee needs to succeed in a specific role, team, or industry. This level of specificity and ongoing feedback related to these skills affords employees the opportunity to develop the skills they need to succeed in their chosen path.
5. It promotes purpose and well-being. Employees no longer come to work just for a paycheck, they come to work to build skills, relationships, and connection. They do not want to live to work but instead, work to live. This requires a more proactive approach to employee well-being, specifically as it relates to performance and expectations. As Gartner suggests, today’s employers “need to focus on eliciting sustainable performance without compromising long-term health through practices such as proactive rest — helping employees maintain their emotional resilience and performance, as opposed to taking recovery after both have plummeted.”

 

Is there a “Right” way to Manage Performance?

The reality is no, there’s no singular “right” way to successfully manage performance. When it comes to determining the best approach for your organization, it’s important to consider a variety of factors including the size of your workforce, the capabilities of your managers, and the needs of your employees.

Flex HR can help you evaluate the best approach by assessing your workforce and your available data to understand what’s working and what could be improved with your existing process. Perhaps traditional performance management is the most reliable approach for your company, or perhaps your workforce and leaders are ready for revolutionary change. Better yet, maybe your organization combines elements from each of these approaches. If you’re feeling overwhelmed by the possibilities, it’s time to engage a team of HR professionals who can expertly guide you. Reach out to Flex HR today!

Contact Flex HR today to be your HR support at info@FlexHR.com.