Gallup recently reported that only 2% of CHROs from fortune 500 companies think their performance management systems work effectively.
We’re used to suggestions that only 70-80% – and sometimes even as low as 20-30% – of HR activities work properly. But 2%? This is a truly shocking figure, particularly given that many companies have put significant effort into changing and developing their approaches over recent years (for example, shifting to a stronger output focus supporting remote and hybrid working).
What’s more, Gallup’s suggestions are probably not going to make things that much better.
Yes, it’s important to involve people in setting their objectives, and moving these goals to team level. However, achieving benefits from these actions depends on why and how they are performed.
The first component of successful performance management is people centricity.
For Gallup, these higher level needs are about setting expectations, inspiring progress and improving evaluations. Having unclear expectations or poor evaluations is certainly going to make performance management less useful, but in today’s age, more needs to be done to make the process fit for purpose.
Inspiring progress is a bigger, more important opportunity, but here, Gallup’s specific suggestions fail to rise to the occasion. As an example, revisiting goals during quarterly progress conversations is important, but isn’t going to significantly improve motivation, performance management effectiveness or productivity.
Most of Gallup’s suggestions are also actions that many organisations have already been taking (presumably including some whose CHROs participated in the study).
So how can we genuinely achieve performance management gains? Here, I will defer to a few of the suggestions I made back in 2022 in a HRZone report on ‘Five Ways to Humanise Performance Management’.
People centricity is key to performance management
The first component of successful performance management is people centricity. This is about seeing employees as real end customers of a business who, given their role in, and commitment to, an organisation, need to be understood and supported just like the customers of a company’s products and services.
A people-centric HR team has to focus on the real needs of each individual, not just those needs related to peoples’ jobs and their work for a business. These broader needs are often unique to a particular individual and generally go well beyond earning a certain salary.
Examples include development, participation in internal or external networks, career progress, and the performance of certain activities or achievement of outcomes. These activities need to be meaningful to a particular individual and could also relate to the business strategy, but do not need to.
It’s important to unleash people’s inspiration by supporting them to progress against their personal objectives.
Expectations should be set from both the employee AND employer
People increasingly want, and often expect, their employer to help them meet their individual objectives for their employment – performance management should therefore incorporate these goals. We do need to set expectations, but we should also ask individuals to articulate their expectations for their employment. Reviewing performance against expectations should run both ways.
Additionally, it’s important to unleash people’s inspiration by supporting them to progress against their personal objectives. Relevant actions here include enabling people to:
- Craft their jobs and personal objectives
- Volunteer for tasks and projects across the organisation
- Connect with business leaders, other employees, customers and other stakeholders who could be useful for them
Ask: ‘Why do you want to work for us?’
Most importantly, we need to be interested in why individuals choose to work for a particular organisation. We should help them meet their needs just as we would (or should) do for more traditional customers.
Without doing this, performance management will always be something that is imposed on an employee for the benefit of their employer and will rarely be seen as meaningful or motivating.
This human-centric approach to performance management is now slowly attracting more interest from practitioners and organisations.
Performance management (and other HR activities) needs to reflect the new realities of work based on a more important role for employees. This is the only way we’ll be successful in motivating employees, boosting performance and impacting productivity.
People-centric performance management remains unpopular
Whilst this perspective is still not that popular, it is not completely new. I recall applying these approaches back when I was an HR Director in the 1990s!
This human-centric approach to performance management is now slowly attracting more interest from practitioners and organisations.
For those wanting to apply people-centric performance management, start with the following three actions:
1. Engage business leaders with the need to become more people-centric
Provide research and data to evidence changes in people’s expectations and facilitate conversations across the business. This will help leaders internalise the experience of working for your organisation.
2. Find a pilot group
Create a pilot group where leaders believe there is an opportunity to improve performance management by making it more people-centric. Ensure this area will be provided with sufficient freedom to implement a different approach, and to spend time and energy supporting peoples’ identified needs.
3. Leverage data
Get more data on the impact of people-centric performance management within the chosen area and use this to extend your approach. Look for changes in attraction, retention and engagement, including in the performance management process. Go back to your business leaders to discuss how these outputs have impacted business results.
