Ahead of the 5th Annual Spring UNLEASH Conference & Expo, we spoke to David Mallon, Chief Analyst at Bersin by Deloitte, about what the future holds for performance management. David will be speaking on this topic in his session ‘Performance Management, Disrupted: An updated look at the evolving state of PM and related technologies’, taking place on day 2 of the conference (20th March) at 12:15pm on the Analysts stage.

Can you tell us what next-gen performance management technology looks like and what its emergence means for businesses?

We updated our ‘High-Impact Performance Management’ (PM) research in the second half of 2018, and in that study we looked at the companies that are driving the most value from their performance management processes. Broadly speaking, a couple of things are happening with these businesses:

• Continuous performance management: there’s a move away from traditional time cycles (such as annual appraisals) to processes that are more in keeping with how work happens, including frequent check-ins and more sources of feedback.

• A human-centred approach: there’s a shift towards employee-centric from process-centric approaches.

• Intrinsic to work approach: PM is becoming less of a process that HR owns and much more about how the individual, the team and the organisation manages and gets work done.

It’s not surprising then that the market is starting to catch up with these shifts. There are those that are now focused on continuous approaches, feedback and human-centric approaches versus those that are still (for the most part) managing a process according to the traditional calendar.

For all the disruption that has taken place in performance management, have we now reached a point where this area of HR can deliver real value to businesses?

There are early signs of this. However, over the past few years, so many organisations have felt their existing performance management processes weren’t working: they were painful, they were slow, they were not generating the value they promised for individuals or organisations.

We fell into this easy trap of thinking ‘if we buy the latest piece of software it will force us to do things in a different way and force us to get more value out of it.’ But using technology to drive change – to lead change – is never a good idea. Performance management properly done is really about the mindset: the why and the how. How are we going to break up work and find out if it’s successful?

Honestly, 90% of the effort has nothing to do with what tool or platform you pick. And we’re seeing HR functions finally recognising they have a role to play in productivity – in looking at the workforce holistically and considering how to improve the experience, alongside productivity and wellbeing.

Get your own house in order, think about why you need PM, what you are hoping to get out of it and what values you are trying to reinforce with it.

There are many performance management vendors in the market offering different strengths. What should businesses be looking out for?  

There are thousands of players in the performance management space and they don’t all do the same thing. There are vendors that are focused on increasing feedback, then there are others that are focused on new ways of managing work, goal setting, objectives and key results, and driving talent processes.

It’s somewhat disingenuous to put these tools next to each other and say they’re the same thing. While they overlap, they are approaching performance management from very different philosophical backgrounds.

It’s therefore not surprising that while there is a tremendous amount of energy around PM right now there’s also a lot of companies taking it very slowly, sitting on the sidelines, saying ‘we’re not sure we’re ready to pick one of these right now, because we need to figure out what PM means to us first.’ 

How should businesses go about selecting what’s right for them?

My advice is to answer the question ‘why have performance management?’. And be really honest about it. Get your own house in order, think about why you need PM, what you are hoping to get out of it and what values you are trying to reinforce with it.

An interesting thought exercise is to ask yourself, ‘what if we just didn’t do PM for a year?”. Would people notice? Would people miss it? Would it cause the implosion that a lot of HR folks think it might? Probably not. But thinking about this helps you see whether you are doing PM for the value of your workforce or for yourself in HR.

Then you can consider how to make it more valuable to the workforce, the stakeholders and the business, and how to take advantage of the way the business already manages its own work. Perhaps this is where we should build what we do in performance management versus buying a separate system.

How important is it to take a holistic approach incorporating recognition, career management, feedback and other tools with a PM system?

My personal caution on this would be that it’s so difficult, yet fundamental to who you are as a business, to tackle the questions ‘why performance management?’ and ‘how do we rethink about work?’. So be careful of distracting yourself by trying to attach too many things to your PM approach until you get that part figured out.

Out of recognition, career management and feedback, I’d say the most important one to consider incorporating is career management – it’s a huge issue for organisations, and individuals, right now.

Being able to provide a transparent view on both career opportunities and the implications of our daily decisions that influence the direction of our careers (which 99% of the time we’re unaware of) is of huge value. How do we as organisations help the team be more cognisant of that and have those conversations?

The notion that performance management is a market unto itself will gradually disappear.

Do we need to focus less on the performance of individuals and more on the performance of teams?

It’s not an either or. Many organisations are recognising that they have to do both.

There’s a lot of good reasons to build not just notions of individual success and progress, but also communal group success and progress – and performance management is a good place to do it.

If you’re going to talk about team work as a value for the business then you should put your money where your mouth is. And also reward teams as teams. This doesn’t mean just handing out team prizes but providing the formal recognition that is received with individual performance management. 

How do you envision the technology in this area will evolve in the coming years?

I hope that performance management becomes less of an independent space and more about how work is managed. This includes the basic back and forth relationship we have with individuals and teams, the data we need to give them to be successful and the data we collect back from them.

There’s a reason why there’s an overlap between performance management and the engagement space, and there’s probably going to be an overlap with the collaboration space eventually too.

The tools that we use to communicate back and forth with people, that we do work in, share files in – it’s becomes a natural place to track what’s going on.

Becoming more intrinsic to work is a trend that we’re seeing and hope to continue to see. And if it does come to fruition then the notion that performance management is a market unto itself will gradually disappear.