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David Perks

Pay Compliment


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The HR power shift: the new reality of performance management

The future of work depends on performance management that has workers at its heart.

Whilst the way we work is being disrupted, some HR processes are approaching their 100th birthday with very little change in all that time. The HR profession is suddenly being asked how organisations should manage the performance of workers at a distance and against the backdrop of an uncertain future of work.

When change is constant, annual KPIs quickly fall out of step with what’s being asked of the workforce.

To manage performance going forward, Organisations need to give up on the illusion of having management control, and instead work on increasing levels of trust and impact of leaders. There are six new realities to acknowledge in making this shift, which we’ll discuss in this article.

1. Positional power has lost out to influence

A network doesn’t respect the rules of hierarchy. Clinging to positional power is not enough for bad bosses to avoid irrelevance. When everyone is hyper-connected through digital tools, poorly led workers will go around blockages up the line to be seen and heard. The new power is influence.

Influence for a leader comes from being dialed in to the needs and sentiment of the people you lead. It comes from asking instead of telling and delivering value instead of demanding it.  

Organisational network analytics that look at patterns of digital communication between people can reveal which leaders are, and are not building connection to their teams, as well as which unappointed leaders have most influence over others.

By measuring influence your organisation is at a significant advantage compared to those working from an outdated premise that information is flowing along the lines of the org chart.

2. Goals are mostly irrelevant

Networks make a mockery of annual key performance indicators and cascaded goals. When change is constant, annual KPIs quickly fall out of step with what’s being asked of the workforce. As they’re not usually updated, they are often simply ignored or declared as ‘met’ or subjectively assessed.

Multidisciplinary teams that form and disperse throughout an annual cycle get stuff done quicker than you can say ‘goal alignment’.

What works better than traditional goal setting in a networked organisation is:

  • Team goals that are measured and rewarded for the duration of a teams’ work.
  • Improving personal bests for individual performance and development.
  • Achievement of agreed next actions for measurement of short-term contribution.

Goals only serve their intended purpose when they are relevant, negotiated and agreed rather than imposed, and when actual levels of attainment are continuously tracked and visible.

3. Performance needs don’t fit into convenient cycles

Should performance be reviewed annually, twice a year, monthly, in fortnightly sprints or in real time? The answer of course is all of the above. Performance needs are personal, both in terms of frequency and focus. Some people may need frequent performance signals, a balance of affirmation and stretch whilst others may be happy with an occasional nod of thanks.

Ultimately a talent crisis is looming if organisations do not become more inclusive in talent development, regardless of employment basis.

Each individual is best placed to pull their performance signals as and when needed rather than having performance reviews pushed out at a pre-determined interval. This is easier than it might seem if there is a culture of high performance supported with feedback platforms that provide a range of tools to allow for personal preference.

The organisation has needs too. Performance assessment has traditionally been a link in a chain of pay reviews, promotion, succession planning, competency mapping, capacity management, corporate governance and so on. These are all different needs and yet organisations continue to drive them all with a single data collection process. In the information age, it’s ill advised. Use different performance management and measurement regimes to suit the situation and individuals involved.

4. Employers must support all workers equally to perform

It sounds obvious that all workers would have equal opportunity to perform, and yet when Pay Compliment surveyed a group of HR directors it highlighted a disconnect.

There’s a marked difference in the treatment of workers that the organisation feels they own, versus those they feel they contract. Few organisations (35%) take a stewardship approach to performance management by including non-permanent workers. The rest are leaving performance review of these workers to others, or in reality to no one. With an increasing proportion of workers shifting to a non-permanent employment basis such exclusion seems shortsighted.

All categories of worker have unrealised potential, yet organisations actively exclude non-permanent workers from their talent management arrangements. In particular organisations are not onboarding non-permanent workers to feedback, employee experience and learning experience platforms. This serves to deny these classes of worker from access to ‘in the moment’ performance signals and learning resources, which is when learning happens best.

Ultimately a talent crisis is looming if organisations do not become more inclusive in talent development, regardless of employment basis. To stand out from the crowd, give all workers equal opportunity to do their best work every day.

5. Prescriptions foster fixed mindset

The next set of conventions that don’t fit into the future of work are the prescriptions for how work and how workers look. Competency frameworks, job families, job descriptions, development programmes, assessment centres and so on are all designed to measure the degree to which a unique individual conforms to a norm. Prescriptions are important for areas of compliance such as health and safety but not for areas of performance.

When it comes to high performance, we’re looking for diversity, unique strengths being applied, and increasingly innovative thinking. This does not come from management by prescription. Instead of prescriptions, take an approach to performance that:

  • Finds personal strengths, not deficits.
  • Shapes jobs to suit the strengths of individuals.
  • Develops using personalised playlists of microlearning resources and feedback loops instead of classes and courses.

6. Outputs will look after themselves

Performance has always been about outputs; make 100 widgets, sell $100,000 of new business, hit a CSAT of 99%. Believing that outputs can be accurately predicted and managed is the ultimate illusion of management control. There are simply too many variables and interdependencies on others.

In the future of work, production processes are atomised into sequences of small tasks that can be automated, outsourced, completed with a lower level of skill, or pushed back for the customer to complete themselves. This means that few workers ever see the final outcome of their work. The output they do see is so disconnected that it creates little meaning from their work.

Instead of managing outputs that cannot be controlled, future leaders will manage inputs. Does the workforce share common values and beliefs? Is there a common purpose? Does the team work cohesively? Are energy levels high? Are the workers skilled and learning in the areas they need to succeed? Do they know what a good day’s work looks like? If these factors are attended to then outputs will largely be assured.

Summing up, the future of work requires an approach to performance management that has the future of the workers at its heart. Middle management is disempowered through networks and platforms that democratise access to performance signals and learning resources. To retain relevance, middle managers will need to demonstrate value in the network. Such value is established through servant leadership and creating the conditions for workers to know and use their strengths and to grow through insightful performance observations, coaching and support.

Interested in this topic? Read How collective leadership leads to sustainable growth.

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