MODERN PERFORMANCE MANAGEMENT

IMPROVING EMPLOYEE ENGAGEMENT & ORGANIZATIONAL RESULTS.

Employees are the life force of an organization, driving innovation, productivity, and results. It is imperative today’s companies are devoted to developing their workforce in meaningful and effective ways. Not only can employee development improve organizational results, but it can ultimately improve a workforce’s efficiency with minimal impact to the bottom line. What companies may be unaware of is that they do not need a large budget or abundance of resources to start making a difference.

Today’s employees want and demand more from their careers. Engaged employees receive regular feedback, are given ownership, know their path for career development, and understand how their role fits into organizational priorities1. Because of this increased demand for workplace development, organizations and their human resources departments are experiencing a paradigm shift. Performance management was once a project or idea. Now it has developed into a series of processes and tools that allow and enable employees to perform to the best of their ability. Performance management can make the difference between passive employees who keep an organization functioning and engaged employees who move their organization forward.

INTRODUCTION

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[1] BlessingWhite Research (2013). Employee engagement research update January 2013 - Beyond the numbers: A practical approach for individuals, managers, and executives. BlessingWhite.com, p. 2. Retrieved from https://blessingwhite.com/wp-content/uploads/2014/06/Employee-Engage-ment-Research-Report-2013.pdf

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The Society for Human Resource Managers (SHRM) defines performance management as “the process of maintaining or improving employee job performance through the use of performance assessment tools, coaching and counseling as well as providing continuous feedback.”

Conversely, human resources expert Susan M. Heathfield defines it as “the process of creating a work environment or setting in which people are enabled to perform to the best of their abilities.”2

Modern performance management ideals draw from these two definitions. While one definition discusses performance management as monitoring activities and results through tools and processes, the other defines it as a process that results in enabling employees being able to perform at a higher level.

Performance management is evolving. Organizations are moving away from formal, annual performance reviews that focus on the past year’s activities to ongoing conversations that discuss current performance, strengths, and goals that align with the organization. The old way is reactive and focuses on past performance, while the new way is proactive and focuses on keeping employees forward-facing.

WHAT IS PERFORMANCE MANAGEMENT?

[2] Heathfield, S. (2015). Performance management: Quick stop learning guide to performance manage-ment. About.com. Retrieved from http://humanresources.about.com/od/glossaryp/g/.

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• PERFORMANCE REVIEWS ARE GENERALLY ONLY ANNUAL. As more millennials enter the workforce, it is important to understand they want consistent feedback, asking for it 50% more often than their older colleagues.3 Organizations monitor their business results on an ongoing basis. In the same way, monitoring employee engagement and performance should be a regular, ongoing activity. Taking time to discuss and evaluate where an employee stands in terms of their performance, goals and contributions should happen frequently4 to help foster ongoing improvement across the board.

• RATING SYSTEMS ARE OFTEN SUBJECTIVE. Employees can feel like their work has been oversimplified when it is simply assigned a number. It also can create an unwanted sense of competition between employees4. They want to know how they are performing in relation to their skillset and contributions, rather than how they rank against their colleagues.

• COMPENSATION AND JOB PERFORMANCE ARE NOT ALWAYS SYNONYMOUS. Blending discussions of performance and pay can blur lines, especially when market conditions do not match how an employee has contributed or performed. Merging the conversations can lead to confusion.

Furthermore, the lack of a performance management philosophy can impact recruiting efforts. With unemployment at its lowest point since 20095 and job openings becoming abundant through 20206, many organizations may struggle not only to fill positions, but recruit and retain qualified candidates. A competitive work landscape puts power in the hands of employees, allowing them to ask for items like growth potential, engagement, and transparency. Many of these are not tangible items that can be quantified in an offer letter or promotion package. Improving performance management and creating a culture supporting it requires higher-level buy-in from leadership and executive staff. Following this, a performance management culture should be ignited by Human Resources.

WHERE IS CURRENT PERFORMANCE MANAGEMENT LACKING?

[3] Oxford Economics (2014). Workforce 2020: The looming talent crisis. SuccessFactors.com, p. 2. Retrieved from http://www.successfactors.com/content/dam/successfactors/en_us/resources/white-papers/sap-workforce2020-executive-summary.pdf

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STRATEGIC ALIGNMENT: When companies align performance goals to broader organizational goals, employees are better able to understand how their inputs impact outputs. Simply put, when employees understand how their daily actions matter to larger organizational goals, they find purpose in their role, feel engaged, and appreciate what they are working towards. Employees should feel aligned to common objectives and feel like what they do makes a difference in the grand scheme. This helps contribute to transparency throughout an organization as well, rather than limiting it to teams or departments.

ONGOING FEEDBACK AND COACHING: Business moves fast. When employees are unaware of how to improve their skills and contributions, there are missed opportunities not just for employee career growth, but for the business. Frequent conversations about how teams and individuals are performing help employees assess where they stand. Finding out about opportunities or weaknesses once a year limits the benefit to the company, the individual, the team, or management. Real-time discussions and coaching can positively impact the organization right away and long-term.

CURRENT TRENDS TO HELP IMPROVE PERFORMANCE MANAGEMENT

Paylocity’s Performance Management feature contains self-service capabilities, allowing leadership to control the organization’s key success factors and ensure measurable team and individual goals roll up to larger goals.

Performance management isn’t just about checking an item off a list of office to-do’s. Organizational leadership should be held accountable for developing their employees beyond a standard once-a-year review and pay raise. All employees at every level should view career development as a daily activity. Performance management requires a new organizational philosophy that should be engrained in all employee, management, and team activities and outputs.

To develop a more progressive performance management philosophy, organizations should embrace trends that focus on accountability and productivity.

With Paylocity’s Performance Management feature, 360 Reviews allow employees to obtain feedback from several colleagues and gain a broader understanding of their impact in the organization.

[4] Parent, D., Sloan, N., & Tsuchida, A. (2015). Global human capital trends 2015. Deloitte University Press, p. 51-56. Retrieved from http://dupress.com/wp-con-tent/uploads/2015/08/DUP_GlobalHumanCapitalTrends2015.pdf [5] Bureau of Labor Statistics (2015). Labor force statistics from the current population survey. Retrieved from http://data.bls.gov/timeseries/LNS14000000[6] Carnevale, A.P., Smith, N., & Strohl, J. (2013). Recovery: Job growth and education requirements through 2020. Georgetown University Public Policy Institute, p. 8. Retrieved from https://cew.georgetown.edu/wp-content/uploads/2014/11/Recovery2020.FR_.Web_.pdf

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DEVELOPMENT AND TRAINING: No employee or manager should ever stop learning. The business landscape will continue to change. New skills and ways of thinking will be introduced. Staying well-informed, educated, and trained is essential for remaining ahead of the curve. Employees and managers should work together to identify any performance gaps on individual and team levels. Gaps should not be viewed as shortcomings, but areas of opportunity. When teams continue to learn, they continue to feel empowered to drive innovation and results. Training and development can come in the form of classroom training, online courses, or even the assignment of a mentor.

GIVING EMPLOYEES CONTROL OF THEIR FUTURE: The responsibility of performance management shifts from manager to employee when they hand employees the reigns. Once employees are given control over their goals and objectives, they are no longer required to participate in tasks and steps that may make them feel more like a spectator than a contributor. This is not to say their manager does not have a say in employee goals and objectives. Rather, employees and their managers should be aligned on building a career. The manager and employee can review strengths and accomplishments, discuss stretch assignments and opportunities, and make sure the employee is able to drive their career to a place that mutually benefits the individual and organization. When employees are involved in identifying projects and skills that they excel and thrive in, they have a stake in their future. Even better is when their manager helps foster career growth as an outcome of these conversations.

Training videos and documents can be uploaded in to Paylocity’s solution to help you and your employees keep track of who is up to date with the latest areas of expertise.

Paylocity’s Performance Management feature contains goal management capabilities allowing reviewers and employees to define and agree upon goals and objectives in one central place.

THIS WAY

THAT WAY

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Of course, the implementation of a new philosophy takes more than new processes and ideals. Tools and systems to facilitate performance management can help bring these methods to life efficiently and effectively. New system trends include:

• ANALYTICS: When HR systems and portals are integrated with performance management, the human capital management process becomes not only more streamlined, but more intelligent. Data related to performance, assessments, onboarding, and compensation can all be tied together. This integration creates more robust data that can lead to insights and informed decision-making. HR managers and teams can identify gaps in capabilities and skills, knowing what needs to fill. They can pinpoint the qualities and skillsets of top performers, which can help to shape recruiting efforts. Integrated system data can also give more insight into retention and what employee factors are helping and/or hindering it.

• AUTOMATION AND INTEGRATION: Removing the manual processes associated with managing employee performance and HR-related tasks frees up time for leadership to focus on data evaluation, coaching, and mentoring employees. Automated alerts and integrated functions can give managers real-time information and data about employees. By automating these tasks, this takes the administrative burden off the manager. Employee and manager needs can be documented and resolved quickly.

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• ASSESSMENT AND TRAINING TRACKING: Organizations may have the need to track employee expertise through training and assessments. An integrated assessment system can allow HR teams and management to view, track, and evaluate employee training, giving clearer access to workforce needs. Targeting skill and capability gaps through integrated assessment systems can produce more detailed results about teams and employees, such as what specific training is needed.

• SOCIALIZING RECOGNITION: Many organizations are featuring social media elements in the workplace. By socializing recognition, employees on all levels are able to showcase their accomplishments. Whether this comes in the form of a social site, a portal newsfeed, or a weekly digest, recognizing employees doesn’t always have to equal an actual reward or compensation. Simply showing gratitude for a job well done or going the extra mile can help employees feel valued amongst management and their peers.

Paylocity’s solution allows HR personnel and managers to easily track, store and manage training documentation.

Paylocity’s Impressions social recognition tool encourages peer-to-peer acknowledgment and feedback across organizations.

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While it may seem daunting, a new philosophy and performance management system doesn’t need to be a huge, time-consuming, and costly overhaul. It should invigorate your workforce and breathe new life into how performance is managed. A few steps on where your organization can start7:

• BUILD A PHILOSOPHY THAT SUPPORTS YOUR BUSINESS STRATEGY: Not sure where to begin with a performance management philosophy? Look to executive-level strategies as a starting point. Business goals are met through the daily work of employees, so employee performance goals should align to or at least roll up to these objectives. If a larger goal is to become an employer of choice, create employee goals that help meet this goal.

• ELIMINATE AND SIMPLIFY: Where possible, remove needless, arduous tasks. These can be ones that take up large amounts of paper, administrative activities, time, and resources. Are performance reviews currently only documented on paper? Find out if your existing system allows for electronic filing, reducing filing and printing. Many solutions, such as Paylocity’s Performance Management modules, help reduce the burden.

WHERE TO BEGIN

Paylocity’s Performance Management feature includes goal management, allowing leadership to define goals related to the business strategy.

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• MAKE PERFORMANCE AND COMPENSATION CONVERSATIONS SEPARATE AND DISTINCT: Making performance discussions about compensation can block an employee from understanding and retaining the real information about what they need to do to grow and improve as a worker. Career improvement conversations should be about more than money; put job motivation, engagement, development, and satisfaction at the forefront.

• INVEST IN MANAGERS AND LEADERS: Empower those who pave the way for employees. Leadership development, whether from outside resources or from internal training, can help managers and team leads feel enabled to coach and mentor their employees. Software tools like dashboards and analytics will give them added insights on how to help their direct reports. The drive to improve will catch on. Eventually, all members of the organization will benefit from this new culture of performance management and you’ll find your colleagues living the new philosophy every day.

Give employees visibility into sharing success with tools such as Paylocity’s Impressions or 360 Reviews.

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[7] Parent, D., Sloan, N., & Tsuchida, A. (2015). Global human capital trends 2015. Deloitte University Press, p. 51-56. Retrieved from http://dupress.com/wp-content/uploads/2015/08/DUP_GlobalHumanCapitalTrends2015.pdf

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Ultimately, empowering employees to feel in-control of how they contribute to organizations can lead to loyal and engaged employees. As mentioned previously, this cannot simply begin with one manager or small tweaks in a process. Building a culture around nurturing employee skillsets and capabilities gives organizations and their human resources departments the opportunity to strengthen retention, satisfaction, and growth.

With the right methods and tools, any organization can begin instilling performance management ideals into its culture. Paylocity offers human resources modules that help you manage goals and facilitate reviews in a streamlined and integrated system. Easy self-service setup gives you the control to design performance management tasks and processes to fit your organization’s needs. You can promote employee engagement, influence job satisfaction, and impact productivity all from one Performance Management feature. Start building effective business intelligence solutions today with Paylocity.

www.paylocity.com

CONCLUSION