Performance management refers to a continuous process of communication between an employer and his employee. It is an on-going process, and takes place throughout the course of the year, keeping in mind the goals and objectives of the organization. It a process whereby the performance of the workforce is evaluated. An employee’s performance is systematically evaluated over time.
As a communication system, performance management is developed to assist employees in achieving success. It requires systematic direction, not only from the managers and supervisors, but also requires active engagement on the part of the employees.
In the middle of the first quarter of the 21st century, organizations have come to the conclusion that the ever-increasing workforce is constantly changing. This puts pressure on the organizations to find new ways to deal with this constant change. Employers’ expectations from their employees are high. There has been a vast change in the competency of the workforce; they have become more diverse, globalized and technology-savvy. There is scarcity of critical new skills, due to which it is becoming increasingly difficult for companies to find people and develop expertise. With the expansion of mobile, social and cloud computing, there has been rapid transformation in the performance management procedure.
Today’s workforce is extending their work careers for a variety of reasons; be it personal or financial. The workforce, as a result, is becoming multi-generational. Hence, there has to be a process by which companies can keep a track of this highly diverse workforce. This is where the concept of performance management comes in.
At the beginning of this century, performance management was viewed as a backward assessment program, run mainly by human resources. However, change is seeping in. Performance management is seeing new dimensions, and is slowly becoming a more forward-looking process. Its goal is to enhance employee engagement and improve results. Modernized performance management processes sometimes include evaluations at year-end, but the focus is less on the assessment of the employee and more on the overall objectives of the organization.
The “traditional” performance management of ranking employees is becoming obsolete. Research has shown that more than half of the active workforce is employed in service or knowledge-related jobs. Their performance is fuelled by their competencies, their behaviours and attitudes at work, their focus on customers and clients, as well as their ability to adapt to constantly changing environments. Over time, these key skills need to be acquired and successful performance management evaluations must focus on furthering the development of these skills, rather than on overall employee rankings.
In today’s fast-changing world, business priorities are constantly changing, goals are constantly changing. Companies come up with new business strategies and the workforce changes jobs, always looking for better opportunities. The environment is constantly moving, and research shows that evaluations in this constantly moving environment yield much better results than those where evaluations are done only on year-end. This is one of the major reasons why companies are rethinking their performance management techniques.
Retention of employees and development of their skills are an important part of an organization’s success. This is why a company’s performance management technique needs to be centred on continuous coaching of the employees and their overall development. The traditional way of evaluating an employees’ performance only on year-end needs to be done away with. Managers and team leaders who give regular feedback about their team members are more likely to create high-performing teams, than those who resort to traditional methods of performance management.
An important constituent of the new “coaching and development” performance management model is the deviation from the process of providing feedback with respect to salaries. Research has shown that exchanges about remuneration packages often have a negative impact on the coaching process. The new tendency is to remove the previous link between performance evaluations and remuneration packages. All salary-related decisions should be based on an employee’s competency, the cost that the company needs to incur to replace him, and his actual value to external clients. Only the employee should be held accountable for the results he produces, which would be more efficient if the employee is given appropriate tools and the right coaching.
The current job market is more dynamic and is becoming more and more unambiguous. Employees are demanding regular feedback and advice for their careers. They are not satisfied with the once-a-year old-fashioned performance reviews. The major goal now is to concentrate on strengths, encourage overall development, and focus much less on the weaknesses. Employees perform the best when their work is directly related to their strengths, which, in turn, keeps them motivated.
Team management is also a very recent and very important component of the new technique of performance management. The latest methods focus on team-centric management to enhance employee collaboration and performance. Both bottom-up and top-to-bottom feedback is important as it encourages managers to see their own areas of improvement.
As the world becomes more digitized, there has been an increase in goal-setting and performance management is becoming swifter. Many SaaS solutions are coming up into the market and being adopted by companies, leading to the new performance management process. This had made things quicker, more perceptive, and more observable. The new tools allow the employees to share their performance objectives, and provide feedback and recognition online. All these factors make the performance management process more efficient and a little bit more “fun.”
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