I’ve written previously about the transformation of performance reviews, specifically how we can effectively distinguish developmental conversations from pay discussions. Putting the practicalities of the transformation aside for the moment, these conversations speak to a much larger trend in the modern workplace.
Employees and employers alike now expect to be more actively involved and invested within the workplace. The result of those expectations is narrowing the space between the formal organization and the informal organization – introducing more dynamism to balance out perceived rigidity, and crowdsourced insight to balance out top-down influence.
The formal organization represents the side of the organization that comprises the structure and hierarchy, as well as policies and procedures. It is easily understood and observable, and as such, plays an important role in aligning employees to roles, but may have trouble adapting to changes.
The informal organization represents the side of the organization that is less observable, rooted in relationships and informal groups that people have developed. As such, it is much more fluid and capable of motivating and energizing employees.
Whereas the former is much more top-down, the latter is driven by bottom-up processes. In the Industrial Era, the formal organization reigned as the dominant force. As we have entered the Human Era, the informal organization has begun to play a much larger role, alongside the higher expectations that employees have for their ability to find a sense of purpose, achievement, and growth through their work and work relationships.
Integrating the two sides can help to power a more human-centered workplace and places much greater emphasis on systems that work efficiently and benefit all involved.
Performance management offers a great microcosm for observing some of these dynamics.
For their part, employees like to know where they stand and want to know how to improve, but rigid systems of annual ratings are typically viewed as unproductive and uninformative. In line with the informal organization, employees want to seek out information about their performance from all sides of their networks.
On the other hand, HR and company leadership expect to have reliable and accurate performance data to feed into a number of downstream systems, spanning compensation, talent management, and succession planning. Unfortunately, they too are facing a process that is ineffective and burdensome without delivering on results.
Any transformation of performance management, and other HR systems, will have to look closely into the blending of formal and informal organizational elements, to better address the ways in which today’s employees expect to interact with each other through work.
How is your organization managing the shrinking gap between formal and informal organizational components?
As Globoforce’s Vice President of Client Strategy and Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition, leading workshops, strategy meetings and industry sessions around the world. He is the co-author of "The Power of Thanks" and his articles on fostering and managing a culture of appreciation through strategic recognition have been published in Businessweek, Workspan and HR Management. Derek splits his time between Dublin and Boston. Follow Derek on Twitter at @DerekIrvine.