The Changing Nature of Performance

I recently got back from the HR Technology Conference in Chicago. It was a tremendous opportunity to see cutting edge trends, new technologies and the latest research.

What truly struck me across many of the sessions and panels is that many of these ideas are not incremental improvements. There has been a growing awareness that the traditional functions aren’t meeting the needs of modern organizations.

Instead, many are contemplating radical transformations of what HR can be and how we can better provide an employee experience. They are fundamentally breaking down and rebuilding services across learning, talent acquisition, and performance.

Perhaps nowhere are we seeing more of this happen than around performance and related appraisal and compensation activities.

The driving force for much of this change is the evolving nature of performance itself.

Employees are increasingly in project-based roles or in fluid matrixed environments. They expect to have much more information on how they are doing and where they are going. Performance is no longer something that can be “reviewed” or “managed” or even “incented” once or twice a year.

Instead, employees actively seek continuous conversations around their performance, whether those conversations are in the form of peer-to-peer social recognition, feedback through coaching or one-on-one sessions, or career development conversations.

Expectations of the business are also changing, setting a much higher bar for solutions that encourage greater levels of performance or effectively differentiate between levels of performance. According to some observers, business often fail to see these types of returns from their variable pay or merit increase strategies.

We are at a stage where businesses are still experimenting with the best paths forward, and there is no shortage of emerging approaches or tools.

Still, I am willing to bet that successful strategies will emphasize workplaces that are more human – acknowledging the needs individuals have for achievement and purpose and self-direction. I believe we will see a growing comfort with management-by-conversation that is owned by business leaders, instead of relying on HR systems that can act as a crutch.

The natural progression is perhaps even greater comfort with a compensation-by-conversation approach.  A portion of an employee’s pay can be shifted away from traditional levers and towards greater alignment with the next wave of performance systems, aligning to data created by performance conversations, moments of recognition or feedback.

Perhaps most significantly, such compensation could be crowdsourced from anywhere in the organization where performance occurs, mirroring the work that is done in the moment. This approach could help businesses to find the increased motivation and performance differentiation that they are looking for.

Where do you think these performance trends are leading?

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.

Comments

[E. James (Jim) Brennan]

Transparency, empowerment and feedback will flourish. Highly visible formal programs to enhance continual information-sharing loops and cybernetic feedback seem to be the trend for performance management success. All the latest academic research by Ledford et al and practical findings by Microsoft prove those elements most essential for desired outcomes.

Note the Nobel Prize announcement today re the Harvard/MIT economics profs Hart and Holstrom for their work on Contract Theory. Pay and incentive planning and design hinge on that. It also confirms that, "incentives matter." While they may have nailed the predicable rational economic utility formulae, the future action should concentrate on irrational economic decisions per Prof Dan Ariely. Cuz us human beans are emotional animals rather than identically programmed robots...

[Karen Kervick]

Millenials will drive the continuous feedback model rather than one annual performance evaluation.

Compensation will separate further from that one annual rating.

Hopefully variable pay will follow for most positions which should cover the incentive rewards piece better than an annual increase.

[Harold Brown]

Performance management is an area of HR management that has been subject to the introduction of fads for many years. The condition has existed since the 1970s, and follows an identifiable evolution. A new idea is widely praised, then used and caste aside, and is subsequently replaced by another widely-hyped idea. In recent times, 360 appraisal systems, the balanced scorecard approach to appraising employees, and forced ranking systems have exhibited characteristics of this pattern.

[Harold Brown]

WorldatWork member surveys show the following recent usage history of companies that assess performance, but do not have an overall score.

2010 – 14%
2012 – 11%
2014 – 9%
2016---8%

Not exactly taking the HR field by storm, contrary to all the hype, IMHO.