Performance management tech: What’s working and what isn’t

As the dust starts to settle following months of turmoil in the HR and business world, now is the time for human resources professionals to re-build better and stronger.

For so long, performance management has focused on appraisals, which are derived from the US military’s “merit rating” system devised during World War I to identify poor performers for discharge or transfer. But now, it’s time for that to change.

“I definitely believe the events of the last year have demonstrated why the traditional way many businesses conduct performance management is broken,” Emily He, SVP at Oracle Cloud HCM, tells UNLEASH.

The standard SMART (specific, measurable, achievable, relevant, and time-bound) performance goals that are only evaluated during annual review cycles are too stagnant to withstand a crisis, she adds.

Indeed, the pandemic has caused widespread disruption; skyrocketing unemployment levels have made headlines in several nations, including the US and the UK.

“Goals across nearly every industry changed drastically — whether due to shutdowns or spikes in demand. Imagine how retail supply chain managers felt as the pandemic began, watching their goals go out of the window because there was no toilet paper to be found,” He notes.

George LaRocque, an HR tech analyst and founder of WorkTech, agrees that the industry has historically struggled to keep up with the pace of developments.

“Work and the management of it has evolved faster than the approaches to performance management. Businesses have struggled to keep up.

“Like many processes in business today, the traditional annual performance management process is a throwback to top-down command and control management philosophies.

“In HR and especially with processes like performance management, one size never fits all. Employers have been on a mass exodus away from stacked rankings and traditional annual performance reviews for some time.

“However, while the move away from stacked rankings was relatively quick, the move to continuous performance management has been more of an evolution and many times is augmenting the annual review which is still the staple for compensation reviews and bonus adjustments in many environments,” he said.

Where is HR tech going wrong?

Performance management means different things to different employers and employees — this is often why a lot of the technology available in-market fails to meet the needs of specific teams and businesses.

“Many performance management applications take a one size fits all approach, expecting leaders to implement a prescribed model for performance management,” LaRocque says, adding that this fails to address the flexibility required across the market, or even within one business.

For example, he notes, while OKRs or SMART goals may be a trend that work in one company or department, they may fall short elsewhere.

“Many project management solutions, while enabling ad hoc feedback and performance reviews with greater frequency, are still stuck in a command and control culture — it’s something that happens to an employee, not a dialogue that occurs between the employee and leadership,” adds LaRocque.

Leaders today have to adapt to an increasingly empowered workforce where feedback is not only desired, it’s expected.

Additionally, LaRocque notes that there needs to be more cohesion between HR functions: “Performance management without a tie to learning and development pushes the onus for improvement on to the employee.”

Several surveys have highlighted the extent to which HR professionals are burdened with administrative tasks — despite automation promising to liberate leaders from this type of work, much of these processes remain to be disrupted.

“Capturing data and insights to use in a performance review is cumbersome and time consuming for leaders, managers, and employees,” LaRoque said.

USING HR TECH IN THE RIGHT WAY

Integration across the board is also key, says He: “The most important part of an employee performance tech stack is that it isn’t a standalone solution that managers and employees use once a year during the annual review cycle.”

“To get the most out of performance management solutions, it needs to be integrated with all the other tools that HR is using to manage and develop their talent,” He notes.

Only by doing this will performance management play an active role in helping employees develop their careers, identify skills to cultivate, and proactively benchmark compensation, instead of merely measuring whether an employee qualifies for a raise or a promotion in that specific moment in time.

While the market is awash with countless HR technology products to help organizations attract and manage their talent, for the technology to actually work, human resources leaders must use it in the right way. “HR technology is capable of a lot more than many organizations are using it for today,” He notes.

“Employee performance management is only a small piece of the puzzle in developing and growing talent within an organization. Part of ensuring good employee performance needs to be creating strong employee experiences that help workers get what they need done quickly and efficiently,” He continues.

Performance management in the remote world

As expected, the rapid rise of remote working as a result of the pandemic has resulted in a much more empowered and flexible workforce. While most organizations have realized there’s an increased need for communication and transparency, the lack of in-person interaction has severely affected key HR functions, such as performance management.

“The biggest change to employee performance management in a virtual setting is that managers now need to make a deliberate effort to provide feedback,” He explains.

In the office, managers could easily pass by an employee’s desk and praise them for a specific task. In the remote world, this kind of spontaneous interaction may be a lot harder to come by, hence why managers need to intentionally seek it out.

“The other major challenge of performance management during remote work is that managers have less insight into the obstacles that an employee is facing – whether personal or professional – that negatively impact their performance,” He adds.

For example, if an employee is stressed and overworked, staying at the office later than usual and coming in early, an observant manager may notice they need extra help. Without witnessing this in-person, a manager may never know an employee needs help.

Even in a remote setting, workers could be facing constant interruptions from kids or home internet disconnections. These kinds of challenges are less visible or obvious when teams are no longer working in the same physical space.

“In response, managers need to be much intentional about connecting with their employees by committing to their one-on-one check-ins with employees and make an effort to ask how they’re doing. As we continue to navigate through a pandemic and post-pandemic era, both HR leaders and managers need to be more actively aware of the mental health of their employees in a way that hasn’t been necessary before,” He notes.

LaRocque says many of the challenges of the offline world are amplified in the virtual setting. “Data is in siloes and not immediately visible to the manager or employee,” he adds, noting “these conversations that should be taking place based on that data in the online world are even more difficult when extended by distance.”

DOING performance management RIght

LaRocque is clear: HR professionals should choose tools that are embedded in the flow of work and that enable, even nudge, employees and managers to engage in a conversation about performance.

“Also, performance management should be embedded in a larger feedback and recognition culture,” he adds.

The industry may have a long way to go — particularly when one considers the proliferation of creepy listening tools used under the guise of capturing sentiment and aligning with productivity or performance data — but there are certainly some positive strides that deserve to be mentioned.

Overall, LaRocque says the industry is making it easy for employees to track and monitor their own performance. He also highlights the efforts to provide much-needed guidance to managers via technology. “Managers are incredibly bad at performance conversations,” he notes.

“Just as one size doesn’t fit all, success or failure isn’t universal. Success is largely more of a reflection of the culture and the commitment to employee experience than it is technology. The performance management tech market is saturated with tech providers of all shapes and sizes, there’s ample tech available to support an employer with a sound process,” LaRocque concludes.

Key advice for HR leaders

Technology aside, He believes HR leaders can focus on implementing three changes to overhaul and improve their employee performance management strategies:

• Implementing more frequent review cycles instead of relying on annual check-ins. While many HR and performance management solutions support the flexibility of how frequently HR teams want to conduct review cycles, the typical default is still an annual cadence. Annual, and sometimes even quarterly, goals are so static that it is unrealistic to expect them to align with the employees work and career trajectory when it comes time for evaluation.

• Adopting a more agile nature to reviews and goal setting. In addition to more flexibility in review cycles, the industry needs to move towards supporting and encouraging more agile performance management programs. In today’s market, goal setting and career progression conversations should be happening continuously in order to adapt to evolving employee and business priorities.

• Encouraging joint accountability. HR teams also need to take into account what is happening within the business and their operating environment because it impacts the performance of their employees. For example, budget strains or supply chain shortages can have an impact on the business that carries over into employee performance and team goals. Employee performance reviews need to take these factors into account and need visibility into these areas when measuring employee performance.