Performance Management is changing. In today’s dynamic markets, the traditional approach of a standardized, annual process comes under increasing pressure. hkp.com in an interview with the hkp/// group experts Frank Gierschmann and Leon Jacob.
hkp.com: What are the current pain points of Performance Management?
Leon Jacob: Many companies still use annual performance cycles. That is, objectives are agreed upon between managers and employees for one year in advance. At the end of the year, employees receive feedback on their performance retrospectively. This traditional approach is mainly criticized for its lack of flexibility. Nowadays, strategies are discussed multiple times a year, which is why objectives simply do not follow 12 month-cycles anymore.
Frank Gierschmann: On top of that, common IT solutions are based on the assumption that Performance Management is a more or less industrialized process which is very similar in all companies. Hence, these solutions offer only limited room for individual adjustments. Against the background of highly diverse objectives and company contexts, companies, which are not sufficiently familiar with the configurational options of the common IT solutions, are in a way forced into some kind of “corset”.
hkp.com: Do any emerging trends become apparent in the market how companies try to address these pain points?
Frank Gierschmann: Yes, we are actually observing that more and more companies replace their annual Performance Management process with more agile approaches. Monthly, weekly or even completely demand-oriented and informal feedback methods replace annual and formal performance evaluations. The aim is to enable and foster a continuous dialogue on strengths, development areas and possible development measures between managers and their employees.
hkp.com: Does this mean that Performance Management is fundamentally revolutionized?
Frank Gierschmann: No, such a statement would go too far. The overarching goal of Performance Management is unchanged. Companies still aim to increase their employees’ performance and thereby finally the overall company performance. Companies only differ in their ways of reaching this goal.
hkp.com: Does the described trend from standardization to flexibility and self-responsibility change the roles of employees and managers?
Leon Jacob: Yes, both roles are changing. Managers need to take time for giving feedback. Moreover, a major task of managers is to empower their employees to self-manage their performance.
Frank Gierschmann: Exactly, because innovative Performance Management approaches put employees in charge of managing themselves. They themselves are responsible for observing their own performance development and actively asking for feedback – from managers, colleagues or their direct reports.
hkp.com:This change certainly cannot be achieved overnight. How can companies support their managers and employees with it?
Frank Gierschmann: That differs from company to company. When implementing a completely new Performance Management approach it can be helpful to start with a big pilot group and then use selected employees as multipliers. In any case, it is important to closely involve employees and managers. Innovative tools like feedback or self-management apps are also conceivable.
Leon Jacob: With regard to managers, it is extremely important to support them with filing their new role adequately. Formats such as “Train the trainer” seminars could be conducted to enable managers to motivate and support their employees with self-management.
hkp.com: More one-on-ones, new trainings, feedback apps – that sounds like a lot of effort!
Leon Jacob: Perfectly right. Especially in the beginning, lots of resources and patience are required as companies have to ensure that the change reaches the basis of the organization. That is, employees and managers have to internalize and live the new way of managing performance. However, in the long run, the total effort is minimized because Performance Management is transformed from a time-consuming and regulated process into an everyday and effortless habit of every company member.
hkp.com:Less effort sounds very promising. That means you would recommend companies to follow the current trend.
Leon Jacob: That really depends and cannot be answered generally. For some companies it might surely be the right approach, for others not.
Frank Gierschmann: Since companies have different corporate cultures, structures and targets pursued with Performance Management, there is no general recommendation. Every company should find the approach that fits its own characteristics and demands best.
hkp.com: And how can a company find out which approach is the best for itself?
Leon Jacob: First of all, companies should define and prioritize the targets they want to pursue with Performance Management.
Frank Gierschmann: Furthermore, feasibility has to be checked on different levels. One very important requirement for example is that the Performance Management approach matches the corporate culture. In addition, the company’s level of digital maturity has to be taken into account because innovative Performance Management approaches are often based on the latest technologies. Finally yet importantly, a good cost-benefit ratio is important.
To put it in a nutshell, there is no “one-size-fits-all“ solution; the trend is rather moving towards “fit for purpose“ and „tailor-made” Performance Management solutions.