How Revamping Your Performance Management Leads to Higher Employee Engagement

November 26, 2013 - 6 minute read - Posted by

It has become a known fact that nowadays, the average worker stays in each job for 4.4 years. Forbes’ latest article also suggests that the new wave of Generation Y workers entering the workforce will stay in a job for less than 3 years. In my last blog post, I mentioned how it costs one employer approximately 250% of annual salary per exiting employee. Many of our clients come to 7Geese because they are encountering the following issues:

  • High turnover: Employees are leaving the companies because they do not feel valued and/or are not aligned with the company’s vision and values. There is no connection between them and the organization.

  • Low performing employees: Managers are having a hard time identifying who need support in order to help low performing employees achieve their potential. Low performing employees do not know who to turn to in order to receive feedback on how to improve.

  • Weak alignment – As companies grow in size, it becomes extremely hard to make sure that each employee understands how their jobs are aligned with what the organization wants to achieve. Employees do not have a clear line of sight regarding the organization vision and objectives.

  • Presenteeism – This issue happens when your employees are physically and not mentally present at work. Often, it is due to the fact that they do not know what they need to focus on. Your company is losing in terms of productivity and also resources as you are not making use of your talent effectively.

There are some recurring themes among these issues such as clear communication for alignment of objectives and employee engagement in the workplace. One solution that companies are looking into to address these issues is to revamp their performance management system. Long gone are the traditional annual performance appraisals. Companies are looking for social, agile, and innovative ways to make performance reviews more regular with real-time feedback. Managers are becoming coaches and 1:1 coaching sessions are employee driven.

One question that you may be asking yourself is “What do the employees really want and what do they expect from their company’s performance management system?” According to a survey done by SHRM, the highest ranked objectives for performance management systems are as follows:

  • Provide information to employees about perceptions of their performance

  • Clarify organizational expectations of employees

  • Provide information to employees about their development needs.

According to an analysis done by Mercer, linking performance to development planning and setting SMART goals are “the 2 skills that matter most in delivering on a company’s desired performance management outcomes”. Traditional performance appraisals focus on past performance. The conversation is centered on how the employee has performed throughout the whole year and a rating or score is then assigned. According to Mercer, only 56% of companies cascade goals from company to departments/teams, and only 51% cascade goals from business unit to individual employee.

All our clients have embraced setting goals as a way to revamp their performance management system. They actively follow the Objectives and Key Results methodology used by Google and Zynga. This goal setting technique encourages your employees to cascade your organizational objectives to their own personal objectives. It promotes transparency so that everyone in your company can hold each other accountable. Publicly sharing your objectives helps the managers to be proactive. By tracking each of their direct reports’ progress, they can jump in at any time to provide the necessary support and to provide real-time feedback.

One very interesting way that many of my clients are integrating career development in their performance management is by revamping their performance review sessions. The focus has shifted from past performance to future improvements. I personally really like the Start-Stop-Continue model:

  • Start: “What do you want to start doing to reach your career goals?” Managers and direct reports explore what are the steps towards getting to where the employees want to be career-wise.

  • Stop: “What are the things you want to stop doing?” Think about what hasn’t worked in the past or given the current situations, what are the things that are no longer effective.

  • Continue: “What do you want to keep doing?” Think about what are the behaviours that you still want to demonstrate, what have worked in the past and you want to keep reinforcing.

The other model I would recommend for career development is the 6 Questions process. The questions are employee driven and guide the employees to develop an action plan on how to reach their career goals with the support of their managers.

Your performance management system is fundamental to the success of your organization. Human capital is a scarce resource and you do not want to lose your best talent. By revamping their performance management system to focus more on alignment of objectives and career development, you will very likely experience the same benefits as many of 7Geese users – higher performance from employees, positive employee engagement and clear communication within the organization regarding company’s core values and vision.

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