The conventional command-control model of performance management is losing traction due to a growing emphasis on teamwork, shared leadership, and the ongoing struggle to attract and retain skilled employees.
Performance management was often perceived as a cookie-cutter, top-down approach, prioritizing negatives over positives and hindering constructive career discussions. This approach has historically failed to inspire motivation, typically leading employees to merely avoid it without alternatives.
The imperative is clear: to break away from familiar yet antiquated methods and embrace a changed reality shaped by interconnectedness, customization, and the influence of millennials in the business world.
Nairametrics recently interviewed a human resource expert, personnel psychologist and learning & development expert, Mr. Folasele Vincent Akinloose,where he shares some insights about how companies can adopt, build and sustain high performance culture, shifting away from the traditional approach and transcend outdated practices.
How can you define performance management for a layman?
Performance management is how we assess employees’ contributions to organizational objectives. So, when we hire you, we provide you with a job description and key performance indicators (KPIs), and we want to evaluate whether you’ve been able to deliver based on what we’ve asked of you.
Performance management typically adopts what we refer to as a balanced scorecard. This balanced scorecard usually consists of four components, but personally, I expand it to five: Finance, people, customer, processes/tools, and core values
When we talk about finance, we are talking about assessing your financial contributions. The people aspect involves how you’ve been improving yourself and creating value through your development. For the organization as a whole, we assess factors like talent retention, talent development, and overall career growth. When it comes to customers or stakeholders, we consider the impact we’re making on their lives and their satisfaction with our work. When we look at our core values, we are considering how our actions align with values and we are able to create a culture that promotes sustainability and psychological safety.
In summary, performance management refers to the systems and processes put in place to measure employees’ performances and contributions to organizational objectives. It involves regular communication between managers and employees to align individual goals with the organization’s strategic focus. Additionally, it identifies areas needing improvement and plans actions for improvement.
Moreover, performance management includes rewards and recognition, which are essential components. So, when assessing an employee’s contributions, let’s use the terms “staff” or “employees” instead of “staff” alone, as it’s outdated.
We need to identify these contributions and determine how to reward, recognize, and support employees so they can continue making valuable contributions to the organization. That covers the full scope of performance management.
There has been a shift in the world of work with new trends as a result of new ways of thinking. How has this affected the way HR leaders see the practice of performance management?
It’s becoming intriguing because there’s a significant transformation in the world of work. This shift is driven by what we refer to as the VUCA environment—Volatility, Uncertainty, Complexity, and Ambiguity.
Globalization, technological advancements, and the diversity of workforce multigeneration have led us into this VUCA environment. Different generations in the workforce have unique needs and skills. For instance, Baby Boomers may be less inclined to embrace technology compared to Gen Z. This diversity necessitates a reevaluation of our approach to performance management.
Traditionally, performance management focused on annual or semi-annual reviews, primarily involving appraisals and ratings. Often, after HR completes the appraisal, employees are left out of the feedback loop. This approach has had a limited impact on employees, possibly less than 25%.
In the modern approach to performance management, we prioritize the relationship between line managers or supervisors and their direct reports. Instead of waiting for annual reviews, we adopt ongoing performance management, which can occur weekly, monthly, or quarterly.
In this new approach, we emphasize several critical aspects:
One is promoting a culture of continuous growth: We assess staff growth regularly, rather than waiting until the end of the year.
Two is creating a feedback culture: Employees receive feedback regularly, empowering them and fostering a culture of continuous improvement.
Three is motivation and recognition: We don’t wait until the end of the year to recognize and reward staff for their contributions.
Four is getting clear expectations: Employees receive clear expectations aligned with their roles on a regular basis.
This new approach is driven by the quality and trust in the relationship between managers and employees. Line managers are responsible for providing necessary support and tools for employees’ performance, rather than relying solely on HR. Additionally, reinforcement of successful performance behavior through rewards and recognition is emphasized, not just annually, but regularly—weekly, daily, or monthly.
To summarize, the new approach to performance management prioritizes relationship building, clarity of purpose and smart goals, provisions of necessary support and tools, and emphasizes regular rewards and recognition. This marks a significant departure from the traditional approach and underscores the evolving nature of performance management strategies.
How can business and HR leaders build and sustain a high-performance culture?
The most crucial aspect to understand about this endeavor is that it’s deeply rooted in organizational culture. All performance stems from culture, and when we talk about culture, we’re referring to the organization’s philosophy.
This philosophy encompasses the organization’s vision, mission, values, and strategy. As an expert, your first task for any organization is to clarify its goals. Clear direction and purpose are essential because unclear goals can lead to confusion and hinder progress. Employees need SMART goals—ones that are Specific, Measurable, Achievable, Relevant, and Time-bound—from the top down to the individual level.
Next, organizations must focus on building capabilities. Employees need the right skills, knowledge, and resources to achieve their goals. Continuous development and training are vital in this regard. Additionally, providing feedback, coaching, and development opportunities is crucial. These elements should be embedded in the organization’s training and development programs.
Recognition and reward of performance are essential for reinforcing desired behaviors and outcomes. Creating a supportive work environment that values diversity, collaboration, and innovation is also key. Psychological safety in the workplace is paramount.
Furthermore, all managers and leaders should lead by example, promoting a culture of accountability, trust, and transparency. Performance management is built on trust and transparency. Lack of transparency breeds distrust, which can undermine the effectiveness of the performance management system.
Leaders must align their actions with their values to instill trust in the performance management system. Transparency is crucial in ensuring that employees understand the purpose and outcomes of performance management processes.
Finally, accountability for the effectiveness of the performance management system ultimately rests with leaders. While managers and supervisors implement performance management strategies, leaders must set the tone by leading with accountability, trust, and transparency.
What new metrics are used to measure the performance of employees in an organizations?
Performance management doesn’t have to be an annual thing. We are now in an agile environment with an agile workforce, meaning that performance management has become an ongoing effort, to enable one rise to the challenges of globalization, technology, artificial intelligence, and even the volatile environment of the business.
What is currently being done now is to shift the responsibility of performance management from the HR to the line managers and supervisors. While the responsibility lies with them, then the leaders should take accountability. What should leaders do? They need to know if the line managers and the supervisors are doing the right thing regarding performance management. Do they take feedback and are we using the feedback? Then, are they empowering the staff? Do they have the right tools?
If you are not empowering employees, how do you want them to achieve their goals? That is bias. So we need leaders at the top level to make available the right tools and create the right culture because whether you like it or not, leaders champion culture. So they need to create the right culture that will make staff succeed.
That is the whole essence of performance management. Driving the behaviour of performance should change initiatives to reward and recognitions and to making the right tools and environment available that will make people succeed.
HR leaders believe that a positive, engaged and high-performance culture supports higher business revenues. What are some of the effective ways to use performance management to increase profitability
I earlier emphasized the clarity of purpose and setting smart goals because that is the major focus of performance management. It is clear. The process is transparent. And when you look at the KPMG research, they say that organizations that effectively establish performance management have a chance of increasing their profitability by 25%. And that is the truth.
And it’s not just about increasing by 25%, they also increase employee retention and engagement. Do you know what that means? That is massive. So, how does effective performance management now increase profitability? This is how it happens. Number one, we need to ensure that organizations set smart goals and clarify their purpose. When you want to give employees targets, give them smart targets, something they can achieve.
If your employees understand what they need to do, how to do it, and have the resources they need to do it, why wouldn’t they achieve goals?
Next, is for them to now align employees’ goals with the organizational goals because employees have aspirations.
And all of these aspirations will be factored into the performance management system, and when they realize that the performance management system is fair and transparent, they will begin to trust it, when they can see that everything around the performance management also factors in the employees’ aspirations and dreams.
Then another way we can ensure this profitability is to ensure that there are recognitions and rewards which will help them to hit their targets and their deliverables, which is very important.
And above all, it is very important that we embrace the right technology for performance management that is driven by data and we can easily get insights for decision making.
And when we get insights for decision-making, then we will be able to allocate the right resources in the right direction. We will know when we need to dismiss, reward, or recognize particular employees, and identify the developmental or career path for the staff. So, data plays a role in achieving that kind of profitability.
The essence of this question is that for performance management to increase profitability, then it has to be effective based on clarity of purpose and you need to stay smart.
Organizations need to align an individual or employee’s aspirations, and goals, with the organizational goals and objectives. Then beyond that, it must put recognition and reward into place so that high performers are rewarded and they are also promoted because, whether you like it or not, your performance manager should be able to identify and select high performers for reward and recognition. And finally, it should be driven by data and we should leverage appropriate technology for us to do that.
Are there challenges to conducting an effective performance management?
Employees lack trust in the organization’s performance management system due to perceived ineffectiveness in promoting and rewarding deserving staff. Transparency issues arise when promised promotions or salary increases fail to materialize, leaving employees uncertain about their future within the organization.
Fear, bias, and inconsistency further erode trust, as shifting goals and lack of fairness in measurement criteria create disillusionment among employees. Leadership plays a crucial role, yet leaders often fail to lead by example or be held accountable for toxic work environments. Toxicity, characterized by a lack of psychological safety and growth opportunities, hampers employee performance. Technology, while crucial for automating performance management processes, presents challenges in finding tools that ensure fairness, transparency, and consistency, thereby fostering trust among employees.
