The New Rules of Performance Management

The workplace paradigm has shifted in an instant—and so must your methods for evaluating employees. Here’s where to start.

By Susanna Mlot and Katie Hynan

Over the years, performance management has evolved from the traditional—and often dreaded—annual event rooted in formal superficial ratings to more dynamic approaches, including more frequent and less formal 360-degree feedback and continuous coaching combined with ratings.

But now, we’re facing another inflection point: How do we assess an employee’s performance at a time in which our working environments, interactions, and in some cases, work content have drastically changed? 

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What can be done to balance holding our people accountable while being compassionate and understanding of financial burdens, illnesses, and familial obligations? 

How do we ensure as much fairness as possible in evaluating contributions when so many factors are in flux? 

And how do we leverage performance management platforms to enable a better employee-supervisor experience in this environment?

We can start by remembering two truths and following a few simple principles.

Truth #1: Assessing Performance Is Still Essential

Amid all the uncertainty caused by the COVID-19 crisis, it’s important to remember why performance management is, and always will be, a critical business process. Human capital—the collective knowledge, skills, and experiences of our people—makes companies great in today’s knowledge economy.

An organization’s ability to align the behaviors of the workforce toward a common goal, improve key skills, and make smart business decisions is an undisputed competitive advantage. Naturally, this ability greatly helps the organization manage through a crisis. But it requires frequent feedback, course correction, and making tough workforce decisions.

The shift to a more dynamic approach to performance management is rooted in good intentions. Employees were supposed to experience more of an informal coaching relationship with their supervisor, one focusing on continuous feedback and customized goals and development plans. In practice, however, many organizations have found the opposite to be true.

For example, research by CEB/Gartner shows measures of employee engagement and performance dropped by up to 10 percent at organizations where reviews were eliminated. Employees feel continuous feedback isn’t as robust or actionable as event-driven summaries, and many go weeks without a conversation due to supervisory capability and capacity. 

Supervisors found it more difficult to hold employees accountable, and overall, performance and development suffered. 

Truth #2: Performance Management Requires Good Management

Approach aside, strong employee management remains core to successful performance management. Despite the challenges of the current environment, maintaining consistency with your current approach to assessing performance is important. What’s even more important is ensuring your supervisors are equipped with the knowledge, skills, and abilities to lead and manage their people.

Supervisors, especially those who may be leading through their first economic crisis, require more attention and support from leadership. This is an opportunity to build manager effectiveness through demonstrating leadership and sharing wisdom, particularly in trusting employees and not making assumptions about an individual’s circumstances.

8 Simple Rules for Performance Management in a Crisis

In the next month or two, before the traditional year-end performance review events commence, we recommend taking a critical eye to your performance management process and following these rules:

1. Maintain Continuity

While extraordinary times may require rethinking aspects of your performance management process, it’s important to retain as much of the value of good manager-employee dialogue as possible.

2. Do Simple Better

It’s never been more important to reemphasize the solid fundamentals of delivering effective feedback and providing simple, easy-to-use methods and tools.

3. Emphasize Transparency…

Recognize that employees are feeling an unprecedented amount of uncertainty. Some may fear for their jobs, leading to increased anxiety about performance. Be honest and upfront in conversations—don’t shy away from providing feedback when necessary so employees are clear on where they stand.

4. …But Embrace Empathy, Too

While it may sound contradictory, now’s the time to also practice measured, thoughtful feedback about strengths that employees are demonstrating as well as opportunities for improvement. 

In delivering feedback and performance coaching, be sure to acknowledge and articulate the context that you understand regarding employees’ circumstances, stressors, and needs.

5. Clarify Expectations

Expectations and priorities have likely shifted in recent weeks. In some cases, work content has shifted drastically. Schedule dedicated time to discuss expectations and provide revised documentation where appropriate, so employees have a clear reference point.

6. Trust Your People

With a significant portion of our workforce operating virtually, supervisors have less visibility into the execution of daily tasks. Plus, it’s easy to be distracted with household chores, childcare, and the news. Trust that your people are doing what they need to be doing and listen when they ask for help. 

7. Recalibrate Your Rubric

With changing expectations and environments, “good” is bound to look much different. Current competency models require a tweak at the minimum, while others may require a complete overhaul.

8. Recognize Bias

Many supervisors tend to fall victim to recency bias, rating employees on their most recent performance while failing to think about the big picture and performance over the year. 

Now more than ever, it’s extremely important to be aware of this phenomenon. Recognize that some employees may not be at their best during this time, nor do they have the same coping mechanisms as you or others.

Performance management is integral to the process of making informed, strategic business decisions. It measures the value that individuals and teams contribute to the organization and provides essential data on the return on investment in talent. And it reinforces the consequences and rewards that motivate most employees, and therefore is an important part of the communication loop.

In this period where it’s so easy to be distracted, it’s critical that good performance management reinforces the valuable conversations between employees and managers.

Susanna Mlot is a partner at Axiom Consulting Partners. As a 30-year consultant and healthcare executive, Susanna has partnered with clients to enable their achievement of excellence in execution and building capabilities in the critical pathways to profitable growth. Susanna’s expertise includes change management, strategy development and articulation, organization design, and workforce planning and development.

Katie Hynan is a manager at Axiom Consulting Partners. Experienced in qualitative and quantitative analysis, strategy articulation, organization transformation, and change management, Katie brings a diverse and impactful skillset to each organization she serves. She supports global organizations with operating model definition, organization design, operational excellence, and talent strategy and assessment.