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5 Performance Management Trends for 2017

Performance Management Trends for 2017.

Tak­ing a look at the lat­est per­for­mance man­age­ment trends and how you can adapt your process­es for max­i­mum productivity

2016 was an excit­ing year for per­for­mance man­age­ment. Con­tin­u­ous per­for­mance man­age­ment has con­tin­ued to shake up rigid, tra­di­tion­al HR process­es and flex­i­bil­i­ty is becom­ing ever-impor­tant, espe­cial­ly giv­en the pref­er­ences and moti­va­tions of Gen­er­a­tion Y. Mil­len­ni­als are chang­ing the way we do busi­ness, mean­ing the future of per­for­mance man­age­ment is set to see sig­nif­i­cant changes in 2017. Com­pa­nies who acknowl­edge this and embrace these new changes will be the ones to flour­ish and suc­ceed in the years to come.

Here is a sum­ma­ry of the most impor­tant per­for­mance man­age­ment trends that HR experts believe will become estab­lished prac­tices in 2017.

Annu­al per­for­mance reviews will con­tin­ue to fall out of favour

As pre­dict­ed at the begin­ning of the 2016, year­ly reviews are increas­ing­ly being phased out in favour of con­tin­u­ous per­for­mance man­age­ment. Organ­i­sa­tions all over the world are recog­nis­ing that increased com­mu­ni­ca­tion and inter­ac­tion results in height­ened pro­duc­tiv­i­ty and per­for­mance, reduc­ing turnover as a result. Through­out the year, more and more com­pa­nies have been mak­ing the shift and intro­duc­ing reg­u­lar one-to-ones or check-ins’ with their staff and insti­gat­ing real-time feedback.

A notable exam­ple of a com­pa­ny mak­ing the switch to con­tin­u­ous per­for­mance man­age­ment is Ryan, the glob­al tax firm. It has recent­ly been plac­ing an empha­sis on work-life inte­gra­tion and trans­paren­cy of com­mu­ni­ca­tion. This keeps employ­ee goals aligned with com­pa­ny objec­tives, encour­ag­ing a height­ened degree of trust with­in the organisation.

When con­ver­sa­tions between man­ag­er and employ­ee are fre­quent and unin­tim­i­dat­ing, employ­ees are bet­ter able to open up and engage in gen­uine, pro­duc­tive com­mu­ni­ca­tion. Use of tech­nol­o­gy, includ­ing per­for­mance man­age­ment soft­ware, can apply much-need­ed struc­ture to these reg­u­lar employ­ee dis­cus­sions as well as cap­tur­ing the out­comes and action points.

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Per­son­al devel­op­ment will become as impor­tant as per­for­mance goals

As 2017 pro­gress­es, per­for­mance man­age­ment sys­tems will need to place a more of an empha­sis on per­son­al and career devel­op­ment. Mil­len­ni­als will con­sti­tute near­ly 50% of the active work­force by 2020, so we need to be mind­ful of what moti­vates them and keeps them pro­duc­tive. The answer to this appears to be train­ing, devel­op­ment and improve­ment, mak­ing it the most valu­able ben­e­fit employ­ers can provide.

Gen­er­a­tion Y want their com­pa­nies to help them grow. In fact, 87% of them state that pro­fes­sion­al or career growth and devel­op­ment oppor­tu­ni­ties” is a crit­i­cal aspect of what they look for in a job, as opposed to the 69% of non-mil­len­ni­als, mak­ing it a huge dri­ver of employ­ee engage­ment. One com­pa­ny that is using this to its advan­tage is Yelp, who make employ­ee devel­op­ment their key pri­or­i­ty. The com­pa­ny hires hun­dreds of young account exec­u­tives each year, but they are reg­u­lar­ly pur­sued by rivals. For this rea­son. James Bal­agot, Head of Learn­ing & Devel­op­ment, says their organ­i­sa­tion pro­vides dai­ly learn­ing oppor­tu­ni­ties, men­tor­ship and advance­ment prospects to defend against attri­tion. Oth­er notable exam­ples of com­pa­nies invest­ing in this area are Sales­force, Pan­do­ra, Adobe and Facebook.

On a relat­ed note, a recent­ly pub­lished per­for­mance man­age­ment research study from the CIPD found that for com­plex roles or tasks, per­son­al devel­op­ment objec­tives focused on learn­ing and behav­iour will do more to help employ­ees focus and per­form well than SMART per­for­mance goals. At Clear Review, we advo­cate a flex­i­ble approach to goal set­ting where­by employ­ees agree with their man­ag­er what the right bal­ance of per­for­mance goals and devel­op­ment objec­tives is for them.

Employ­ee auton­o­my will become a huge perk

Inde­pen­dence and auton­o­my will become crit­i­cal to employ­ees — and a perk that per­for­mance man­age­ment sys­tems can­not ignore. In order to get the most out of our work­force, man­agers should coach and sup­port, rather than micro­man­age. As such, we pre­dict that more com­pa­nies will place employ­ees in the dri­ving seat and give them greater con­trol over their own goals, per­son­al devel­op­ment, careers and even their hours.

Com­pa­nies like Deloitte make employ­ees respon­si­ble for arrang­ing their reg­u­lar one-to-ones with their man­ag­er, reduc­ing the bur­den on man­agers to keep track of who they need to check-in with.

Wal­mart made head­lines this year with its deci­sion to give work­ers more pow­er over their sched­ules. Employ­ees now have more cer­tain­ty over their hours and Wal­mart is able to improve staffing lev­els dur­ing peak shop­ping times. This flex­i­ble nature can also be seen in com­pa­nies such as Microsoft and Sweaty Bet­ty, who now offer flex­itime to their workforces.

Use of tra­di­tion­al’ per­for­mance rat­ings will decline further

Dur­ing 2016, more and more organ­i­sa­tions elim­i­nat­ed annu­al per­for­mance rat­ings. Accord­ing to the CEB, 49% of HR lead­ers have elim­i­nat­ed or are con­sid­er­ing elim­i­nat­ing per­for­mance rat­ings. Yet, research from the CEB also found that remov­ing per­for­mance rat­ings can result in a decrease in employ­ee per­for­mance. Unfor­tu­nate­ly the media at large wide­ly mis­rep­re­sent­ed this study, stat­ing that com­pa­nies who elim­i­nate per­for­mance rat­ings were some­how doomed to fail­ure and should rein­state them.

But it should be point­ed out that CEB doesn’t rec­om­mend rein­stat­ing rat­ings or annu­al appraisals. Rather it sug­gests that com­pa­nies who choose not to use rat­ings should have a reli­able sys­tem in place to ensure employ­ees are receiv­ing valu­able, con­struc­tive feed­back, from both their man­ag­er and peers, on a reg­u­lar basis. GE are a great exam­ple of an organ­i­sa­tion who have suc­cess­ful­ly achieved this, and their employ­ee sat­is­fac­tion has increased since drop­ping rat­ings and most of their man­agers say they are able to dif­fer­en­ti­ate per­for­mance for pay pur­pos­es with­out ratings.

A point worth not­ing is that some organ­i­sa­tions who have elim­i­nat­ed rat­ings are still mea­sur­ing per­for­mance for reward or tal­ent man­age­ment pur­pos­es. Microsoft famous­ly got rid of annu­al appraisals and per­for­mance rat­ings, but man­agers still assess each team member’s impact’ on the team, busi­ness and cus­tomer on an annu­al basis to help deter­mine reward. This process is, how­ev­er, com­plete­ly sep­a­rate from their per­for­mance man­age­ment dis­cus­sions which take place 3 – 4 times a year. Sim­i­lar­ly, Deloitte have replaced their per­for­mance rat­ings with four future-focused ques­tions.

New per­for­mance man­age­ment soft­ware tools will be rapid­ly adopted

As the CEB found in their research, when you elim­i­nate appraisals or rat­ings and don’t estab­lish a struc­tured frame­work for ongo­ing per­for­mance man­age­ment to replace them, you are left with a vac­u­um where lit­tle com­mu­ni­ca­tion takes place between man­agers and their team mem­bers. Where this is the case, the com­pa­ny is bound to suffer.

For this rea­son, organ­i­sa­tions are look­ing for soft­ware tools to help ensure that employ­ees receive ongo­ing per­for­mance feed­back. Yet, as Josh Bersin points out in his Pre­dic­tions for 2017, the trend towards a more agile, con­tin­u­ous, feed­back-based approach to per­for­mance man­age­ment has left the incum­bent HR soft­ware providers flat-foot­ed” and the big soft­ware vendors…do not have the soft­ware yet”.

As a result, Bersin pre­dicts that organ­i­sa­tions will rapid­ly adopt a new gen­er­a­tion of per­for­mance man­age­ment tools such as our own Clear Review soft­ware. Such tools enable employ­ees to receive and request feed­back in real-time, send auto­mat­ed email reminders to ensure employ­ees and their man­agers check-in with each oth­er reg­u­lar­ly, pro­vide online agen­das for effec­tive one-to-one con­ver­sa­tions and give HR and senior man­age­ment vis­i­bil­i­ty of whether reg­u­lar per­for­mance dis­cus­sions are tak­ing place. These tools also enable agile objec­tives and short­er-term pri­or­i­ties to be agreed and mon­i­tored, as opposed to tra­di­tion­al per­for­mance man­age­ment soft­ware which typ­i­cal­ly ties organ­i­sa­tions into an annu­al goal set­ting cycle.

Next Steps

Learn how our Clear Review soft­ware can make con­tin­u­ous per­for­mance man­age­ment and ongo­ing feed­back a suc­cess in your organisation.

Next Steps?

Learn how our Clear Review software can make continuous performance management and ongoing feedback a success in your organisation.