It’s that time again. For the fourth year running, we’re going all-in to predict the developments our customers and colleagues can expect to see over the year ahead: read on for our piece on the Performance Management Trends for 2020. Also, you can find 2019 performance management trends in our previous blog.
1. Performance and engagement need to work together
What is the purpose of performance management? What is it used for (or rather, what should it be used for)?
If you ask HR leaders — as we did in our Performance Management Report 2019 — then the answer is developing performance. We want to make people better at their jobs, have more clarity on their goals and give and receive good quality feedback. Ultimately, this is about making people more productive.
But productivity is a huge challenge. The most recent ONS figures show that, since the 2008 recession, productivity has (at best) stagnated. That’s more than ten years of virtually zero growth. And that’s bad news for employers (obviously) and workers (less so). The ONS looks to productivity as the main driver of long-term economic growth. If we’re not productive, you take home less money.
Are we heading for a recession? That depends on who you listen to. But we know one thing for sure: uncertainty is bad for business. If difficult times are ahead (again) that means slower hiring and sluggish wage growth. It makes it more important than ever that businesses invest in their best people and make sure that they’re engaged, aligned with the business goals and invested in where the organisation is heading. Why? Because engaged employees do more. Dale Carnegie research tells us that engaged employees are up to 202% more productive than their disengaged counterparts.
We believe that the alignment of employee engagement and performance management will be the single biggest trend in HR in the year to come. And probably the year after that. The war for talent is real. Birth rates are declining. Productivity is static. Businesses need to do more with what they have. They need to invest in their people. They need to take those people on their journey and, to do that, they need to understand what motivates and inspires them. Most importantly, they need to understand that tinkering at the edges of the employee experience is not a sustainable way of building engagement. You can’t roll out a Thursday morning yoga club or a Craft Beer Friday and say the job is done. People want their work to made better. They want the experience of work to be more rewarding. Businesses which understand how to ask the right questions and prompt the right conversations with their people will have a huge advantage in the years to come: a workforce of resilient advocates who understand how best to play their part in the company’s success.
2. Managers need more time to manage their people
The manager is the engine of productivity and engagement. Which seems a little unfair on them when they have so many other things to do. But the oft-quoted Gallup statistic (which dates from 2015) tells us the managers are responsible for 70% of the variance in employee engagement.
This is probably not surprising at all, especially if you’ve ever used the line “People don’t leave jobs, they leave managers.” And as we’ve been saying in the previous point, engagement is directly linked to productivity. The better a manager is able to engage their people, the more benefits they’ll see in terms of output and quality.
The problem is that managers are bursting at the seams. And, in a way, technology contributes to this. On-boarding, which might historically have been seen as an HR function, is now often delivered through technology under the guidance of the line manager. At the same time, the rise of continuous performance management asks managers to set aside time to connect with their teams. The benefits are widely accepted — 92.3% of the respondents in our Performance Management Report said that performance management was a critical area they need to address in the next 12 – 18 months. And yet we still hear concerns from HR directors and CEOs over the availability or capability of their team leaders to act as coaches.
Surely, by now, we know why. The reason this doesn’t happen is because managers aren’t held accountable for it. They’re already subject experts, so their own workload is a concern. They have the workloads of a group of people to worry about. Stuff needs to get done. These are the things they’ll be praised for (or criticised for). The other things can wait.
We suggest that our customers shift their attention away from the annual appraisal and ensure that the regular performance conversations happen. Many of them still use an annual appraisal in some form, and see the benefit of those conversations when appraisal time comes around. We help people to work through both the theory and reality of making that shift. We know that doing it all in one go can be challenging.
The shift is gradual but growing. More and more influencers are posting articles on precisely this subject. We have our own views on this. Expect this debate to run and run.
3. HR isn’t moving as rapidly as we might think
We asked 300 HR leaders how they are currently managing performance at their own organisation. 28.3% said they were using a continuous model of some kind. 1% were using nothing at all. The remaining 70.7% were either still using annual appraisals or were looking for the right continuous model to move to.
For many HR people, downstream activities — appraisals, annual objectives, performance-related pay, ratings and the like — are still their focus. They spend much of their working week serving processes rather than people. And yet we know that their aspiration is to develop performance. And appraisals are usually designed to measure, not develop. Redesigning the appraisal process can be a fallacy: as we discussed at a recent event, doing the wrong thing righter, so to speak, is still wrong.
So our prediction is that more and more organisations will start looking at performance management from an environmental point of view. What do we mean by that? We mean that HR people will focus on creating the right environment for people to thrive. There’s such a huge body of evidence out there now to support the benefits of frequent feedback, and yet it can be a challenging culture to implement — especially when managers are hidebound by years of inertia.
HR can encourage new ways of working. They can be as simple as getting people to hold one-to-one meetings out of the main office building. They can be as revolutionary as decoupling performance-related pay from performance management. The point is that HR’s energy goes into people, not processes.
4. Employee-centric organisations will have an edge
This last point contains echoes of all our previous points, but we think it’s worth its own moment in the limelight.
As you would expect from a business which operates in the world of HR tech, we go to a lot of conferences and events. As well as meeting and hearing from a lot of smart people — and sharing some of our own wisdom too, we hope — we hear a lot of the unvarnished truth in the more informal surroundings of a café or at an exhibitor stand.
One of the expressions we hear most often is “employee-centric”.
In fairness, this can have more than one meaning, but the intention remains the same for each: to create an environment that encourages and supports people to bring their best selves to work.
Employee-focussed tools give people the chance to express their own feelings about the workplace. This could be a way of sharing opinions with management and HR — it could be as simple as a suggestion box, or a Slack channel, or a dedicated email address.
User-friendly tech approaches working practices from a consumer tech point of view. We’ve been talking about this for some time, but it’s still relevant: if something isn’t simple and intuitive, it can get in the way of user adoption. And that means the business won’t be getting its money’s worth because not enough people will be using it.
Employee-centric thinking describes operating in a way that puts the employee experience front and centre. When we think about the processes that inform our working lives, they tend to be organisation-centric. Rankings are produced primarily for the benefit of the business, not the person. Appraisals which end with a neat number in a box may go on to provide a bonus or pay rise, but the exercise has been carried out so the business can fulfil a process rather than develop a person. But the tide is turning, and we expect “employee-centric” to be an ever more prominent issue in the months (and years) to come. Is it a performance management trend? We’d argue its a wider business trend, but — in the HR world — we’re uniquely placed to make it happen.
Learn more about the state of performance management
Those were our performance management trends for 2020. You can download our definitive look at the state of performance management in in 2019 in our UK Performance Management Report.