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Performance Management Trends for 2020

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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. If you’re look­ing for last year’s trends, you can find them here.

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

We’ve been talk­ing about this one all year.

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. 

    Those were our per­for­mance man­age­ment trends for 2020. You can down­load our defin­i­tive look at the state of per­for­mance man­age­ment in in 2019 here.

    You can take a look at our new engage­ment tool, avail­able from ear­ly 2020, here.