Top employers know that a great culture is key for finding, engaging and keeping the right talent. That’s why many organizations are taking a closer look at the connection between culture and performance. This article explores how rethinking performance management can support broader goals of engagement, retention, succession planning and growth in an increasingly competitive global marketplace.

A people-centred performance management approach is a key tool for helping to evolve organizational culture, yet, the majority of companies today are still using outdated performance management processes, usually centred around an annual performance review, the output of which is a static year-long development plan.

In addition to focusing on past events instead of future opportunities, this process is also time consuming for managers – A Harvard Business Review article estimates that managers spend more than 200 hours per year on performance reviews: that’s five work weeks. And nearly half of managers (45%) find little value in the process, while many Human Resources leaders consider traditional performance management processes to be a poor use of time.

Then there’s the employee experience. Annual reviews are not only stressful for employees; there is very little evidence they actually improve performance. In fact, only 20 percent of employees say their performance is managed in a way that motivates them to do outstanding work. In this transactional approach to performance management, it’s also difficult to connect talent to the overall needs and goals of the business. In the face of a rapidly changing workforce and new ways of working, getting out of the rut of outdated performance management approaches and putting focus on both personal and professional growth for employees will be critical.

Modernizing Performance Management

It’s been ten years since Adobe famously announced it had abandoned its traditional employee review process, and not long after that, PwC, Accenture and other global professional services firms followed suit. Yet all these years later, 70 percent of organizations still use annual or semi-annual performance review approaches.

In the face of new business realities, organizations that can rethink performance management may have a competitive edge. Today’s organizations need to tap into the power of teamwork and find more agile ways to work with shorter planning cycles at the same time as they compete in a global talent marketplace for scarce, specialized skillsets. A starting point in this new thinking is employees themselves. Employees want to own their career paths and drive their own personal growth, and they are looking for input from their managers and insight into organizational goals to help them. In fact, 96 percent of employees say they want regular manager feedback.

Modern performance management prioritizes continuous feedback by helping managers have ongoing conversations with their teams. A McKinsey study finds that organizations where these conversations are occurring are 10 times more likely to say they have an effective performance management process and are twice as likely to report outperforming their competitors.

At TELUS, we adopted a coaching model to foster more frequent, more impactful conversations among managers and employees. We quickly found that this coaching culture enhanced our performance development by helping team members dynamically set goals and receive ongoing feedback to adapt their performance. Along with a simplified assessment and compensation approach, this has helped us drive exceptional employee engagement, strong customer service and outstanding community impacts.

Four Success Factors

In a coaching-driven performance management model, there are four factors that support long-term success.

Connect roles and goals:

First, it’s key to tie employees’ roles to the overall priorities of the business. Studies show that when employees can clearly see how their work connects to the mission and goals of the business, performance management improves. In fact, almost half of organizations who link employee goals to organizational priorities say they have effective performance management, versus just 16 percent who don’t link goals to priorities. A transparent performance management system ensures employees can see this alignment clearly and track their progress. Employees are more likely to be engaged when their managers involve them in this type of goal setting.

Bake in accountability:

Research shows that just one-fifth of employees feel their performance metrics are within their control. In connecting individual employees’ roles to the overall objectives and purpose of the organization, it becomes critical for team members to be able to control the factors on which their managers assess them. One way to support this control and overall alignment is to use a system that allows for on-demand self-service access to a platform where managers and employees can document their coaching conversations and continuous two-way feedback to ensure that objectives remain relevant, measurable and achievable.

Create great coaches:

Managers are asked to build and maintain broad skillsets, both as practitioners and leaders. Increasingly, organizations are adding coaching to that list. With 7 in 10 multinational organizations moving toward a continuous coaching model for their performance management, coaching will soon be a baseline competency in the workplace. Investing in coaching skills development will pay dividends in supporting the larger performance management strategy. McKinsey research shows that 74 percent of organizations say that effective coaching and feedback are what drives effective performance management systems.

Invest in great technology

Performance management effectiveness depends on alignment, accountability and coaching, but having the technology to streamline the processes, capture the data and support the outcomes is essential. That’s why nearly half of employers are looking to their technology to go beyond performance management basics to support succession planning, skills mapping and career pathing.

Look for a proven performance management and succession planning solution that lets leadership teams share goals, weightings and success metrics so that managers and employees can tie performance to organizational priorities. The solution should also support accountability and transparency by letting team members and managers add comments or ratings at any time as part of the two-way feedback coaching practice.

With today’s hybrid working models, it’s also important to have a solution that allows employees to login whenever and wherever needed to update performance metrics, add to their skills inventory or review their career path.

Make Evidence-based Decisions

Of course, all of this activity creates a rich store of data about the workforce, skills inventories and succession scenarios. With half of global C-suite leaders saying workforce insights are a key output of Human Resources technology investments, a sophisticated performance management system is a key tool in supporting strategic decision-making. Ask your technology vendor how performance management, succession planning, 360-degree feedback and skills management data are collected and integrated into your Human Resources platform.

The future of the workplace is still emerging, but one thing is certain: investing in seamless coaching, employee-centric career pathing and solid Human Resources performance management technology will be key to higher retention, increased engagement, solid talent pipelines and, of course, great performance.

At TELUS, we are privileged to work with Canada’s most innovative employers to help drive performance management. Learn more about how to shift your organization to a continuous performance management model. Register for our free webinar (Free to CPHR BC & Yukon members) on Tuesday, June 1 and earn 1.0 CPD hour.

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