Are your performance management practices turning determined, enthusiastic employees into frustrated, disengaged individuals? You might be guilty of old-fashioned, backward-thinking approaches to managing performance.
When was the last time you investigated your workplace processes, examining what works and what doesn't, and considered a drastic overhaul to your performance management system?
If you have been experiencing high employee turnover or low levels of employee engagement and motivation, it might be time to go back to basics and question whether you are utilizing the right performance management tools to the right effect.
For businesses that are short on time but eager to turn their companies around, below are practices or issues that might be causing trouble. For the benefit of everyone involved, it's best to act now and show these outdated performance management practices the door and make room for new, forward-thinking approaches.
1. The dreaded annual review
If you're still only having one performance appraisal per employee in a 12-month period, you're behind the times, and you need to change this now. Companies large and small have been ditching their annual performance appraisals in light of evidence showing how inefficient they are.
Annual appraisals are uncomfortable for employees, they're stressful for managers, and they try to accomplish too much in one meeting. After all, how can a manager and employee have a meaningful discussion about goal progress, setbacks, accomplishments and training needs in one sitting while also setting the objectives to be completed in the year to come? The answer is that they can't. This approach is simply unhelpful to managers and unfair to employees.
Communication between manager and employee needs to be routine, more honest and more meaningful. Consider implementing more informal monthly check-ins, following the example set by companies such as Adobe and Microsoft. If you need help guiding these frequent catch-ups, you can make use of a free one-to-one meeting template to help you with the transition.
2. Stack ranking systems
Stack ranking systems, otherwise known as rank-and-yank systems, are relics of another time and should be buried along with all the other poor performance management practices on this list. Even General Electric, a company famous for making use of this practice for decades, abandoned its ranking system back in 2015, and you should certainly follow in its footsteps.
In essence, ranking systems are psychologically unhealthy and they pit employees against each other. They encourage unhealthy competition and stress for anyone who isn't at the top of the pile. Traditionally, using this approach, performance is graded on a curve, with the lowest-performing employees being let go. This creates a toxic working environment, where nobody is confident in their future at the company; employees can't rely on company loyalty, and employee collaboration suffers.
You want your employees to work as a team and feel part of a well-functioning unit. For the benefit of overall performance and productivity, not to mention employee well-being, consider eliminating this form of performance appraisal altogether.
3. Setting vague objectives
Employees feel empowered when they know what tasks to perform and how they should perform them. Any vagueness with regard to objectives prompts poor performance and a lack of motivation.
Objective-setting should be a collaborative process between manager and employee. This empowers the employee and encourages them to take ownership of their own goals, meaning they are much more likely to achieve them. Of course, the manager should always be present to remind employees of how their objectives should feed into company goals. Companies should make use of SMART objectives – meaning they should be specific, measurable, attainable, relevant and time-bound. This framework will ensure all objectives are clear and realistic.
4. Ignoring employee accomplishments
You might be working under the assumption that a fair paycheck is good enough for the average employee and they don't require anything else to perform at their best. Unfortunately, this is not true. Most employees require confirmation that what they are doing is right, and that it is appreciated. Hardly anyone works for money alone and, if they do, these are not the employees you want on board. You want employees who genuinely care about the quality of their work. These same employees deserve the occasional "thank you" or another token of appreciation to show that their hard work isn't going unnoticed.
Consider the last time you made time for employee recognition. Perhaps you could implement an official employee recognition program. Such a program doesn't need to come at a high cost. There are a number of affordable, effective ways to appreciate employee efforts.
5. Turning a blind eye to development
Just as no one wants to work for money alone, no one wants to work in the same role for years on end without development. If you're hiring the right people, they will be individuals driven toward self-improvement and advancement. This is something that needs to be incorporated into your performance management system. Have you and your employees discussed relevant training or development opportunities? If not, it is time to incorporate the use of personal development plans (PDPs).
PDPs aren't something that should simply be paid lip service to and never readdressed. During your monthly check-ins, discuss progress against PDPs and see if there's any support the company can provide in terms of training. Keeping track of PDPs can be difficult, especially if you have a large workforce, but the benefits are enthusiastic, skilled employees who are happy and loyal to your organization. You can always make use of performance management software to track and monitor your many PDPs.
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Adapting your performance management system can be a challenge, especially if you have maintained the same approach for years. Organizational change takes a while and requires a great deal of effort and determination. However, if you take your first steps today, you won't regret it. Ultimately, everyone benefits: Managers will be less stressed, employees will be much happier and engaged, and companies will be far more productive.