Performance management is far from a stagnant concept. It’s an ever-evolving field that adjusts and adapts to suit the needs and preferences of each generation. It is only by questioning the way we operate and having the tenacity to change that our companies can genuinely achieve their potential.
As the years go by, we have seen performance management processes fall in and out of favor. Some organizations are more quick to adapt than others, but anyone involved in management and HR will notice the trends. Modern businesses, for example, are moving away from single annual performance reviews and preferring continuous performance management as a means of inspiring great performance. Similarly, performance ratings were once commonplace, but now evidence has come to light to suggest that they are more detrimental than advantageous to employee productivity
It can be hard to keep track of current performance management trends and to know which tools to implement. To make life simpler for busy executives and managers around the world, below you will find the leading performance management trends that are set to take 2018 by storm.
1. We will start to prioritize employee experience
Over the past few years, the words ‘employee engagement’ have been HR buzzwords that have warranted a number of compelling articles and prompted a lot of discussion. While employee engagement is still undoubtedly important, as we move into 2018 there will be a greater focus on employee experience — a concept that encompasses employee engagement as well as company culture and physical environment. Employee experience is defined as “the sum of the various perceptions employees have about their interactions with the organization” and has been termed ‘the future of work’ by Forbes.
Companies are starting to take note of the importance of employee experience, and this concept is likely to take off in earnest in 2018, propelled by the increased transparency of the digital age and the influence of the millennial workforce. Businesses are beginning to employe Chief Employee Experience Officers to keep standards high. Companies will start to examine their employee journey map, experiment with technology that aims to enhance employee experience and improve company communication. It is likely this will have a notable effect on employee performance and discretionary effort as we near the start of a new decade.
2. Every workplace and performance management process will strive toward simplicity
As noted, employee experience is a hot topic for companies around the world. In order to get the most out of our employees, we need to pay more attention to what inspires and motivates them. We also need to remove the red tape and unnecessary complications in order to make their work life more streamlined. Doing so ultimately boosts productivity and saves your company time.
As such, it is highly likely that in 2018, companies will begin to facilitate and simplify their workplace and performance management processes, making them less formal and more intuitive. This is hardly a new concept. In fact, Michael Armstrong stressed the importance of simplicity in his Handbook of Performance Management, claiming that a performance management system should be “ridiculously easy to understand”. However, over time, processes can become convoluted, and unnecessarily feature-rich technology can become more of a hindrance than a help.
In this new year, it is likely that companies will pay more attention to the feedback provided by their employees. Businesses will determine what processes of theirs are superfluous to needs, which are overly complex, and what technology is slowing them down. This will have the benefit of saving time, money and resources, while keeping employees happy and productive.
3. The quality and nature of regular performance discussions will become paramount
Those who keep up to date with HR and performance management trends will be aware of the fact that frequent performance reviews have been strongly pushed over recent years. We know that they are more effective than yearly performance reviews. They accomplish more and they provide an opportunity for employee and manager to develop a trusting, honest relationship that is conducive to more meaningful work.
While the frequency of performance reviews is certainly important, it is not the sole consideration. As continuous performance management (otherwise known as agile performance management) becomes less of a disruptive HR trend and becomes more widely acknowledged and incorporated, companies are starting to realize that the nature of the meetings are just as important. It is not helpful to have 12 — or even 24 — performance discussions per year if the one-to-ones aren’t helpful or inspiring. These conversations need to be future-focussed, high-quality, and developmental in nature.
To make sure these regular performance reviews are providing value, companies in 2018 will start training managers on how to conduct meaningful performance reviews. After all, without appropriate training and assistance, managers won’t be in the best position to coach and guide their employees, meaning that the company isn’t likely to progress or advance.
4. Performance management data will still matter — but the focus will shift
Data has always been a focus in HR. Quantitative information has been instrumental in guiding our decision making, recruitment, and compensation. While it is unlikely that data will become less of a focus in 2018, it is reasonable to say that, in terms of data, our focus will shift noticeably from employee to management.
Traditionally, performance management data has been focused more on performance ratings and appraisal completion rates. This data is all about measurement — measurement of the employee, in particular. In 2018, we can expect the focus to be less on measurement and more on improvement, meaning it is likely that the more valuable data will center on management behavior. Specifically, it will be useful for companies to look at information such as how often performance discussions were held. Data regarding the effectiveness of management will also be essential, considering the effect managers have on overall employee engagement levels.
5. Performance-related pay will come under fire
Performance-related pay has become a sticking point for companies as they transition to a more agile form of performance management. Many businesses find it hard to determine performance-related pay, given they have abandoned ratings and are opting for a more qualitative, forward-thinking approach to management.
One large shift in management often prompts another, and it is likely that as we move into 2018, the concept of performance-related pay will become redundant. Instead, it is likely that pay decisions will be based on market rate, company performance, and responsibility. For companies unwilling to let go of performance-related pay, there are other recommendations on how to incorporate it into continuous performance management. Regardless, it seems clear that performance-related pay will be a hot topic in 2018, and one subject to radical change.
6. Businesses will begin to consider how to accommodate Generation Z
While there is still a lot of discussion regarding millennials and how they are impacting the workplace, the reality is that the older millennials are now well into their 30s. The millennials aren’t coming; they are here, they have been here for quite a while, and they are dominating the workforce. Moving forward, it is Generation Z that will be demanding our attention and prompting changes to our performance management systems as we prepare for the influx of eager, young talent.
Generation Z are those individuals born after 1995. They are a generation that has grown up and embraced technology, social responsibility, and personal growth. In 2018, companies will have to learn how to welcome and motivate this demographic.
7. Companies will take flexibility more seriously
In 2017, it became increasingly clear that flexibility is a perk desperately sought after by the average employee. This was confirmed by a Gallup report, which listed flexibility as a key factor that could influence an employee’s decision to leave or take a job. The demand for flexibility is going nowhere, so in 2018, companies will have to seriously address how they will adapt their performance management systems to accommodate flexibility.
There are a number of ways companies can offer flexibility. It can come in the form of flexitime, remote working options, job shares, or untraditional work hours. What companies are able to offer will vary depending on the nature of the work, but it is clear that flexibility is not only a factor that will attract great talent; it will also go a long way to retaining existing, valued employees. For this reason, 2018 will be a time when companies have to seriously question their flexible approach going forward.
No organizational change is easy or straightforward. They will always take time and dedication to enforce, and it is likely that you will run into issues or dissent along the way. However, the only way your business will really evolve and advance is by taking chances and adapting when needed. Show your employees you are dedicated to them, and they will prove themselves loyal to your company. By incorporating a number of the trends above and moving forward, you will become a force to contend with in 2018 and beyond.
About the Author: Stuart Hearn is an HR professional with over 20 years of experience. He is the founder and CEO of Clear Review — an intuitive performance management software solution. Stuart and his team are passionate about employee performance and engagement and have helped companies of all sizes enhance overall productivity.