It’s been puzzling that in the current environment, some companies are saying “we aren’t doing performance management this year. We’re just going to focus on the work.”
Why would a company eliminate a process designed to increase performance and engagement, just at the time things are monumentally ambiguous and difficult? From where I sit, there is no better time to double down on performance management.
That said, perhaps not performance management as it was done in the past—namely, by assessing people’s contributions. Instead, as it has increasingly been delivered by forward-thinking companies, who have reimagined these systems over the last decade to be more flexible, continuous, and focused on helping people be better.
Continuous performance management anchors on three main ideas:
- Review shorter-term goals often
- Deliver real-time feedback like a coach
- Focus rewards on team and innovation
This approach helps teams focus on the business and provides the more regular feedback and rewards to motivate and engage people in these difficult times. Let’s see what each one might look like.
Review Shorter-Term Goals Often
Today, businesses are having to react quickly to constantly changing state and local rules designed to keep employees and customers safe. The retail sector, for example, had to first close their brick and mortar stores, and move to a focus online; then it opened in some states for curbside delivery, and later had to figure out how to keep employees and customers safe once stores were open to the public again.
Agility is now a requirement, and in this chaotic landscape, it’s hard to focus on long-term goals. The annual goals you created at the start of 2020 are mostly likely no longer relevant, in some cases no longer attainable, and in others, have significantly underestimated the new business environment that has been the result of the current crisis.
Companies like Amazon and other online retailers are seeing incredible spikes in demand for their products and services. A recent poll on the NLI website with 225 participants revealed that 65% are adjusting their goal-setting processes due the COVID-19 pandemic, while only 16% are adjusting their annual reviews.
Goals are still important, even when the world is rapidly changing. But rather than focusing on annual goals, it’s more effective to create shorter-term goals that focus on the most important work—and to review them more often. For some companies, that could even mean daily check-ins.
Shorter-term goals reviewed more often mean employees know exactly what to work on, even when priorities are ever changing.
Create a Real-Time Feedback Culture
If goals are dynamic and shifting quickly, feedback giving must make a similar transition.
It needs to be real-time, especially when not just goals but so many things are changing so fast today.
To be sure, changing a feedback culture isn’t something you can do overnight. It takes time. But in my experience, it’s really the core of managing goals—and in particular, shorter-term goals. When goals have short timeframes, your window of opportunity to give feedback is smaller. Giving feedback more often becomes essential to ensuring employees know if they are on track.
A critical step involves making it easier for managers to give feedback and for employees to hear it. In other words, remove the threat that is created when someone says “I’ve got some feedback for you.”
Our research at NLI suggests the most powerful way to do this is create a culture of people asking for feedback a lot, versus trying to get everyone to give it a lot. When we ask for feedback, the threat level for both the asker and the giver is significantly diminished. One study showed that asking for feedback roughly halved the stress level for the giver, which is important as being stressed when giving feedback means you end up not doing it well, and avoid discussing the negatives.
Regularly asking for feedback delivers a number of positive benefits:
- Reduces stress for all sides of the experience
- Provides much faster feedback, immediately after an event
- You can ask from many people which is the only way to reduce bias in feedback
- You can get the specific feedback you need
If you can’t get people to ask for feedback, you can always ask people questions to help them reflect, and have more of a coaching conversation. If this sounds like a significant shift in behavior, it is. But there is a way to start making this transition to a more brain-friendly type of feedback. It starts with managers asking three questions:
- What’s going well?
- Where did you get stuck?
- What might you do differently next time?
By listening and engaging in a conversation, feedback givers help the receiver find their own insight, instead of simply doing all the telling. If the feedback giver really does listen, she or he will receive numerous insights into how the employee sees their own performance. When you fully understand what the employee is thinking, rather than assuming you know, it’s much easier to be an effective coach and build trust.
Focus Rewards on Team and Innovation
The last performance management practice to consider changing in this VUCA world is rewards.
Science and my experience suggest that companies should stop labeling employees with A, B, or C grades. No one wants to work hard all year long only to find out they are a C, especially this year when it will take tremendous focus and effort to just survive.
Performance reviews that allow for comparisons between employees result in the perception that they are unfair (e.g., Why did I get a C and she got an A?). Instead, researchers have shown that evaluating one’s current performance compared to past performance increases their perception of fairness of the process.
We don’t recommend ratings at all, but if your company isn’t yet in a position to remove ratings entirely, consider using a pass-fail rating instead of a multi-point scale. (Under a pass-fail system, anyone receiving an A, B, or C would “pass”; those who are “failing” would be on the way to corrective action, and would likely already be aware.) The elimination of the rating reduces the feeling of unfairness in the process.
There is a second and perhaps more important reason to do a pass-fail evaluation this year. Unlike working in an office, working from home has required employees to balance work with personal obligations. While some employees have only limited distractions, others are living with partners, children, or parents, all of which may take the attention and focus away from them during the workday.
Forthcoming data from a recent industry study suggest that while 49% of employees felt increased anxiety levels from one week to the next, some employees felt significantly more anxious than others. Individuals who experienced childcare management issues, COVID-19 infections, or reduction or furloughs reported significantly higher anxiety levels than those that managed increased health and safety issues, a negative impact on revenue and profits, or had to do no or less business travel as a result of the pandemic.
The takeaway: If the playing field isn’t level, it’s unfair to evaluate employees as if it were.
This might also be a year to shift your discretionary compensation programs (like bonuses) from those that rewards individuals to those that rewards teams. Recognize that in these difficult times, it’s about coming together as one to win. This can be done as a companywide bonus or be allocated to specific teams that excelled. Special recognition might also be given to those who found creative solutions to real problems caused by working remotely.
There is no better time to make a few simple changes in how we manage performance. Employees need to know what to focus on and if they are on the right track, just like they always do. It’s even more important when the track keeps moving.
So, to sum up, in this year of incredible chaos:
- Review shorter-term goals often
- Create a real-time feedback culture, focused on asking for feedback
- Focus rewards on team and innovation (and if you currently use ratings, consider using pass-fail)
Doing these three things will more fully drive performance and engage employees, even in this VUCA world we are living in.