Performance Management Trends for 2019

Performance review

As we move into 2019, organizations of all sizes are once again reviewing employee performance management strategies.

In a field as dynamic and fast-changing as HR, the new year is seeing HR teams trying new approaches that include recent scientific insights, productivity research and technology developments.

The traditional annual review is on its way out at more and more organizations, with increasing focus on continuous performance appraisal and management.

Companies are refining the metrics they track and the amount and types of employee feedback they include in their processes. Managers are expected to coach employees to help them realize potential. More companies are looking to separate goals setting and evaluations from compensation discussions. And jobs, schedules and training are getting more personalized.

While HR Pros have been reading about some of these trends for a couple of years, actual rollouts have mostly been limited to a few large corporations.
Here are six trends expected to gain traction across a much wider set of organizations during 2019.

The (lingering) death of the annual review

HR pros often struggle to get managers and employees to treat performance management as a positive opportunity for growth rather than an unavoidable, but deeply uncomfortable, ritual. Taking a fresh approach to how you think about feedback might make a real difference. Besides helping to keep everyone aligned with the organization’s strategy, building a culture of open communication and constant improvement helps all employees to guide their own professional development in ways that are truly meaningful to them.

Many of the HR practices we’ve taken for granted for decades were developed to manage a largely industrial workforce whose job functions changed very little from year to year. Performance metrics were based on concrete production targets.

Today, most employees are tasked with adjusting to constantly shifting targets as organizations seek growth in a constantly shifting competitive environment.

In such fast-changing workplace, employees don’t just want real-time feedback. They need it to be successful, so your organization’s success might depend on making that happen.

HR software provider Impraise reports that more than 70% of users say that getting regular feedback from peers and managers helps them improve their performance.

How you design your feedback processes can make the difference between an engaged and energized workforce and one where both managers and workers dread and resent performance reviews.

Flipping the feedback loop

Most of us are familiar with the concept of the “flight or fight” response to anything we perceive as a threat, a response that comes from one of the oldest and least evolved structures in the human brain. Unfortunately, although understandably, most humans respond to even well-intentioned criticism much the same way they’d react to a physical threat — they switch from thinking to reacting. And that isn’t a one-way street. Research shows that both giving and receiving feedback are stressful — they feel like conflict and we prepare and react accordingly.

That has a real impact on how employees — and supervisors — perceive performance management, whether in an annual sit down that ends with numerical rankings or a continuous communication model where supervisors give feedback to workers weekly, or even daily.

So, is there a solution to this deeply seated, brain-based problem? According to research published by the NeuroLeadership Institute (NLI), the trick is to flip the feedback loop on its head.

‘Crowd-sourced’ performance assessments

Instead of structuring performance discussions around GIVING feedback, the researchers recommend training everyone — employees, supervisors, managers and execs —to instead ASK for feedback on a regular basis. That puts the asker in a position of control and reduces the stress reaction. It also means that everyone needs to think about specific aspects of the job they want to discuss before they begin the conversation.

NLI’s research indicates you can help form a healthy organizational culture by encouraging a common habit of thoughtful and honest communication by changing your feedback. Other research by the Institute for Corporate

Productivity (i4cp) and the Center for Effective Organizations (CEO) supports the idea that organizational and financial results improve when positive and productive goal setting, performance assessments and career development conversations result in better employee motivation, engagement and retention.

For HR pros, that means training managers and supervisors to give regular feedback. But it also means training them to encourage employees to ask for feedback — and to share their own feedback with peers.

Moving away from “stack and rank”

Along with the move from annual and semi-annual reviews to continuous performance feedback, companies are revisiting how they evaluate and rate performance. Rather than following a rigid and often flawed “stack and rank” process of measuring performance, companies ranging from global tech giants to family-owned small employers are moving away from point-based assessments.

That doesn’t mean all assessments are going to become purely qualitative. Especially for production and sales teams, firm numeric targets remain critical to evaluating performance. But most employees — especially the majority in the middle who are doing a good job but aren’t either stars or laggards —benefit more from continuous guidance and coaching than from being ranked and rated against inflexible goals that are handed down once a year.

With a continuous performance management system in place, employees can be evaluated on how they’ve responded to feedback from peers and supervisors and whether they’ve adapted to changes in company goals or individual job targets over the year.

Coaching

Employees come into a new job with a set of talents and competencies but how well they adapt and improve depends a lot on how —and how well — they’re coached. Companies will focus a lot on how to improve their coaching over the next 12 – 18 months.

Coaching can include sharing with employees examples of what has and hasn’t worked in the past and discussing how those examples relate to overall strategic goals. With technology speeding up how quickly companies can judge success or failure, those examples will move closer and closer to real-time, helping to drive lessons home.

Along with changes in how performance reviews are conducted, coaching helps to focus discussions on what is needed for future success rather than on post mortems.

Separating evaluations and compensation

Many companies that have moved to continuous feedback have also taken the next step and separated performance evaluation from any discussion about compensation.

The idea of disconnecting formal performance evaluations and compensation decisions feels counter-intuitive. Most companies have always linked evaluations, comparative ratings and compensation. Top performers get above average compensation and increases. Poor performers see below average pay and most are compensated around the market average for their jobs and seniority.

The problems with this approach also cluster in the middle, however. There is always a limit to the available compensation budget. If a manager has already decided to pay one employee slightly more than his or her peer, they might be tempted to tweak ratings to justify the difference. When employees find out about the ratings difference (and they always seem to find out) they are likely to be demoralized, not driven to work harder. Over time, employees come to see things as a horse race and are more likely to undercut each other instead of working together.

Job Personalization

Personalization is moving out of the realm of business-to-consumer commerce and into almost every arena of human activity. For HR, this trend means empowering employees to find the best path to mastering skills needed to do their jobs. That translates into a need for customized training that focuses on the specific requirements of a job and individual employees’ specific skills and skill gaps.

That can be tough for small HR departments. The good news is that there are a growing number of technology solutions that can help even the smallest HR team develop and implement flexible, personalized programs. When those are tied closely to continuous evaluation and feedback, training plans can adapt more quickly to changing job requirements — and become more relevant to employees.

Increased focus on emotional health and stress management

Every HR pro knows employees’ mental health is just as important as their physical health. And when employees aren’t getting what they need, their work suffers. Research by the British government found that the number of people who left their job due to mental health was 50% higher than the number who left for physical health reasons.

The best way to help? Communicate, communicate, communicate. It is important to create an atmosphere of understanding and openness where employees dealing with emotional stress and more serious mental health issues are comfortable discussing any difficulties they are experiencing with work.

Employers can help by creating a framework for discussion and finding assistance, when appropriate.  Here are some ideas from experts in the field:
Assess the workplace by reviewing existing data, conducting anonymous surveys, and identifying the appropriate people or departments that will be responsible for overseeing programs.

  • Understand common risk factors and examine where workplace processes and procedures might be changed to help avoid those factors
  • Ask employees for their input, including suggestions for practical improvements
  • Research best practices and
  • Create a yardstick to measure the effectiveness of programs

One of the main things that negatively impacts employee mental health? Feelings of isolation and loneliness in the workplace. And, thanks in part to technology, employees are feeling lonelier than ever.

Regular check-ins with both onsite and remote employees — in person or via a phone call, team celebrations and company-supported social activities are all low-cost ways to keep workers feeling supported and recognized.

The trends for 2019 include truly fundamental changes to how HR – and the organization – looks at performance management and compensation.

But for HR, the one thing that stays the same is the certainty of constant change. Your ability to adapt and evolve is what makes an HR professional so valuable.

Tim McElgunn
Tim, a member of the HRMorning staff, is a veteran writer and editor. His background includes producing and managing publications for Bloomberg, Frost & Sullivan, Gartner Group and McGraw-Hill. Email: tmcelgunn@hrmorning.com