Insights

Turn your performance management process into a driver of engagement

Overview
Published on: October 26, 2021
Subjects:  Total compensation, Performance and bonus

Given the current labour shortage and employee exhaustion against the backdrop of the pandemic, organizations must now, more then ever, differentiate themselves if they want to attract, retain and engage talent. At PCI, we believe the performance management process can—and must—be part of the solution to help organizations execute their strategic plan by rallying the troops to achieve greater organizational performance.

For many years, the HR community has been saying that the current performance management process needs to be updated, because it doesn't seem to be meeting either managers' or employees' needs and consequently isn't delivering the expected benefits.

According to a survey of more than 200 organizations conducted by PCI1 this past May, over half of the organizations have reviewed their process in the last two years (56%) or plan to review it in the next two years (67%). The same survey found that 57% of employees and 49% of managers are not particularly enjoying their organization's current process.
 

Let's see why, and more importantly, how organizations can put their performance management process at contribution to achieve their goals.

New needs, same approach?

Market globalization, demographic issues, technological advances, climate change, pandemic... All of these factors are impacting the workforce and are pushing the job market to constantly evolve. Not to mention that each new generation entering the job market brings different needs and realities.

Today's employees also place much more importance on skills development. They expect feedback, training, coaching and opportunities for growth. But most of all, they want their work to be meaningful and understand how they can better contribute to the success of their organization, which is actually positive.

In this backdrop, the traditional approach of meeting with employees once or twice a year to assign them a performance rating is no longer the way to go. Managers need to shift from one-time formal evaluations to a continuous performance management approach. This more agile approach has been proven to boost employee engagement and increase overall organizational performance.

Continuous performance management: a powerful driver of engagement

Continuous performance management involves regular, consistent employee feedback and coaching, while maintaining a focus on evolving organizational priorities to create a high-performing, agile organization.

Although this is the current trend in performance management and over 60% of managers support it1, many fear it will increase the amount of administrative work: more management time and more one-on-one meetings on top of their regular responsibilities.

However, adopting this approach doesn't mean increasing the number of formal evaluation meetings. It simply means incorporating new feedback and coaching habits into the manager's day-to-day activities, for example, during project follow-up meetings, when reviewing an employee's work or even during informal water cooler discussions. The goal is not to formalize the process or to document it continuously. 

And it also doesn't mean that formal meetings during the year are no longer needed; they're still an important way to assess if employees are meeting objectives and discuss their professional development.
 

That said, for these discussions to be part of a continuous management approach, organizations must ensure that managers have the necessary coaching skills.

The manager-coach: driving the high-performance organization

"Not only are managers critical, they also drive team performance." – Google's Project Oxygen

In today's high-performance organizations, managers need to be more than experts in a specific field who have been promoted to a management position. They need to be nurtured to become true manager-coaches who are focused less on team management and more on their people's progress and performance. They need to be skilled in providing constructive, positive feedback and adopt engaging approaches. They also have to know how to adapt their approach based on their team's various positions and individual profiles. HR leaders can properly equip their managers by identifying their needs and offering them customized training.

That said, continuous management isn't a one-way process. Employee are playing an active role by tracking their objectives and asking for coaching and feedback as needed. But is that enough to make them feel truly engaged?

The meaning of work: a pillar of engagement

Engagement is a process by which members of a group feel a sense of loyalty and trust toward one another, which helps the group be more effective. And as we said before, to feel engaged, employees want to understand their contribution to the organization.

At a basic level, the organization must be transparent about its goals and priorities. It must also provide tangible mechanisms for aligning organizational priorities with team and individual objectives. This enables employees to find meaning in their work and to better understand how they can contribute to the company's success and priorities.

To take full advantage of the agility offered by these mechanisms, it's important to periodically review the organization's priorities (such as quarterly), and to realign team and employee efforts as needed.

Key takeaways

The continuous performance management approach increases employee engagement, enhances the manager's role and improves organizational performance. Organizations that have adopted this approach report having achieved better results than their competitors.2

Senior management and HR leaders have every interest in getting managers to adopt this approach so they can achieve their objectives, be acknowledged for their leadership and have their team's contribution recognized within the organization.

And how does all this tie in with compensation? We'll cover that topic in an upcoming article.

Let's continue the discussion...

If you'd like to receive the results of our pulse survey on performance management practices1please contact us.

You can also watch our continuous performance management webinar (in French)3.

Watch the webinar

Authors

  • Marie-Eve Boyer, CPHR, Consultant
  • Dominique Thuot, MBA, Associate

Sources

1Pulse survey on performance management practices, PCI Compensation Consulting, May 2021
2Betterworks Research, 2019
3"Continuous performance management: driver of engagement?" workshop presented by PCI Compensation Consulting as part of the Ordre des CRHA's "Journée Boîte à outils," May 26, 2021

Other sources:

  • Léger survey in collaboration with the OCRHA, "Les travailleurs québécois et l’évaluation de rendement," March 2015
  • Employee Engagement: A Review of Current Research and Its Implications, The Conference Board
     

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