By David Cohen –
Performance management is on the way out. In its place, “Agile Performance” Improvement is on the way in.
Agile Performance Improvement calls for frequent and ongoing conversations between manager and direct report, eliminating in part or in full the annual formal review and rating scale. Since its inception around five years ago, over 70 large multinationals have embraced the approach.
Here are 9 criteria I recommend adopting to make the approach successful:
- Establish authentic behavioral criteria
Before you begin, you need clear authentic behavioral criteria rooted in your organisation’s values that are job-family specific behavioral statements. Define what success means to your employees and managers in concrete terms. Off-the-shelf behavioral competencies that are not authentic to the culture of the organisation are unlikely to drive people to successful execution of the goals.
- Engage employees in building the process
Before implementation employees need to see the pros and cons of the new approach. If you get them involved through a design-thinking process, they’ll feel like owners. Power accrues from the pride of authorship coming from employees and not human resources or a consultant.
- Make goal-setting fluid
Goals must be fluid – and adjusted as the year progresses and priorities shift. A system where at year’s end managers bring people back to the goals originally stated, but not worked on, defeats the process. Goals should be incremental, and reviewed every three months during the check-in to ensure progress to a desired outcome at the end of the year.
- Anchor to business strategy
The focus must be on the business strategy. How does the program improve productivity and engagement? How will it advance the organisation’s goals? The organisation needs to share the bigger picture, strategy, and the reasoning behind the strategy to give people pride in their contribution.
- Build in peer feedback
If goals are fluid and people need help, are quarterly check-ins enough? One way to augment manager-report conversations is to build in peer feedback that is more frequent and “in the moment.”
- Think dialogue, not coaching or conversations
Coaching puts a lot of pressure on the manager to make something happen. Accountability for meeting the goals rests with the individual. I recommend a process of dialogue in which people assess the situation with a common objective to figure out how to improve performance and generate success.
- Feedforward, not feedback
In the traditional annual formal system, the focus is on what the person did not do last year. The discourse is on what caused issues or “failures” to meet goals. It focuses on the negative. Instead, focus on what they can do to be successful going forward. Too often what they did not do last year is not relevant to what they need to be successful in the year ahead. Marshall Goldsmith calls this “feedforward” rather than “feedback.”
- Take the elephant out of the room
Compensation in the form of bonuses and merit pay is closely linked to the traditional performance review. Many organisations even allocate the budget for bonuses and merit pay in advance of the conclusion of the annual reviews and almost always award it all, making the exercise somewhat pointless. The performance improvement process should be focused on achieving improvement and objectives, not satisfying predetermined bonus criteria. I advocate separating bonuses from reviews by making them a transparent part of overall compensation from the outset. Minorities and women are particularly concerned about fairness in evaluation systems tied to subjective reviews.
The majority of organisations benefit from a more dynamic approach that engages people in an open conversation – one that helps them develop the desired behaviors and skills they need to succeed in alignment with the organisation’s values and strategic objectives.
David Cohen is Human Resources Professional based in New York and Director, Human Capital, American Securities