Performance is often used synonymously with efficiency, productivity, and profitability. While this may not always be wrong, there are times when the performance of an employee may not match with the organizational objectives or the skills may need major uplift, which is where performance management comes in. Performance management has hence become the central focus of HR operations too. In the words of Josh Bersin, “Hierarchies were invented in an industrial society, and hold a little place in the digital age. We should look at ourselves as coaches rather than bosses if we want to build a better workforce. We need to be able to be agile, collaborate, and empower people.”

With the focus being shifted to a more personalized approach, towards skill-development, performance matrix, and feedbacks,

Here are some of the most noteworthy Performance Management Trends for 2020.

Continuous Performance Management Process

The appraisal system, one of the primary indicators of performance has been changing over the years. While the system has often accentuated the three touchpoints of the appraisal i.e. the goal setting, midterm review, and the final review, more and more organizations are now shifting to a holistic and continuous approach. This includes interaction and continuous discussions and coaching that organizations are now doing every month. This is widely known as check-ins or checkpoints or connect. The checkpoint elements include Goal setting, trans­par­ent com­mu­ni­ca­tion and col­lab­o­ra­tion, employ­ee recog­ni­tion, honest feedback, and employee development.

Goal setting is more of a collaborative process wherein employ­ees have better clarity about the organizational expectations and can cre­ate goals which com­ple­ment those objectives and make dai­ly deci­sions to fur­ther these objec­tives. This is enhanced with real-time com­mu­ni­ca­tion and build­ing healthy rela­tion­ships with col­leagues and man­agers and regular feedbacks, creating a continuous performance and appraisal management process.

Learning and Employee Development

The other facet of continuous employee performance management is employee development. It plays a critical role in employee engagement and retention. Honest feedback and interactions can deliver productive results only when it is supported by appropriate developmental approaches.

Training and development programs are created to act as motivators for boosting employee performance and productivity. The learning strategies and models used must target holistic employee development, identifying the skill-gaps to create radical career paths for the skilled workforce. An approach that can assist in attracting and retaining the best talents in the industry. This developmental approach begins with eradicating the stringent categorization that can otherwise demoralize the employees. With continuous development becoming the primary focus of performance management and a growing trend too, identifying the skill gaps and pinpointing the areas that need improvement becomes the prime objective.

Predictive and People Analytics

A complete picture is needed to analyze the actual position of organizational progress, the growth and also to evaluate the level of employee skills. For even charting a transient development plan, identification of the strength and weaknesses of employees, the average performance growth or drop of talent in comparison with previous years becomes essential. In addition, identifying the group of top-performing employees capable of consistently achieving the goals faster and pinpointing the areas where there is a general competency lag organization-wide and which needs considerable attention and developmental interventions can assist in making better strategic decisions in terms of organization-wide developmental reforms.

HR has been investing in people analytics that can help in integrating data with decision making. People analytics powered by AI and robotics is becoming an integral part of recruitment assisting HR to identify and interact with potential candidates, and also in L&D in helping employees explore career options¸ and in improving employee experiences. Data is being utilized not just for people analytics but also for predictive analysis. Turnover data and data on team interactions, wellbeing, and employee feedback can be put to use to make trend-based decisions and in creating an agile work environment and improving performance.

Rethinking Team-building Strategies

Organizations have now gradually come to the understanding that performance is no longer an individual function. The overall performance often depends on the team and the organizational environment. This realization has, in turn, increased the focus towards trust-building and employee satisfaction.

According to research by Michael Mankins and Eric Garton, Bain & Company, “the average company loses more than 20% of its productive capacity — more than a day each week — to “organizational drag,” the structures and processes that consume valuable time and prevent people from getting things done.” Team building is one of the major factors that influence productivity. “We’re supposed to have great people on board, but you wouldn’t know it from the output we get”, is the major concern that executives talk about according to Michael and Eric. This often depends on team allocations and team strategies rather than the employees themselves.

With the relative dearth of talented employees who can have a visible impact on strategy execution and performance, it becomes important how those “difference makers” are employed to increase their effectiveness. Rethinking the team-building strategy is hence a critical performance management trend.

Mankins further pointed out that extending trust to employees improved productivity and supported employee growth and development at top companies and that good talent management can compensate for some of the productivity that’s lost to organizational drag.

Focusing on Employee Engagement

Research suggests that “an employee who is satisfied with his or her work is 40 percent more productive than an unsatisfied one. But an engaged employee is 44 percent more productive than a satisfied worker, and an employee who feels inspired at work is nearly 125 percent more productive than a satisfied one.” Engagement is directly proportional to performance and hence a growing trend in performance management. Engagement is also used synonymously with experience, i.e. the thoughts, feelings, emotions, decisions and overall qualitative experience that the employee has while working at a company. The creation of a robust and productive performance management process calls for a shift from just employee interactions to creating an employee-oriented workplace environment, transparent conversations, and feedbacks for continuous improvement.

Embracing the Gig and Remote Workforce

According to a Deloitte report, “When asked to forecast the makeup of their workforce in 2020, 37% of survey respondents expected a rise in contractors, 33% foresaw an increase in freelancers and 28% expected growth in gig workers.” Organizations have forever focused on the in-house talent, however, with the expansion of the so-called gig economy and remote workforce, there is a rising need to focus on a performance management approach that comprises an insightful inclusion of all the variables. While HR focuses more on the methods to engage, nurture and develop the remote and Flexi workforce, the performance management approach should also embrace the dynamic and rapidly growing demographic. Flexible work arrangements, Work-from-home or telecommuting, and hiring specialized freelance workforce clubbed with continuous and transparent feedback mechanisms, etc. can assist in creating a performance management system that is truly agile and flexible.

Streamlining employee training, personalized support, etc. too, are growing trends in performance management. The Performance management trends for 2020 aren’t just about a management tool or software, the trends focus on various aspects that influence performance and produce positive outcomes, supported by HR functions and leave a positive impact on the entire organization.