Events

It feels like we have been talking about performance management forever. In our conversations, organizations are telling us that performance management practices are not just ineffective; in some instances, they’re painful. In fact, when we recently asked managers in one organization how performance management was handled, our two favorite answers were: “with a pointy stick” and “like it’s 1979.”

Why this is important:

We are at least 7 years into the performance management “revolution”, and yet, many (rightfully) have a healthy skepticism about whether the new approaches are any better than the old. In fact, recent research by McKinsey & Company found that 54% of respondents still don’t believe that performance management has a positive impact.

Despite myriad articles and case studies about simplified ratings (or no ratings at all), separate performance and compensation conversations, real-time feedback and the technologies that support it, agile goal-setting, and coaching and development as a part of performance management, most organizations would admit that performance management is still a struggle.

Today, we’re launching a formal research study, sponsored by Glint, into what organizations are doing with respect to performance practices and how effectives those practices are.

Hypothesis:

Peformance shouldn't just be managed; it should also be enabled.

The premise for this project is that we have moved from an era where organizations only had to concern themselves with performance management to one where enabling performance is equally as important.

In the beginning…

A hundred years ago, performance management was much less complicated than it is today. Organizations were looking for a way to understand the return on their people investment. During the first industrial revolution, as assembly lines and other methods for increasing efficiency made an appearance, people were plugged into those systems and processes.

The worth of an employee was much more easily quantified than it is today. Tasks had a “right” way, and because measures associated with those tasks were objective (e.g., cycle time, number of widgets), it was easy to determine how well an individual performed based on those numbers. It created a transparent and equitable way to compensate employees.

The times, they are a-changin’…

However, we’re not living through the first industrial revolution; we’re living through the fourth. And there are some differences.

First, the work organizations are asking employees to do is different and much harder to measure. There are increasingly fewer ‘right’ ways to do a task because employees are continuously adjusting to changes in both internal and external environments. Instead of a set way of doing things with a set way of measuring things, employees are often left with nebulous job responsibilities and organizations are left with even more nebulous ways of assessing them.

As a result, “performance” has necessarily become less of a technical term. Instead of objective measures, shifting goals and strategies make it necessary to use more subjective measures when appraising employee performance.

Second, employee expectations have also shifted. As our societies continue to evolve toward a knowledge and information economy, compensation has become only one of many factors that keep employees with an organization. Employees now choose roles and tasks, not solely based on compensation, but also on things like how interesting they find the work, whether there is room for growth, opportunities for recognition, and what types of skills they can learn.

These expectations have prompted organizations to supplement traditional performance management processes. They are no longer just worried about the outcome or throughput; if organizations invest in individuals, they also want to measure their propensity to learn and their attitudes as a part of their overall performance.

The result…

As a result of these changes, many organizations have implemented a hodgepodge of old practices that don’t quite fit current conditions, and new practices that are applied haphazardly. As organizations try to blend the old with the new, gaps are introduced that result in frustration and uncertainty, both for the organization and for their employees. We currently see that frustration in the market. Gaps include:

Focusing on management or enablement, but not both

It is likely that during this last performance management revolution that we threw the baby out with the bathwater. Performance appraisals are an important part of how organizations compensate and create fairness, and throwing them out has caused havoc in more than one company.

As we begin to adopt some of the new ways of doing things, it becomes doubly important that we figure out how we fulfill some of the more traditional reasons for performance management. (By the way, if you’ve managed to create performance management practices that balance both of these, we would love to talk to you.)

Treating performance as a stand-alone challenge

Currently, most organizations look at performance and performance management as a separate set of practices and measures. However, how employees perform is ultimately the culmination or result of all other people practices.

This means that incentives, recognition, compensation, wellness programs, career management, coaching and mentoring, and engagement programs impact the performance of the organization. Truly enabling performance means taking a holistic approach to people practices by looking at all parts of the organization and understanding how they impact individuals and their ability (or willingness) to perform.

Missing the perspective of the employee

Most modern performance management practices have been conceived of by leaders of organizations and management consultants. Strangely, a lot of organizations limit upstream feedback to engagement surveys and the occasional 360. In the case of performance management, we think employees are in a unique position to tell us what would be useful to them in order to perform better. As a part of this study, we will be asking them.

Ignoring inherent bias

Performance management processes as implemented in most organizations are inherently biased. Most processes are largely subjective, no matter how many times a year a conversation is conducted. While a manager’s and peers’ opinions are important and valid to appraise performance, new technologies and access to new data can provide additional information that may create more fairness in the process and provide the organization with much more information about who is performing well at what tasks and in what instances.

We want to explore that further.

Why we care:

It seems like everywhere we look folks are talking about employee experience (EX). In fact, a global 2018 study of five hundred CHROs, found that 83 percent of organizational leaders believe a positive employee experience is crucial to the organization’s success.¹

Why is this the case? Some folks mention the hyper-competitive talent market and the expanding need for innovation. However, an equally critical reason is financial: many believe there is a clear connection between employee experience and customer experience (which should then drive revenue).

While this makes sense intuitively, there are still many unanswered questions:

1. What, exactly, comprises employee experience?
2. What is the relationship between employee experience and employee engagement?
3. How does employee experience impact customer experience (CX)?²
4. What is the measurable impact of employee experience on customer experience?

Understanding the answers to these questions will allow leaders to make much more strategic employee experience investments.

This is why we are launching a new research initiative, sponsored by Medallia, focused on these questions. We have already begun our analysis of existing literature and are actively looking to interview organizational leaders (is that you? Email us!) who can share their stories (the good, the bad, and the ugly) of how they have used employee experience to impact customer experience.

Hypotheses:

There is not a clear definition of employee experience. For example, some believe that employee experience is the result of connection, meaning, impact, and appreciation that employees find in their jobs – and builds on the foundations of culture and engagement³. Others see employee experience as being more akin to customer experience – using technology to make employee life more personal, predictive, and seamless⁴.

Though neither of those definitions of employee experience are aligned, they are different from employee engagement, which itself does not necessarily have a clear definition. For example, some⁵ defined employee engagement as the harnessing of organization member’s selves to their work roles. Others,⁶ stated it is a positive fulfilling, work-related state of mind that is characterized by vigor, dedication, and absorption. And, yet another academic⁷ defined it as an “employee’s willingness and ability to contribute to company success by freely giving the extra effort on an ongoing basis.”

Finding clarity on the differences and similarities of employee experience and engagement is our starting point.

Despite the competing definitions, research^8,9 indicates that both employee engagement and experience influence customer experience and satisfaction, but the way they do that may be different. To better understand where and how organizations should invest, we need to have a framework for thinking about all of these concepts.

In addition, we believe there are insights that can be drawn from the customer experience world,¹⁰ such as thinking about experience as both static (e.g., a specific point-in-time or interaction) and dynamic (developing collectively over time), that can be applied to our understanding of employee experience.

Finally, we believe that organizations where employees can take action on employee experience and engagement insights tend to see better customer experience. To create a culture that enables these actions, organizations need to consider desired behaviors, leadership activities, information sharing protocols, decision-making rights, incentives and technology.

This Project:

Some of the ideas this research project will explore include:

Please take a few moments to share your comments with us!