New Insights on Performance Management – Asrar Qureshi’s Blog Post #996

New Insights on Performance Management – Asrar Qureshi’s Blog Post #996

Dear Colleagues! This is Asrar Qureshi’s Blog Post #996 for Pharma Veterans. Pharma Veterans Blogs are published by Asrar Qureshi on its dedicated site https://pharmaveterans.com. Please email to aq.pharmaveterans@gmail.com for publishing your contributions here.

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This Blogpost is based on a data published by McKinsey recently. Which came out of survey of 1200 employees at various levels in 11 countries across continents. Link at the end.

Performance management stands on four pillars: goal setting, performance review, ongoing feedback, and rewards. Performance management systems are therefore, designed along these lines. Many years ago, the MNC I was working for, started MBO – Management By Objectives. We got training on how to make objectives that would be measurable, and how to give weight to them. As years passed by, many organizations shifted to KPIs – Key Performance Indicators. Performance reviews were always done at all levels. At various positions, we reviewed performance directly, and reviewed the reviews done by our managers. Feedback was of course given properly at the time of review and on many occasions in between. Connecting directly to rewards remained under discussion, and various models were experimented with.

If even formal performance management is more than half a century old, what is new to discuss now? The working models have changed, and it requires that performance measurement.

Remote work was exception before COVID19 but became a norm during and after the pandemic. Employee burnout, and work-life balance have also taken new significance, as both were impacted during the pandemic. For these reasons, it is now seen that the companies are considering major changes to how performance management shall be done. However, it is a complex question as to what changes should exactly be done. Various models have been suggested by various people, but they lack data backup. We have here a dataset from McKinsey which could help to make more informed decisions.

Performance Management Framework

“The most resonant overall survey finding was this: performance management is most effective when it features strong, consistent internal logic that employees understand”.

Appraisal time in many organizations in Pakistan used to be a stressful time, even politely speaking. The employees ran around scared that their managers would not do justice, or that they might favor some and not others. The entire emphasis was on results and numbers, and the irony was that no one bothered how the numbers were achieved. In recent years, some companies have shifted from results-based goals to new measures balancing what an employee achieved with how they achieved it. The logic is that this is a more holistic way of performance measurement. 

The survey findings show that simplicity and consistency are most desirable features of a performance management framework. Simplicity ensures that it is possible to develop common understanding easily, and consistency is needed to keep the system reliable.

Goal Setting

Goal setting is a the most basic pillar and a critical tool for measuring performance. 72 percent of respondents cited it as a strong motivator. However, goal setting standards are not very well understood by everyone.

The survey revealed that employees felt more motivated when their performance goals included a mix of both individual and team-level goals, and when their goals were clearly linked to their company’s goals. 

The survey also suggests that the process through which a goal is set is as important as the content of a goal. Employees expressed greater motivation when they were involved in the process of goal setting, and when the goals were updated throughout the year to align with the team and company priorities.

The managers should spend time throughout the year with staff to keep the goal-setting dynamic and interconnected.

Performance Review

As employers try to come closer to employee expectations, many have made changes to ratings. Numerical scales, such as from 1 – 5 have been replaced with descriptions like from ‘below expectation’ to ‘exceeds expectation’. The shift is apparently nominal, but some staff believed they related more to description rather than getting a number.

Another very important factor identified in the survey is that employees were significantly more motivated by performance reviews when these were done by a skilled manager. It was even more so when the same managers were involved in goal setting and were therefore well-informed when the assessment was done.

Feedback

Only 21 percent of respondents who had no development conversations, as part of performance management, felt motivated with the performance review. On the other hand, 77 percent employees felt motivated as they received ongoing feedback.

Managers’ training is critical in not just doing a fair review, it is also required to provide constructive, developmental feedback. 25 percent employees overall, and 34 percent working in large companies cited lack of skill and capability of their managers.

Both employees and managers mostly find the process of review and feedback stressful and taxing, therefore, many companies limit it to once a year. Given the importance of feedback, and as revealed by the survey, it is advisable to increase the frequency. 

Rewards

Money is always likely to motivate. The survey also suggests that as work-life expectations continue to shift, non-financial rewards like opportunities for upskilling or professional development, can play an important role in performance management strategies. Employees were also more likely to perceive that the performance management system of their company was improving overall company performance, when nonfinancial rewards were used. The nonfinancial rewards, it shows, can serve as a critical booster for the success of an integrated performance management system.

Previous research by McKinsey has shown that nonfinancial incentives should appeal to five sources of meaning: society, client, company, team, and self. Nonfinancial incentives could include an immediate manager’s praise, an opportunity to lead a high-profile project, greater autonomy, or more workplace flexibility. 

A combination of financial and nonfinancial rewards, used thoughtfully, can work with the greatest effect.

Sum Up

Shifting workplace norms, economic volatility, and increased competitiveness have made it necessary to revisit the performance management systems of the company and bring them up to a level where employees relate to it and deploy it to truly improve the overall organizational performance.

Concluded.

Disclaimers: Pictures in these blogs are taken from free resources at Pexels, Pixabay, Unsplash, and Google. Credit is given where available. If a copyright claim is lodged, we shall remove the picture with appropriate regrets.

For most blogs, I research from several sources which are open to public. Their links are mentioned under references. There is no intent to infringe upon anyone’s copyrights. If, however, it happens unintentionally, I offer my sincere regrets.

References:

https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/what-employees-say-matters-most-to-motivate-performance?stcr=392B4B8D82BE4B07B16F6136693B6F59&cid=other-eml-alt-mip-mck&hlkid=1541635bda3d49f3b35881fa4e4c796a&hctky=2208791&hdpid=5074b363-dd91-4bba-8cd9-2c6a7d3f64a0