Performance Management and Cultural Alignment

Companies with a coaching culture are more than twice as likely to have effective performance management than the average company, according to new Brandon Hall Group research.

Performance management has been broken for some time. But what if the reason it has been so unsuccessful is not because of the tools or the processes, but the alignment with the organization’s culture? Check out this finding from our 2016 Performance Management Study:

Culture plays a significant role in performance management success. Overall, 28% of respondents said their PM program was effective or very effective, but that number rises to 42% for organizations that say they have collaborative cultures, and 61% for organizations that say they have coaching cultures. shutterstock_190772942

Wow. Companies with a coaching culture are more than twice as likely to have effective performance management than the average company.

The answer lies in the direction of performance management as a discipline. Our research shows it is not productive or constructive for managers to save up their feedback to blast the employee with 12 months’ worth of comments and criticism. Even 12 months’ worth of praise is not as help as praise given consistently to reinforce good performance and motivate future performance.

We’re seeing a slow growth of employee-focused activities that enhance the employee experience while still delivering value for the business. This includes everything from coaching and informal feedback to shaping managers into development advisors for their employees to help them grow and succeed. But there is still a struggle in determining how to provide structure and consistency while still keeping the employee at the center of it all.

Process vs. People: Creating the Right Balance

According to Brandon Hall Group’s 2016 Performance Management Study, nearly three quarters of organizations say their performance management process is more process-focused than people-focused. For instance, the goal setting, assessing, and review process is at the forefront instead of incorporating elements such as employee strengths, in-the-moment feedback, recognition, and rewards. Perhaps that is why just 28% of companies say their current approach is an effective method for managing employee performance.

Traditional performance management does not deliver value for companies and creates an adversarial relationship between employer and employee. By gathering information on how employees are performing once or twice a year, performance management seems more punitive than productive. In addition, traditional performance management is not tied to business outcomes or overall organizational success.

When surveyed about what has changed with existing programs, companies touched on some areas that clearly indicate a shift in the traditional approach.

  • 18% supplanted annual discussions with informal, frequent feedback
  • 14% eliminated use of a forced ranking system
  • 11% replaced annual goal-setting with near-term goals

These three items are a stark contrast to the performance management processes of old: they are focused on actual business and individual performance. But, the percentage of companies actually doing this shows that much opportunity remains.

Case in Point: JDA Software

This focus on improving performance, instead of simply recording previous accomplishments and errors, is reflected in the direction JDA Software took with its program.

In a case study published last year, I examined how JDA replaced its traditional, lengthy appraisal forms and ensured frequent alignment between managers and associates so that they could constructively discuss performance, development and career aspirations in a series of connected conversations.

What about your organization? How is your current process working in terms of driving business results? Are you still doing the traditional once-a-year approach, or have you changed it to improve the employee experience?

Ben Eubanks, HCM Analyst, Brandon Hall Group


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