2 Principles for Effective Performance Management

By Derek Irvine

Compensation Cafe logoRecognize This! – The next generation of performance management will be employee driven and focused on contributions. Social technologies are the tools that make it effective.

Across the landscape of companies redesigning performance reviews, there is a diverse range in the way those systems are designed and implemented. Yet regardless of the specific path chosen, the common thread is to streamline and make the evaluative process more efficient while also increasing validity.

At the same time, the big data revolution in HR has begun to provide a wealth of more information about performance events, in real-time and from different platforms. Performance management processes are beginning to take advantage of that trend, leveraging continuous conversations about performance and development.

As I wrote in a recent post on Compensation Cafe, social technologies and tools are well suited to take advantage of these changes in the performance management space.

Specifically, two features stand out among these next generation performance management approaches:

The first is that performance is largely employee-driven, the organization focused on providing the tools that facilitate goals, conversations, and feedback around performance. These tools help to establish both a cadence and continuous improvement mindset. The data provides insight on both current progress and future direction.

The second is the clear separation between discussions around base pay and merit increases (reflecting one’s core skills and abilities) and variable pay and bonuses (reflecting one’s specific contributions over the year). For the purposes of the latter, a majority of employees fall into a group defined by consistent performance (operationalized as having met at least three-quarters of one’s goals). The simplicity of the approach allows for much more focused and ultimately more developmental conversations.

These features balance the needs of individual employees to grow and meaningfully contribute, with the needs of organizational and compensation decision-makers. These approaches will be employee-driven, data-rich and process-light.

What tools is your organization providing to contribute to performance?

Derek Irvine

About Derek Irvine

The VP of Client Strategy and Consulting at Globoforce, Derek Irvine is one of the world’s foremost experts on employee recognition and engagement, helping business leaders set a higher vision and ambition for their organizations. As a renowned speaker and co-author of "The Power of Thanks" and "Winning with a Culture of Recognition," he teaches companies how to use recognition to proactively manage company culture. Derek holds a B.Comm and Masters of Business Studies from the Smurfit Graduate Business School at University College Dublin.

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