There is a fundamental change driving performance management this decade. What previously was a once-a-year meeting has become an ongoing feedback loop. But supporting this cultural shift is difficult for companies who are not prepared for the frequent feedback approach. Managers have to shift their thinking and the way they manage their employees – and for some, this shift is both drastic and disruptive.
Making the performance review ongoing requires new HR tools to support the new wave of manager-employee interactions. HR teams want technology that can enable managers to have difficult conversations and provide accurate, timely information to employees. If your managers aren’t prepared to have impromptu meetings about salary, responsibilities, and company policies, you need to take steps as an organization to provide the right training and information.
Performance Management and Compensation Evolve Together
George LaRocque, Principal Analyst and Founder of #HRWINS, recently wrote, “employers thinking that they can keep their compensation process fully tied to an annual cycle should think again”. As the performance management cycle evolves, compensation must evolve along with it. In fact, recent #HRWINS research estimates that 70% of compensation is tied directly to performance. The frequency of performance conversations now draws attention to the quality of work being produced by an employee on an ongoing basis. If the quality of work is consistently reported to be top-notch, that employee is more likely to ask for a raise before the company is ready to facilitate the request. Shifting your compensation practices to align with your performance management strategy will better prepare your organization for these types of requests.
Millennials Enjoy Feedback-heavy Performance Management
According to this article, millennials now make up 30% of the American workforce. They are driving the biggest transformation in workplace dynamics to date, and this is reflected in the performance management and compensation shifts mentioned above. Millennials crave constant feedback. And with more and more of them entering the corporate world every year, it becomes increasingly important for your company to adopt an appealing approach.
As millennials move into leadership roles, this type of constant feedback may become second nature. Millennials understand how they want to be treated in the professional world, and will give that same courtesy to their future employees. But as of now, many corporate leaders are not millennials. Managers are not used to the ways millennials collaborate and don’t always know how to keep them engaged.
Recent #HRWINS research also states that “employees rank being paid competitively as the second leading factor contributing to their feeling of being engaged at work”. That’s why aligning your compensation strategy to compliment the frequent feedback approach for performance management is so important. Don’t let your organization fall behind.