Performance management – what’s next?

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 cultural shifts are difficult for companies that are not ready for frequent feedback approach.

Hence, managers need to change their approach to managing employees. For some, this change will be difficult 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. Then, if managers are not ready to answer questions about salary, responsibilities, and company policies, you should provide training and information.

Performance Management and Compensation Evolve Together

George LaRocque, Principal Analyst and Founder of #HRWINS, 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.

Moreover, employees who consistently produce high-quality work are more likely to ask for a raise. To prepare for these requests, organizations should align their compensation practices with their performance management strategy.

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, as shown 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 familiar to the ways millennials collaborate and don’t always know how to keep them engaged.

Recent #HRWINS research also states that “employees rank competitive pay as the second leading factor contributing to their engagement 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.