Why You Need to Begin Modernizing Performance Management
Annual and semi-annual performance reviews are slowly becoming a thing of the past as they can actually have a negative impact on your business. In fact, there’s evidence that they can lower the self-esteem of your employees.
With advancing technology and access to more data, there is something you can do to make performance management a more positive experience to help your business achieve operational excellence. Learning how to modernize performance management is one of the ways you can ensure your company thrives. Keep reading to learn about a handful of trending tips to improve your processes.
Problems with Traditional Performance Management
Some aspects of traditional performance management include:
- Performance reviews
- Peer feedback
- One-on-ones with management
The old system didn’t have the tools to use anything other than written and verbal evaluations for this process. There are several flaws with this system that we’ll take a closer look at here.
Personal Bias Can Skew Results
When people evaluate themselves or others, they naturally carry a bias. The bias means people may give a higher or lower rating based on how they feel about the person they’re evaluating.
It’s rare for decisions made with personal biases to be good ones, especially when conducting business, making it impossible to have an accurate picture of how a person is performing.
Focusing on Past Makes it Difficult to Move Forward
Your business isn’t moving backward yet. In many cases, performance management focuses on the past work of an employee and not in the future. Modern systems use the past as a launchpad for future improvements.
Only Looks at Recent Performance Instead of Change Over Time
Let’s say an employee hit a rough patch during the weeks leading up to their evaluation. This can end up being a poor reflection of their true potential.
An individual may have improved drastically during the last five years, but a bad performance review because of recent events can make them look bad. Modern performance management looks at the whole history of an employee instead.
Waste of Time for Everyone Involved
Because of how much time traditional performance management took, it often ended up wasting large amounts of time for employees, managers, and HR personnel. This was especially true because of how little these evaluations achieved.
Benefits of Modernizing Performance Management
Today, there are more than enough tools you can use to modernize your evaluation system so you can avoid the problems mentioned above with traditional performance management.
Let’s look at a few of the biggest benefits you can gain from modernizing the performance management process at your business.
1. Access to More Data Makes It Easier to Measure Performance
Today, it’s easy to collect massive amounts of data about your business and how each employee is doing. With access to this data, you can easily evaluate employee performance and see how well changes were implemented.
However, you can’t get this data if you don’t modernize your systems and use the most up-to-date programs available. Get an accounting software program like QuickBooks that allows you to create detailed reports on everything financial in your business.
You’ll also want to make sure you have performance management software in place. These are programs designed for HR professionals and business owners to help track performance.
2. Ability to Make Logical Decisions Instead of Risking Using Biased Opinions
When you have access to data, you can make decisions based on logic and hard facts rather than the evaluation of managers.
This ties back directly to the problem we mentioned about personal bias. The sales numbers in your accounting software won’t change based on how well an employee is liked.
Although there is something to be said about going with your gut in some situations, there are other times where you need to stay focused on the facts. Employee evaluations are one of those times.
3. Easier to Identify Problem Areas of Individual Employees
Older performance management techniques made it difficult to evaluate each employee as an individual. Instead, entire departments were often scrutinized, and changes were implemented at the department or team level.
However, because modernization makes it easier to see exactly how each individual is doing, you can focus on improving the performance of each employee. This helps those who need to change to do so while allowing others to carry on as usual.
For example, there’s one member of the customer service team that’s struggling to hit their target numbers for call times. They consistently take longer to resolve issues than the other members of the team.
With modern performance evaluations, you can pull out that employee and figure out what’s causing their problems and work with them on it. If the rest of the team is doing well, there’s no need to waste their time reminding them to work faster.
4. Time Saved By Avoiding the Lengthy Manual Evaluation Process
Using modern tools can save you significant amounts of time compared to using traditional performance management techniques. Instead of requiring managers and team leaders to fill out evaluations, you can run reports with the click of a button.
You can also see changes in performance sooner, so you don’t have to wait a year or more to find out if the change you implemented has had a positive or negative impact on your business, saving you some time in the trial and error process.
5. No Disruption of Workflow or Decreased Productivity
Extensive employee evaluations can cause disruptions in the workflow of both employees and managers.
Consider a factory worker. If someone has to step off of the production line to take the time to write up a self-evaluation, it’s going to slow down the entire production process.
When the majority of the evaluation process is done with the click of a button in the office, your employees can keep doing what you pay them to do, which will ultimately help boost the bottom line.
6. Improved Company Culture for Happier Employees
You want your employees to be as passionate about working for you as you are about your business. Although maybe they’ll never quite reach that level, you can get them close by modernizing performance management.
This happens when you have a great performance management system in place that allows your employees to understand how much you value them and want them to improve their skills.
How to Modernize Your Performance Management for 2020
By now, you may be wondering how you can modernize your performance management process so you can take advantage of these benefits.
1. Establish KPIs to Measure Employee Performance
A key performance indicator (KPI) is a metric you use to determine how well an employee is doing in their job. Before you can start implementing other changes, you need to know what you’re using to measure success in your business.
These will look different for every industry, so take time to think about what your business goals are and how you can measure those using the technology you already have in place or can easily put in place.
They will also vary based on the department. Your sales team, for example, will need to make a certain number of sales every month to be considered productive. Those in marketing, on the other hand, will need to generate a certain amount of leads.
2. Set Expectations and Goals for Each Department or Employee
Once you have these metrics established, you need to set clear expectations with your employees as to what numbers they should be reaching. This allows them to set personal goals and know what to do to meet your expectations.
This also makes it easy to identify underperforming employees since you have drawn a line and can see when they haven’t reached it by using hard facts and numbers.
You will also want to start setting up goals with individuals based on their past performance. It’s a great way to push them to continue doing as well as they have been and to do even better.
3. Demonstrate How Much You Value High Performance
High employee performance should be one of your company values. If it isn’t written down as one or displayed as important by all members of upper management, employees won’t follow suit.
An easy way to show you value high performance is to praise your top performers. Create a reward system that inspires employees to work hard to reach the goals you set for them.
You also need to live it out, which means performing well yourself. If you’re not arriving early, leaving late, and working hard every moment in between, you can’t expect your employees to do the same.
4. Evaluate Employees Often to Catch Problems Quickly
One of the biggest mistakes a business owner makes is only making annual evaluations. Imagine how well a sports team would do if their coach only evaluated the players once per season.
In the same way that sports coaches regularly evaluate their players to build up their weaknesses and bring out their strengths, you should be doing that in your company.
The modernization of performance management allows you to do monthly, weekly, and even daily evaluations on how well each of your employees is doing. This helps them reach their goals and enables you to reach yours.
Need Help with Employee Recruitment?
We hope you found some good takeaways on why and how to modernize performance management practices in 2020. As you can imagine, there are countless tools available today that can help you evaluate your employees and improve their performance.
Performance management starts with the recruitment process. If you’re in the construction industry, you can get help with this by partnering with us. We would love to help you find the right candidates for your company.
Video Highlighting How to Modernize Performance Management
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