Having a plan and a system that ensures everyone is seen, recognized, appreciated, nurtured and developed will supercharge your organization.
Let’s start with bad news that also happens to be your opportunity. According to Deloitte Consulting,‘Performance Management’ has a -60 Net Promoter Score. That’s bad! Yet done well, continuous performance management was shown to motivate employees to accomplish their goals, grow and develop the company and help employees develop better relationships with their managers.
Part of the problem Deloitte found was that employees often don’t understand how they are being evaluated, feel that the process is unfair or inconsistent, and that there is a lack of transparency around how performance and compensation are linked.
This would indicate that if Performance Management is a set of formal and informal processes that are designed to create a culture where strategies are delivered, and goals are achieved by happy, highly motivated and engaged employees, there’s something going wrong.
Is this part of the reason why 90 percent of strategies are not getting executed?
In an increasingly people centric workplace, the ideal is for the needs of the organization to align with the needs of each employee. The job of Performance Management is therefore to establish consistent and fair processes that facilitate two-way open dialogues between stakeholders that create alignment and a win-win.
McKinsey found that for a Performance Management system to be effective it also needs to be seen as fair. The propose that this can be achieved when you are able to:
Transparency and engagement – Transparently link employees’ goals to business priorities, whilst maintaining a strong element of flexibility. You should consider getting employees at all levels to feel involved in shaping their own goals. It is clear that mandating goals from the top down rarely generates the kind of employee engagement companies strive for.
ZOKRI allows employees and managers to align personal goals and KPIs with team and company goals, and include them in 1-on-1s and personal development plans.
Develop managers coaching capabilities – It’s recommended that organizations invest in improving the coaching skills of managers. In the McKinsey survey less than 30 percent said that their managers are good coaches, with only 15 percent of those being managed by those with poor coaching skills reporting that the performance-management system was effective.
Differentiating compensation – Reward standout performance for some roles, while also managing converging performance for others with a balanced measurement approach. McKinsey recommends that you keep things simple at base, so managers can clearly explain the reasons for a pay decision and employees can understand them.
ZOKRI has Performance Management and Personal Incentive Plan Modules that allow you to achieve this balancing act.
“Digital technologies are power tools that can increase the speed and reach of a performance-management transformation while reducing administrative costs.”
For the avoidance of doubt, it’s also necessary to mention that Performance Management is not an annual appraisal or review or Performance Improvement Plans (PIP) that aims to deal with employee underperformance. Both of which have very different jobs to do. So if you’re using them and think you’ve Performance Management covered, sorry, you need to master Performance Management as well.
So where might you start with creating a great set of Performance Management Systems and Processes?
A good way of approaching planning better Performance Management is to consider the needs of the organization and the needs of the employee and get them to align.
Metric (KPI) improvement
Goal and execution alignment
Talented and engaged employees
Talent acquisition and retention
To know the strategy
To have clarity on how success will be measured
To be empowered to set goals
To be be given the time, resources and support need to make progress on goals
To learn and develop
To working in a culture they’re proud of
To recommend their employer
Executive Teams are responsible for delivering improvements in specific KPIs like Revenue and Profitability. To do this they need to create and execute their committed Strategy and aligned Company Objectives.
The outcome you want is for every employee to have – goal, role and plan clarity, and to know how the work that they do contributes. This goal and role clarity provides purpose, is rewarding and drives productivity gains. Goals ensure what is being worked on is relevant and guides work away from irrelevant, lower impact activities
Another key organization objective is the retention of its talent. The cost of losing and recruiting every lost employee is significant, and estimates in the range of $30K are not uncommon. This means that the ability to attract and retain the best talent is central to what a company wants. So it’s especially important to consider what employees want and need to keep them from moving to another company.
The good news is that most employees welcome strategy, goal, role and plan clarity, and want the work that they are doing to be connected to outcomes that let them know they are doing a great job.
So having goal setting and management processes that support autonomy and transparency are great starting points.
Individuals and teams can, given the right guidance and support, take responsibility for the achievement of OKR and the continuous improvement of BAU performance and processes.
This guidance and support for most will mean having the right:
63% of employees that are recognized are “very unlikely” to job hunt in the next 3–6 months. In contrast to 11% of those who are “never” or “rarely” recognized. This is why ZOKRI offers customers a recognition module as part of its Performance Management offering.
It’s the job of managers to connect and reinforce organizational, team and individual objectives. Providing regular and timely employee feedback and support, and helping them to improve, whilst of course holding them to account.
However, when you consider the range of roles that exist in a company you realize that the contributions we require, and therefore the measures of ‘performance’ are diverse.
This is where structure, systems and processes are needed. These need to provide consistency, but also be flexible enough to see the individual in the context of their roles, their teams performance, and the timeframe they are being evaluated in.
Without structure, systems and processes, you can’t hope to provide clarity on what is required, what success looks like, and then collect the information and insights you need to performance manage an employee.
These are simple steps, and jobs-to-be-done that will help you create an effective performance management system.
#1 Clear Roles & Responsibilities
Most employees are recruited with a Job Description in mind and it then becomes part of their human resource profile. Organizations, teams and people evolve and it’s easy and actually normal for these to become out of date and lag behind the reality.
Having a system and process, like the one in ZOKRI, for keeping these current and accurate is important to evaluating how an employee contributes towards a team or organization’s performance.
When you review the job-to-be-done, tasks and deliverables that need to be completed in a team and to accomplish roles and goals you have, you are likely to find gaps. You can use simple methods like labeling who is ‘responsible for’ and who ‘supports’ or a RACI matrix.
Improving role fit is another important dimension to setting roles and responsibilities. Employees are probably going to perform better if they are doing work they are best suited to and most passionate about.
#2 Culture, Values & Behaviors
Culture trump strategy for breakfastis a well known phase used amongst management. There is also broad agreement that cultures’ impact on strategy delivery and performance is profound.
It’s therefore ironic that you read statistics like “Nearly half of employees (45%) say leadership is minimally or not at all committed to improving culture.”
Perhaps part of the issue is that knowing what kind of culture you want is only part of the problem.
Having ‘your’ perfect culture requires you to know what kind of culture you have now, which won’t be consistent between teams and offices.
Then you need to know what kind of culture you want in order to thrive. This is more complicated than a few value statements.
ZOKRI allows you to codify your cultural values and behaviors in software. Because employees recognize and get recognized using your defined cultural traits, your culture is continually being reinforced. You will also benefit from cultural analytics and the ability to spot issues and reward outstanding behavior.
#3 Share your Mission & Strategy
Your Mission, Vision and Purpose are how you share your long-term Strategy for the company. Your Strategic Pillars are specifically geared to communicating the key battlegrounds you must win over the coming year.
#4 Set Annual Company & Supporting Quarterly OKRs
Based on your long-term mission and annual strategy, set annual company OKRs and invite your teams to debate, create and align their OKRs with these.
These OKRs will be their commitment to help the company achieve its Objectives, outside the normal BAU of running the business.
When you get this right, employees know how their work contributes to the organization. OKRs therefore help you provide that clarity and support the development of a culture that reinforces the important part each employee role and work plays.
#5 Ask For Initiative Ideas
Once you have clarity on OKRs, ask for your team’s best ideas for achieving them. These are the things you’re going to do that will progress the measurements in your Key Results. Some employees’ biggest contributions can be from their ideas and / or execution and delivery of key Initiatives.
#6 Personal Development Planning
When you’ve got Roles and Responsibilities, clarity on what is BAU and what is an OKR, you can discuss how the company and team needs people to develop, and an employee can share what they have learned and how they have developed as well as discussing what they’d like to learn and how they’d like to develop. Making Personal Development Plans (PDP) quarterly to align with OKRs is a good idea. Personal OKRs can be set as part of the PDP setting process.
#7 Keep To The Agreed Cadence
Performance Management and OKRs both rely on regular two-way communications to optimize alignment and maintain agility. There is a perception that this comes with a big meeting overhead and will impact the amount of ‘doing’ or execution time. The actual impact of well planned and run meetings is the exact opposite. More execution time and fewer unnecessary meetings.
This is a typical OKR / Performance Management meeting schedule. It shows that you’re actually committing to about 19 hours of meetings over a quarter. An employee works for about 420 working hours in a quarter. This means that less than 5% of time is spent aligning, collaborating, praising, solving problems, planning, learning, developing, building friendship bonds, and absorbing culture. Probably way less than is spent in meetings now. That leaves over 95% of an employee’s time for BAU and OKR.
#8 Collect Continuous Feedback
Asking and giving feedback, whether it’s on the people we manage, our managers or colleagues, only annually, is a recipe for disaster. It can’t be objective and therefore can’t be fair. You simply can’t remember the details and you allow for all kinds of biases to come in.
Performance goals and feedback on all levels are best given and received on a continual basis as then used to develop an objective and fair picture of an employee’s year when appraisal time comes around.
ZOKRI allows colleagues to recognize and endorse each other on a continual basis as well as part of a more formal 360 review process.
#9 Use Performance Management Software like ZOKRI
ZOKRI is a Performance Management software platform that aligns the needs of employers with the needs of employees. Create a culture of performance and achievement, and a workplace where everyone has an opportunity to thrive. Find the software that works best for you.
ZOKRI helps organizations unlock the benefits of strategic and goal setting frameworks like OKR. Systematically ensuring strategic alignment, and keeping teams engaged and focused on achievement throughout the quarter.
“I took the time to enter our executive OKRs into 3 platforms to test and demonstrate them to the broader team, after investigating 9. I found that ZOKRI was considerably easier than the others to enter the data into.
Beyond the ease and intuitiveness of the platform, the actual structure of the OKR builder was the most comprehensive. It easily accommodated % based Key Results and even allowed me to create thresholds.
Finally, having KPIs and OKRs separated but living in the same system is wonderful. The ability to have KPIs and OKRs in a team meeting or a dashboard whilst maintaining their separate functions, complex health metrics and working priorities is incredible.”
Director of Culture – GoCanvas