Five Performance Management Imperatives for 2021

To alleviate stress for new remote workers, many companies stopped their performance management systems during the pandemic’s peak. But rather than stopping performance management, they should have focused on accelerating their organization’s ability to be agile. The best performance management practices are ideal for a crisis. They provide continuing updates on rapidly emerging new business realities and they offer clarity to employees on the company’s latest strategies, goals, and operating norms.

As always, the crux of any performance management system is the relationship between managers and their teams. Such systems help explain change, set goals, and build teamwork. Managers need to be continually open to questions and provide timely and candid performance and development feedback. Above all, managers need to continually develop and maintain trust.

In my experience with decades of performance management systems, it is during significant change that executives need to stand tall and articulate their strategies to emerge successfully after any crisis. While they should never expect to have all the answers, they need to provide clear strategies and just as much clarity on what priorities are no longer required. Executives have to attract supporters to their strategies and ensure that members of the organization have the tools and information they need to succeed. No strategic shift during a crisis can occur without feedback from the workforce. Do they understand the strategies? What are their questions? Are their tools sufficient? Are people in the organization working together or at odds with each other? Are they reaching out to external experts for help?

Over the past 10 years, many companies have replaced their forced-ranking performance management systems and, instead, have had annual goals for performance management systems that emphasized continual feedback and quarterly updates. The pandemic has revealed that this change has not gone far enough. With today’s challenges — related to health, geopolitical, competitive, digital technology disruptions — companies and their workforces need to become even more agile.

Here are five imperatives for performance management in the 2020s.

First, replace annual, tops-down goals with agile goals that adjust as needed when the company learns more about its customers, technologies, and competitive position.

Executives who want more agile organizations should consider implementing Objectives with Key Results (OKRs). Research shows that executives who set such goals can significantly improve their organizations’ performance over telling employees to “just do their best.”[i] OKRs are better than traditional goal-setting processes because they allow organizations to change measures and tactics during each quarter or sooner to adjust to today’s digital pace of business.

The OKR system was started at Intel and is attributed to its famed CEO, Andy Grove. It spread to Google upon the suggestion of Google investor John Doerr.[i]

OKRs are deployed down into the organization, but the OKR process encourages managers and teams to write their own challenging OKRs. OKRs are used by companies such as Microsoft, LinkedIn, Workday, and Netflix.

Google on its re:work website explains OKRs this way:

In practice, using OKRs is different from other goal-setting techniques because of the aim to set very ambitious goals. When used this way, OKRs can enable teams to focus on the big bets and accomplish more than the team thought was possible, even if they don’t fully attain the stated goal. OKRs can help teams and individuals get outside of their comfort zones, prioritize work, and learn from both success and failure.

To get started with OKRs, executives should communicate to employees their top five strategies with their objectives and key results and milestones to be achieved during the year. These results could include revenue and profit goals, sales and marketing goals, operations improvement goals, and innovation goals. Executives should then cascade this information down through the organization with the following standard: If any employee is asked, they should be able to repeat the top objectives and key results of the company. OKRs should be prominently displayed on digital kiosks, in digital newsletters, and should be promoted with employees by top management at every opportunity. OKR's are typically updated quarterly.

To learn more about agile goal-setting and OKRs, read my blog, Forget SMART goals. Use OKRs instead!

Second, provide ongoing feedback instead of end-of-year data dumps.

According to Gallup, nearly half of employees in 2019 said they receive feedback from their manager a few times a year or less often than that. But the only viable management style going forward will be ongoing coaching conversations that establish a rhythm of collaboration and create shared accountability for performance and development.

When the pandemic hit, the percentage of office employees working remotely part or full time went form nine percent of the workforce to 80 percent. New research shows that remote workers need even more ongoing feedback than workers in the office.

As shown in the chart below, Gallup’s recent survey of remote workers reveals that performance improves with frequent feedback. The more hours an employee works remotely, the more critical it is to provide regular performance and development feedback at more frequent intervals.

I encourage all managers to regularly hold scheduled one-on-one meetings with every employee on their team (at least weekly or biweekly and more frequently with full-time remote workers. These meetings are an opportunity for employees to give managers updates on their work, discuss obstacles and indicate what assistance they may need. Managers need to vary their coaching and development advice based on each employee’s skills and experience so that it is relevant and helpful.

Train your managers to be “builders” and to use what I call the “ACE” methodology:

1. A-Alignment Business is fast paced. Managers need to continually align employees to changing market conditions, customer preferences, and the company’s strategies and goals.
2. C-Constant Communications and Clarity. Change is a constant, and it requires constant communication and clarity on issues such as roles, information sharing, technology for teams, timing, operating norms, decision rights, and progress.
3. E-Empathy and Empowerment. Managers who show empathy, provide recognition, and let employees have a say in how they achieve their goals engender more engagement and achieve better results. We know this from numerous studies on emotional intelligence.[ii] The same goes for successful teams. (See my blog “What makes a Team Smart,” https://wp.me/p5FLSC-7.)

Third, be a great coach, not a sink-or-swim manager who spends little time coaching.

Coaching, however, is challenging. In most companies, it just isn’t getting done or managers are coaching in areas where they have no expertise—which is worse.

One survey of HR leaders found that they expect managers to spend 36% of their time developing subordinates. Still, a survey of managers showed that the amount of time they spend on this task averages to no more than 9%.[iii]

The best coaching managers are the ones who realize they don’t have all the answers their employees need. Instead of coaching employees themselves for every issue, they connect their employees with experts who can provided valuable information and coaching.

Gartner Research surveyed 7,300 employees and managers across a variety of industries to find out what the best managers are doing to develop their employees. They followed up their survey by interviewing more than 100 HR executives and surveying another 225 HR executives.

Gartner Research identified four distinct coaching profiles[iv]:

1. Teaching Managers coach managers based on the manager’s knowledge and experience, providing advice and personally directing development.
2. Always-on Managers provide continual coaching, stay on top of employees’ development, and give feedback across a range of skills. They treat coaching as a daily part of their job.
3. Connector Managers give targeted feedback in their areas of expertise. Otherwise, they connect employees with others on the team or elsewhere in the organization who are better suited to the coaching. They spend more time than the other three types assessing the skills, needs, and interests of their employees, and they recognize that many skills are best taught by people other than themselves.
4. Cheerleader Managers take a hands-off approach, delivering positive feedback and putting employees in charge of their development. They are available and supportive, but they are not as proactive as the other types of managers when it comes to developing employees’ skills.

The most common coaching profile is the Cheerleader Managers, which accounted for 29% of the managers in the Gartner research. The least common was the Teaching Managers, which accounted for 22% of the managers, but the most successful coaching profile was the Connector profile. I will explain further.

Gartner researchers found that there is little correlation between time spent coaching and employee performance. Effectiveness comes from the quality of coaching rather than the quantity. They also learned that Always-on Managers often do more harm than good. Their employees performed worse than the employees of the other three coaching profiles. The Always-on Managers were the only coaches whose employees’ performance diminished because of the coaching.

The employees of Connector managers had the highest performance. These employees were three times as likely as subordinates of the other coaching profile managers to be high performers. Coaching managers appreciate that they do not have all the expertise their employees need, especially in a world with changing processes, technologies and discoveries. So, they bring in experts or refer their employees to experts as the need arises. This is what managers and coaches do in sports. Head coaches may not be experts in conditioning, but they bring in conditioning experts to get the players into great shape for long seasons and to avoid injuries.

To learn more about coaching, see my blog, Five Steps for Managers to Improve Their Coaching Success 

Fourth, do not stop tracking the performance of individuals and teams due to the pandemic.

One of the advantages of the Internet of Everything (IoT) is that through our ERP and HRIS systems, companies have more information available to them than ever on the performance of a wide range of business processes. Don’t stop tracking information in the name of stress relief. Even if your company decides to cancel pay raises and bonuses, don’t stop tracking your performance measures and giving feedback about them. After all, your organization still needs to meet customer and investment commitments and win new customers.

Fifth, be sure to build more dynamic individual, team and group rewards to meet your dynamic environment as opposed to the annual pay increase and stock awards.

During the pandemic, some companies suspended pay increases because of pledges not to lay off anyone. Others proceeded with pay increases but not stock awards as the company’s financial goals and guidance to Wall Street were suspended due to the pandemic. Both of these strategies make sense and are commendable. In these times, what to do with rewards is going to be highly dependent on each companies’ circumstances.

My recommendation is to continue to reward the achieving of the revised strategies you were forced to take in 2020 and its goals, whether they be learning goals in the name of innovation projects, or revised goals for marketing, sales, recruiting, operations. When the dust settles, and as you look to 2021, after the pandemic abates, companies can review their balance sheets and decide when to resume individual pay adjustments based on the market and individual performance.

One warning, companies that fall behind competitive market rates will lose their best performers.

As companies prepare for 2021, they need to begin by looking at their business and competitive environment and workforces’ engagement. Most likely, half of office workers will continue to work from home in 2021. As the pandemic abates, and other disruptors emerge, their goals will continue to change, and the organization will need to be increasingly agile. Your performance management system will need to reflect not what you have habitually done, but this challenging new reality.

Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting, managing partner of InnovationOne, and Sales Advisor to MeBeBot. He works with companies to transform HR, implement remote work, recruit executives, and develop extraordinary leaders, teams, and innovation cultures. He is the author of the highly acclaimed book, Hack Recruiting: the Best of Empirical Research, Method and Process, and Digitization. Subscribe to his weekly blogs at www.VictorHRConsultant.com. 

[i] Google Re:Work. Found at https://rework.withgoogle.com/guides/set-goals-with-okrs/steps/introduction/.

[ii] Daniel Goleman (2006) Working with Emotional Intelligence, Bantam Dell, Division of Random House, Inc., New York.

[iii] “Managers Can’t Be Great Coaches All By Themselves: The Best Ones Are Connectors,” (May-June, 2018) The Harvard Business Review. Pages, 22-23.

[iv] “Coaching vs. Connecting: What the Best Managers Do to Develop Their Employees Today,” Gartner Research White Paper.