It’s no surprise that technology and automation are reshaping how work is done, increasing the need to improve employee engagement, reinforce desired leadership behaviors and understand how to quickly address skill gaps. And performance management is a crucial tool to help executives and managers develop and incentivize the skills and behaviors required to deliver on strategy, while also unlocking engagement, productivity and retention, for long-term business success.
Through this, a shift has emerged. In addition to measuring “what” an employee achieves, performance management is also focused on “how” they achieve their objectives.
Importantly, the “how” isn’t generic leadership habits or a company’s values, but actual key skills and behaviors that enable the achievement of performance objectives and create the organization’s desired culture.
These are the three core steps taken by best-in-class organizations when setting the “how” in performance management:
- Define the “how”: Organizations should use data to pinpoint the core set of behaviors that drive business impact and desired outcomes. For example, a health care company took an analytics-backed approach to building a new leadership development model. By analyzing how exemplary leaders behaved, they defined the elements of their model that reinforced the culture they were seeking to create.
Over time, powered by AI, organizations can then nudge employees based on development needs. If decision-making emerges as an area of opportunity, an employee can be pushed just-in-time, personalized learning and coaching tips.
- Move the “how” through a feedback culture: Creating an ongoing feedback and development culture through change management is crucial to using the “how” to unlock business impact. Specifically, we have seen these key elements helpful:
- Senior role-modeling: To enforce and implement a performance-driven culture, senior leaders must buy into the new system and understand what they need to do to drive behavioral and mindset change. For example, senior managers at a European insurance organization served as “performance management champions,” sharing best practices for providing feedback to colleagues. These champions spread new coaching practices throughout the organization, leading to improved employee engagement and increased productivity by 15-20 percent.
- Change management story: Defining a targeted communications and stakeholder engagement plan helps employees understand why “how” goals are necessary for business impact. The CEO of a global financial services organization positioned performance management and ongoing feedback discussions as crucial to achieving organizational strategic priorities. This led to the successful launch and adoption of a performance development pilot and tool to improve continuous feedback conversations across 50K employees. The clear change management story and plan also gave the company a clear path forward on the organization-wide launch of its performance development redesign.
- Embed the ‘how’ in managers’ day to day through capability-building: Teaching managers what good vs. great looks like across “how” behaviors helps them provide the right level of feedback and coaching to employees. This can be done through in-person trainings focused on performance management skills and by making knowledge easily available via how-to guides and apps. A U.S. ratings agency had its top 300 managers practice providing feedback across the core behaviors it wanted to emphasize and measure as an organization. The program improved participants’ ability to provide meaningful feedback—approximately 90 percent of managers cited it gave them new perspective on performance development—and helped advance their commitment to put these learnings into practice. Participants also reported significantly higher confidence in their ability to provide feedback and coaching to employees.
Defining the “how” and incentivizing core behaviors to unlock business impact doesn’t have to feel abstract. In fact, grounding the “how” in data and analytics, and supporting it through change management, will allow employees to have concrete goals and behaviors to work towards, improving their performance—and driving business results—along the way.