This question brings us back to the past, to when we were kids. It was so nice to dream of being an astronaut, a veterinarian, a volleyball champion… And it was even nicer to plan our path to growth by looking at planets through binoculars, buying a book about animals, and joining our town sports team. We had clear goals and did everything we could to achieve them.
Then we grew up, step by step, we became someone we would like to be (more or less) and here we are — in a company, in a studio, with a lab coat on or a camera in our hands, or just sitting in front of a computer. Asking ourselves who we want to be has become less important, because in a sense we have already “arrived” somewhere. We devote ourselves to everyday activities, often forgetting the enthusiasm and ambition that used to drive us to plan our future without fear.
Yet today the organizations in which we work ask us to set our goals, to pursue them, and to grow more and more. Few of them, however, are able to offer a Performance Management system made up of ambitious and stimulating growth paths that can really help people to take a leap forward. Those who suffer the most from this condition are the new generations, especially Millennials and Gen Z, who are looking for a cool job rather than a permanent one. Cool job? That means organizations with a purpose and mission, are ready to offer paths towards growth and skill development with the support of coaches (not old-style bosses), mentors who are available to carry on constant dialogue and exchange feedback*.
Performance Management as we know is often ineffective, partly because it’s a complex ecosystem to instill into an organizational model. The constellation of elements to be taken into account should include a shared culture based on continuous feedback, clear guidelines that coexist with enough freedom for the individual, motivated and positively contagious people, and much more.
How can we transform this tool, enhance its meaning and objectives to make it a catalyst for the growth of people and, consequently, of the company?
The historical and economic context has shaped the evolution of Performance Management, leading an increasing number of organizations to move from a culture of performance to a culture of growth. Isn’t the word “performance” probably responsible for distracting attention from what should be the real goal of this process?
Over the past twenty years, organizations have begun a transformation in the way they manage this process, moving from a system based on classifications and rankings to one that values learning and puts the emphasis on people’s strengths as well as weaknesses, with the goal of identifying areas for improvement.
A significant paradigm shift that, instead of having as its objective the mere control and review of performance, provides a tool for the development of the personal and professional journey of people, looking to the future.
Developing companies’ human capital has become central for three main reasons:
What about us? We started from our first-hand experience at H-FARM. Tomas spoke about it in his article on the Yogurt Organization, a reality in which “a great effort of self-determination is necessary, to be able to imagine a personal growth project and try to realize it” and where the traditional MBO (Management by Objectives) system is not followed. An organism where a less traditional way of recognizing work done is adopted: “Salary growth, bonuses and promotions are key elements to enhance commitment and qualities. […] performance is read and rewarded in light of the contribution that individual work has made to the entire team, and the compensation process is designed accordingly to take this into account.“
For us, performance management is based on:
The company’s purpose and values are a source of inspiration and are reflected in the objectives and growth paths of people so that the employee’s experience is not disconnected from the context. For this process to become an integral part of the company culture, it is essential that its positioning is clearly communicated to generate motivation and a sense of belonging. Are you fully aware of how performance management works in your company?
Not only purpose and values, but also the strategic vision of the company must be communicated to everyone in a transparent way so that people have a compass with which to orient themselves and are able to visualize their goals within a clear and constantly updated context. Aligning people with the company’s strategy helps them focus on consistent goals and be clear about their role and contribution. Do you think you know enough about the company’s strategy? Are you able to translate it into coherent objectives?
[…] Only 16% of workers believe that their company is effective at setting and communicating their organizational goals.**
This process acquires tangible value only if we look at people observing how they move within the organization to generate real impact. For this to happen, it is necessary for each of us to feel that we are an active part of the process. It is necessary to have a 100% receptive attitude so that everyone’s growth can create value for the community. How active do you feel you are in this process? Do you feel you bring value to the entire organization?
Just as it is important that individual goals are built on the basis of purpose, values, and company strategy, freedom is essential in orienting people’s paths. Freedom to choose, to change our mind, to experiment, to acquire full awareness of which tools are the most useful for our growth and which directions are the most in line with our aptitudes, interests, and inclinations. Do you feel that you are free to listen and move according to your personal needs?
“Continuous performance management is possible, it works, and it can transform your company. We’re not talking about doing away with ratings, rather we are talking about building a new, ongoing process for goal setting, coaching, evaluation, and feedback.” Josh Bersin
There are so many elements that outline the growth path of a person within an organization, let’s sort them out.
An adequate Performance Management system brings to light and resolves this inconsistency, asking what are the vision, purpose, and values of the company to design flexible models of competence and identify objectives, growth paths, and consistent evaluation parameters.
Only one-fourth (26%) of employees have a clear understanding of how their individual work relates to their company’s goals.
A single purpose, a common value plan, a rich pool of skills and talents continuously shared among people and recalibrated with respect to the context:
Objectives are a communication tool towards others to signal priorities and directions, but also “towards oneself” as a personal challenge and means to give one’s work a purpose and a rhythm. Systems such as OKRs (Objectives and Key Results), applied by thousands of companies (Google, Intel, Siemens, Oracle, Deloitte, and even H-FARM), serve to make everyone understand what is important to do, how our actions reflect the broader business strategy, and how we will measure and understand the success of what we do.
Companies need to invest in some key “meta-competencies” — “genuinely human” capabilities of their employees (adaptability and fluidity, readiness to learn, ability to move boldly and quickly in ambiguous contexts) that are key to achieving goals and making a difference in the workplace. These capabilities are not independent of the corporate identity but are largely influenced by it. Every organization will have its own “map” in which employees can reflect in order to direct their professional growth. We too have our map, as Valentina explains in this article about capabilities.
An effective Performance Management system helps employees to work on the skills needed to evolve their professional profile. You may have reflected on your skills, some of which you already feel very strong about, while others you probably don’t even know you need to update. Tools such as Degreed use big data to map, assess (via peer feedback), and update the skill sets of each job profile, enabling everyone to understand which skills need updating and linking development opportunities to each.
The Performance Management process can return quantitative (as well as qualitative) data that lends itself to aggregate analysis (by seniority, specialty, or business unit) and visualizations that can offer new insights into the evolution of individual profiles and teams. Visualizing the growth trajectories, skills acquired and performance of the individual is an advanced idea of data-driven HR in which human insight and digital systems work together to open up new perspectives on internal mobility, talent placement, upskilling, reskilling, and development.
For the organization, feedback helps to support the evaluation of a work, to make the best use of its resources, and to constantly update its assets. From the individual’s point of view, it helps them to grow and improve. Knowing how you are perceived by other colleagues allows you to limit misunderstandings, avoid prejudices and more confidently manage the compass of growth. But it is not an easy practice to adopt: how often do you give and receive feedback? Do you feel you are able to give quality feedback that is useful and constructive for those who receive it?
One of the main frustrations associated with traditional Performance Management processes is the absence of a “so what”: growth objectives are detached from daily work, and adequate support in terms of training and development is lacking to fill the identified gaps. Try to think about the training activities you carried out: how customized were they based on your needs? Were they useful for your growth? To make the process really useful, it is necessary to formulate a customized development proposal, based on a portfolio of solutions that are inserted into the workflow. Solutions that must always evolve: in addition to training, other opportunities such as mentoring, on-the-job training, and coaching support are to be taken into consideration.
The concrete form that the Performance Management process takes in each organization may vary depending on the starting conditions and context. It must be kept in mind that we are not just talking about an HR process but about a cultural change and habits that must be consolidated.
No new process can work until we understand that professional growth is the responsibility of each and every one of us and that the time dedicated to developing skills must be defended. Cultural pervasiveness, contextuality of action, attention to the concrete impact on the business, and relevant follow-up activities are the four pillars on which to focus the (re)design of a Performance Management system so that it becomes a truly significant development driver for the organization.
To tell us about it and learn more about our research on this topic, write us at firstname.lastname@example.org
* How Millennials Want to Work and Live report, Gallup
** Survey published by Asana, a popular project management software (July 2020)
*** Survey published by Asana, a popular project management software (July 2020)