Current State

Most employers struggle to shift their antiquated performance management processes to modern ones that focus on developing potential rather than looking backward. 

Almost two-thirds (63%) of organizations believe performance management should focus on the potential of employees to meet the future needs of the organization …

While only 25% believe they are effective in doing so, according to Brandon Hall Group research.

 Only 6% of organizations say their current performance evaluations are highly accurate predictors of individuals’ potential. And future potential is heavily factored into employees’ performance rating in only 13% of organizations. 

Complications

The evolution of work requires a more personalized, continuous approach to performance that focuses on developing employees for future roles and meeting the evolving needs of the organization. But in most companies, manager-employee check-in meetings focus on current performance rather than development. 

This leads to a poor perception of managers’ ability to objectively assess employees’ performance and potential, Brandon Hall Group research shows. Only 36% of organizations say managers are objective raters of their employees’ performance and just 19% say managers objectively rate employees’ potential. 

Consequences

Most employers believe they have a long way to go to transform their performance management processes from looking backward to recognizing and developing employees’ potential. 

Critical Questions

To improve understanding of employees’ future potential in the organization, employers should ask themselves several critical questions: 

  • How can you transform the performance evaluation process to focus more on identifying and developing employee potential and less on reviewing past and current performance? 
  • How can you provide employees with more opportunities, such as projects and stretch assignments to demonstrate their potential? 
  • How can you reward and recognize employees more effectively? 
  • How can you have more frequent and effective career development discussions with employees? 

Brandon Hall Group POV

Align performance goals with employees’ career aspirations and business/team objectives. Performance goals can’t only be about what helps the employer. Employees should know that their development will help them meet their career goals as well as the organization’s. That is how today’s workforce is wired. 

Managers meet with employees at least biweekly to provide feedback and coaching on performance goals. Less than half of employers responding to our research do this now. You must do better. Today’s employees want feedback and coaching — and expect it to happen often. The idea that managers are too busy to meet frequently with their team members is fatally flawed. Employers must structure management jobs so employees get the attention they need and expect. On the positive side, more than half of employers responding to our research say that continuous feedback and coaching will be the norm within the next two to three years. 

Use updated performance management software to facilitate continuous feedback and recognition. The latest technology enables widespread coaching, feedback and recognition plus ways to plan for check-in meetings and trade messages back and forth even when there is little time for in-person or virtual in-person meetings. In the age of hybrid work, this type of performance management software is a must. But less than half of respondents to our research say software is used to facilitate continuous feedback, not just by managers but peers and teammates as well. 

Hold regular performance review meetings based on the needs of the employee and the business. How can organizations limit performance review meetings to once or twice a year when everything about work continually evolves? Performance management and development must move at the speed of business. Performance meetings should be held as often as needed and focus on what’s next, not what’s happened. Annual reviews can still be held if they fit your organization’s culture but they should be in addition to periodic meetings, not in lieu of them. 

Focus performance reviews on employees’ potential for future success. How can organizations limit performance review meetings to once or twice a year when everything about work continually evolves? Performance management and development must move at the speed of business. Obviously, conversations about potential must be based in part on employees’ ongoing performance. But their overall aspirations, engagement and capabilities — which sometimes do not include what they do in their daily work — should also be factored in. And the discussion should be spun forward; what will the manager and employee do together to help the employee and organization get where each wants to go? These conversations about potential should include focus on the employees’ ability to collaborate in teams because work will increasingly be team-driven and teamwork impacts the employee’s future value. In addition, performance evaluation should not be solely based on the manager’s perspective. Multi-rater evaluation is important to reduce bias and capture a deeper perspective than one person can possibly provide. 

If compensation is tied to performance, decisions should be made based on employee’s future value to the organization. This can be tricky because it can be speculative. But the advantage is that you are investing in a person’s potential to succeed, which is much more attractive to the employee. The speculation is reduced if your reviews are conducted frequently and involve multiple perspectives, and the manager and employee are collaborating on the employee’s development. 


About

Brandon Hall Group Strategy Briefs answer the critical questions learning, talent, HR and business leaders must address to manage their human capital. To tackle these critical questions in more detail, we built tools, frameworks, research summaries and business builders based on up-to-date research and case studies for you to implement best and next Human Capital Management (HCM) practices. To gain access to these valuable resources, contact success@brandonhall.com.

Leading minds in HCM choose Brandon Hall Group to help them build future-proof employee-development plans for the new era. For more than 28 years, we have empowered, recognized and certified excellence in organizations around the world, influencing the development of over 10,000,000 associates and executives.

 

Claude Werder

Claude Werder oversees Brandon Hall Group's analyst team, new product development, corporate development, the HCM Excellence Conference 2015, publishing, and social media and marketing strategies for Brandon Hall Group. In that role, he manages Brandon Hall Group’s research priorities, Membership Program and Member Center, and Brandon Hall Group’s exclusive KnowledgeBases of research data and HCM solution providers, services and products.