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Traditional Performance Management Reviews Are History

In my blog, Strategic HR with Data-Driven Human Capital Insights, I reviewed how the C-Suite is focused now more than ever on employees. The average employee base is nearing 75% of staff being Millennials, and traditional annual performance reviews aren’t meeting the needs of employees. Millennials want continuous feedback, at least on a monthly basis, and up to 50% more than other generations. They want to know how they did on their last project - now, not how they did last year. Many managers aren’t equipped (skills and tools) to provide the amount of feedback and coaching that Millennials want. Not to mention the amount of time it takes to prep for feedback sessions and the time for sessions themselves.

Beyond Millennials, 66% of employees think the annual or semi-annual review process hinders their productivity. And they feel like not much comes out of it because they are often talking about something that happened a year ago and they feel like managers aren’t prepared in those meetings and are only going through the motions.

The traditional annual performance review process has also become more of a mechanism to determine merit increase for employees and less about actual performance and goals. However, just like everything else in HR we are seeing a shift. Employees are demanding a better employee experience and they want to know what is expected of them and how they are measuring up to those expectations. In fact, Millennials would rather work for less if they feel like they are contributing and making a difference in their jobs. They are not driven by money like other generations and what they want is changing the future of performance management.

This change is happening rapidly and to keep up, successful HR leaders are turning to technology. Technology is enabling a better employee experience by putting the power of performance back into employee’s hands. Now employees can get more frequent feedback with 1:1 meetings and other quick communication tools. 

SAP SuccessFactors has recognized and responded to this trend with their Performance & Goals solutions. Part of this solution is a Touch Base app that helps keep management in the loop of what their employees are working on when they should give feedback. It’s easy, quick and mobile so they can provide real-time feedback even when they are on the go. SAP recently announced they are doing away with annual performance reviews and transitioning their entire staff of 80,000 to their Continuous Performance Management solution.

With the right performance management solutions you can reduce turnover, improve productivity and engage employees for long-term results. There are added benefits beyond engaging employees. Ending annual performance reviews and focusing on performance management has positive results for the bottom line. The numbers behind performance management in this infographic tell the real story.

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The future of performance management will be key to driving employee engagement, increasing productivity and improving the bottom line.

 1st Farm Credit Services made the transformation last year and is experiencing great results. We outlined the lessons they learned in a case study to help companies understand the transformation they can make.

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Vijay Nachimuthu

By Vijay Nachimuthu

Vijay Nachimuthu is a Managing Principal of AltaFlux. His blogs mainly focuses on latest cloud technology trends and its impact on enterprises.