The State of Corporate Performance Management in 2024

 

The world of HR has been revolving around the concept of constant change. While the last few years have seen the onset of a global pandemic, HRs took a front seat in driving the workforce remotely. Then came the season of the great attrition, where employees seeked out a change of work from late 2021.

While that trend continues, what 2024 foresees is an economic turmoil, a possible recession waiting to loom upon the world. While HRs continue to manage change effectively for consecutive years, the headwinds of employee performance stand tall as a challenge. Especially, this year where more pressing challenges such as budget management, and layoffs take precedence.

What HRs need this year is a ‘healthy balance’, to identify the most pressing challenges posed for them, and managing employee engagement, corporate performance management and retention amid the layoffs, and greater uncertainty. Therefore, finding right answers to questions such as why is performance review important and how can one set up a meaningful performance review management process is catching everyone’s eyeballs.

Here’s our take on what we call finding ‘The Great Balance’ to succeed in the times of turbulence.

Forces Driving Corporate Performance Management in 2024

Before we delve into the idea of how performance reviews are to be in 2024, let’s understand the on-ground HR challenges with review cycles this year.

1. The effect of a possible recession on performance reviews

According to McKinsey, despite recently announced layoffs in some sectors, in the United States, for example, there are 1.8 job openings for every hire, according to the US Bureau of Labor Statistics. 47% of HRs feel that employee experience is the holy grail priority in 2024. 

This means that human capital has become scarcer with the great attrition, and employee retention and experience continue to be the top priorities, despite the layoffs. But why is that? Here’s why.

With layoffs, it is likely that the reduction in team sizes will pose additional responsibilities for existing employees. Great talent is in demand even now and their experience is important for the HRs in driving business outcomes.

HRs will therefore have to invest in human capital, and ensure that both the pulse and the performance of employees are positive and progressing. Moreover, the lasting effects of the pandemic have inspired employees to seek newer work experiences and that trend is expected to continue this year too.

To do so, what is the most result-oriented action to ensure that current employees deliver high performance? Performance tracking and reviews come to the rescue. However, the challenge today is that traditional performance reviews follow a rigid pattern of conducting meetings based on closed tasks, rather than unleashing one’s true potential by linking goals. They are conducted once or twice a year.

The timeline is not a sensible choice to discuss half an years’ progress, challenges, roadblocks and achievements. Only when the manager’s understand these challenges will they be able to guide the ‘great talent’ to perform better.

HRs, therefore, need to take a disruptive route to bypass traditional performance reviews. To maintain a healthy ratio of engaged employees, and to increase their motivational levels, a comprehensive performance model is the need of the hour.

In times of turbulence, constantly being aware of the employee pulse helps achieve progress and success consistently. This is possible with regular check-ins with employees, 1:1s. By conducting 1:1s, managers can discuss the scope of additional responsibilities, reassess priorities and plan a mutual plan of action tailored for each employee, so that the talented employees are prepared for the uncertainties, until the economic turmoil settles. 

Learn how Peoplebox platform enables automated 1:1s. Request a demo to learn how technology can help HRs facilitate the dream of a seamless performance review.

2. Ineffective Performance Reviews

A McKinsey survey indicates most CEOs don’t find the appraisal process in their companies helps to identify top performers, while over 50% of employees think their managers don’t get the performance review right.

Ineffective performance reviews often branch from the following challenges:

• Narrow Vs Broad Understanding of review cycles: Often performance reviews are conducted to delve into the past achievements of employees. The idea of shaping a broader narrative, by understanding how real feedback can support holistic growth is often missing, leading to a very narrow outlook that doesn’t serve the purpose.
• Infrequent Reviews: Conducting only annual reviews is a yesteryear idea. However, most organizations, even today, look at performance reviews as an annual task, rather than an opportunity to explore one’s best potential.
• Asking the wrong questions: What you ask is what you get. And yet, most HRs are troubled to get their questions right, resulting in getting insufficient and meaningless feedback.
• Data Inadequacies: Data is a powerful medium that guides everyone to find their Northstar. However, identifying the right metrics that foster one’s best performance is often overlooked.

The checklist to conduct efficient reviews:

• Understand the broader purpose of reviews. Create a review that fosters growth, provides a chance for improvement and helps in employee’s holistic growth. 
• Conduct regular check-ins and 1:1s with employees to not just get feedback, but to understand their pulse. When done frequently, they can mirror issues that need immediate attention and help elevate the  performance.
• Leverage technology to frame relevant and most useful questions that can culminate into realistic, honest and actionable feedback.

Bonus tip: If you want to understand the performance review questions, here’s a good read that will help you.

• Make data the epicenter of growth. Identify key KPIs, road blocks, and opportunities from the feedback and create a meaningful plan of action until the next cycle.

3. Remodeling effective leadership with performance reviews

According to Gartner’s survey 2024 , 24% of HR leaders say their leadership development approach does not prepare leaders for the future of work. And this challenge is the utmost priority for 60% HR leaders for 2024.

While leadership development is an ongoing process, it is extremely important to track the progress of where you started and where you headed. That’s where combining goals to performance can help. Peoplebox helps your team to set goals, track progress, get feedback, and run reviews all at one place. 

That said, this year HRs must set expectations for leaders to take the right direction. Especially with the ‘hybrid’ model reigning in the current year, managers must use the collaboration time to understand employees better, and HRs should play a key role in executing this change.

HRs must foster an empathetic approach so that managers can take appropriate actions that will foster team bonds, highlight any concerns employees are facing. The way to execute this is by conducting regular performance review meetings. Not just for monetary appraisals, but to keep an eye on employee challenges, their roadblocks, and facilitate a road for growth.

The effect of 1:1s with a positive approach, can deliver 2x results for HRs, bridging the alignment gaps between teams. 

Pro tip: To ace the difficult conversations, here’s an aid for 1:1 meeting questions that help prepare for the meeting and have effective outcomes.

4. The disconnect between employers and employees

The same McKinsey survey also brought to light the differential ways of thinking of employers and employees. Employers said the top reasons that their employees were quitting were that they were looking for better jobs, compensation, and work– life balance. But employees’ responses painted a different picture: among the top reasons they gave for quitting were not feeling valued by the organization or by their individual managers and not feeling a sense of belonging at work. 

The disconnect is likely to stem from lack of open communication channels. Employees now-a-days seek transparency as a mandatory trait in work culture.High performing teams can be enabled only when they look beyond mere task-based transactional conversation, and instead give valuable feedback. This helps employees grow, and contribute more to business goals. HRs can solve the puzzle by bringing together the managers and team members on a common platform that integrates employee growth with performance.

A comprehensive developmental discussion sets a platform for employees to discuss their aspirations, paving way for them to grow in the long term. These conversations, when run parallelly with short-term goal-driven discussions, can help employees build a career with your company and decipher a sense of belonging. Here are three key traits you must consider for your developmental review to succeed:

• Actionable: The discussion must lead to actionable outcomes, especially since the discussion is for the long term. Managers can assess how the aspirations can be turned into feasible results.
• Frequent: The discussion must be actioned upon regularly at consistent frequencies to ensure that it is a part of the overall growth discussion. The frequency can be decided by the employee, manager and the HR to track the progress and create follow-ups accordingly.
• Personalized: Because not all fingers are the same. Based on the employee experience at the company and the gaps in the overall business strategy, leaders must shape each employee’s aspirations and help achieve career growth.

Key Takeaways:

• While employee layoffs are real and progressing, with great attrition, the need for employee engagement and retention has become the utmost priorities of HR teams.
• Performance reviews both developmental and appraisal level are going to shape up the employee experience and satisfaction for the next year.
• The commencement of the hybrid model will give scope for leaders to understand team members with exclusive 1:1s and shape their aspirations accordingly.
• This year also sees HRs raising the bar by linking employee performance with motivation and well-being. 
• By connecting goals, feedback and reviews, and leveraging them on a self-serve technology platform, HRs can pave the way for high performance.
• The sooner organizations adopt regular performance reviews, that involve deeper discussions beyond monetary appraisals, the sooner they will pave the way for growth.
• Learn more about how you can raise the bar with our performance management platform. If you want to understand how you can unlock an employee’s true potential, book a free demo with our experts.