Traditional performance management processes are dying.Performance management is being disrupted. In two-thirds of organizations today, business leaders are rethinking the traditional methods of managing employee performance. And employees are breathing a collective sigh of relief. According to Harvard Business Review research, some of the most common performance management methods can actually demotivate your best performers.

Creating a positive employee experience in the performance process isn’t just possible—it’s a necessity for companies looking to engage and retain the best talent.

Shifting Gears on Performance

Ten years ago, virtually every company that was doing performance management was doing so in a once-a-year fashion, often ranking employees from highest to lowest in terms of performance. This not only becomes an incredible drag on productivity, but it also creates an adversarial relationship across the board:

  • Employees see the process as punitive and unhelpful.
  • Managers see it as an exercise in futility, destined to make even good workers unhappy.

In recent years, more and more companies have done away with traditional approaches to performance management. From Sears and Deloitte to PwC and Pandora, companies are trashing the ranking and rating processes of old. The results are intriguing. For instance, Deloitte estimates that it now saves nearly two million hours by not wasting time with talent reviews and calibrations. These results, and those of others that have made the switch, are helping to fuel this increasing trend. In 2014, i4cp reported that just 6% of companies were changing their approach to performance management; in 2016, that jumped to 66%.

The New Performance Approach

Many think that the biggest change in performance management is a shift to more frequent conversations. And while that is a factor, the goals of the practice itself have changed as well. Today, performance is being seen as more than just a way to keep tabs on accomplishments. It’s a channel for recognizing good work, true, but it also gives employees and managers an opportunity to focus on development and growth.

According to Gallup’s research, nearly 90% of Millennials say that development opportunities are important in their job. Therefore, a key reason employees leave their employer is because of a real or perceived lack of advancement and growth opportunities. By shifting performance to focus more on how to align employee strengths with the needs of the business, it creates a winning combination for all parties involved.

Applying Theory to Technology

The conversation thus far has been technology-agnostic, but now that you know the fundamentals it’s not challenging to see how this can be applied within your company’s performance management technology.

  • Seek out opportunities to recognize and develop employee strengths
  • Help managers understand how to seek information on employee development aspirations and goals, tracking that data within the system
  • Encourage managers to track regular development discussions within the system for review purposes and to illuminate any gaps in employee skills for growth and advancement

While the employee experience spans more than just performance management, this aspect of a worker’s employment relationship has the capability to be an incredible driver of retention and satisfaction. In addition, enabling a high-performance workforce is a goal any employer would be happy to achieve.

Written by: Ben Eubanks, Principal Analyst, Lighthouse Research & Advisory