Performance Management: Employee Retention and the Power of the Feedback Loop

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This is the third post of a 4-part series on Human Capital Management and the application of digital technologies, such as cloud-based HCM tools.

In my last post, "Onboarding: How Can Technology Take Us Beyond Compliance and to Connection?," I discussed going beyond compliance to connection within the HCM suite. Recruiting and onboarding took us through the first hiring steps, now it’s time for the employee and their manager to come together and plan their next steps. This process typically starts with discussions and goal setting and should include ongoing performance management. This is one of the most important areas to evaluate in your current processes prior to undergoing any HCM software implementation.

A recent Bersin/Deloitte study states “companies that set performance goals quarterly generate 31% greater returns from their performance process than those who do it annually, and those who do it monthly get even better results. This means employees get feedback on a continuous basis.” While this may be typical in a sales organization, are there other places you could apply it in your company? It’s the regularity of the manager and their employee reviewing progress against their goals that build their relationship and leads to regular coaching and feedback – resulting in higher quality reviews at the end of the year.

I’ve read numerous studies where both employees and employers are highly dissatisfied with their performance appraisal processes. If the process doesn’t work well, good technology will only make a bad process faster! The outcome of a successful implementation should be process improvement, and for goals and performance this may include taking a hard look at your business process first.

Performance management has to be an ongoing process, not an annual event. The first rule to follow is that employees want regular feedback. If they are not doing something right, they should get some corrective feedback early on in the process with ongoing coaching until the performance is to a desired level. For those who are performing at a high level, take the time to recognize them. Recognition doesn’t have to be financial. Salesforce recently added thanks with badges to Chatter. This can also be combined with gamification and rewards, but “thanks” does go a long way.

Managers need to be adept at giving feedback, both positive and negative. If they aren’t comfortable giving feedback, they may not be the right person for the job or they deserve the training to be able to properly provide feedback. Feedback has also become social. While most peer feedback leans to the positive, the manager can request peer feedback as part of an annual appraisal process or on an as needed basis. This feature is one of the powerful keys to cloud human capital management systems.

The areas of performance management that cause the most damage to employee engagement, ongoing performance and retention, are forced distributions of employee ratings. The bell curve never really worked in school and certainly doesn’t work in business. A small portion of the problem includes:

  • Employees get so hung up on the numerical rating they never actually hear the feedback that’s intended for them
  • Employees lose trust in their manager, rendering ongoing feedback useless
  • The employee essentially fires their employer before they leave – becoming disengaged and looking elsewhere while still collecting their paycheck from the current company

Take the time to discuss the performance management process with your key stakeholders before implementing a new HCM system. The adoption to the new system will be far greater if the process improves along with it.

Read my final post in this series called "Employee Compensation: Tying Your Compensation Strategy to Corporate Goals" to establish some key compensation takeaways.

- Ken Steinman, Consultant and Certified Performance Technologist

Post Date: 2016-03-15