In 2019, Mercer updated their Global Performance Management study. Unfortunately in the six years since their last study on the topic, there hasn’t seemed to have been much progress. Just 2% of respondents claimed their performance management process delivered exceptional value to the business. 

In today’s environment, when a company’s results are heavily dependent on the performance of each employee, HR and C-suite operational leaders can no longer be content with legacy performance management processes. It’s become mission-critical to uplevel employee performance management practices in order to support better business outcomes.

Mercer identified the following “Four Truths” needed for more effective performance management:

Truth #1 – Goal clarity matters most

The most important thing companies can do is ensure every employee understands how their work contributes to overall company priorities. This clarity helps them understand how they can, day-to-day, have a positive impact on the business. In a rapidly changing business environment, reviewing and transparently communicating company priorities on at least a quarterly basis helps keep everyone focused on what matters most to the business.

Truth #2 – Effective coaching requires empathetic, action-oriented managers

Providing quality, actionable feedback to employees is an important skill every manager needs to continuously work to improve. General feedback, however, is not as valuable as specific, individualized feedback that will accelerate their contribution to business goals. Related to the point about goal clarity above, it is most important for managers to clearly communicate their expectations and then provide feedback and coaching that helps employees meet and exceed those expectations.

Truth #3 – Dropping ratings doesn’t necessarily mean richer feedback

Many organizations feel uncomfortable with ratings as a point-in-time, generally annual, view of performance. They recognize the need for a more continuous performance assessment process, but simply dropping ratings isn’t the fix. They need to be replaced with the things that actually contribute to a feedback-rich culture: clear goals, meaningful information about performance and removing bias from performance evaluations.

Truth #4 – An integrated talent management strategy is the way forward 

Mercer states that “HR leaders [must set] a strategy that combines the business priorities with the desired employee experience”.

Transforming performance management starts with aligning everyone’s work to the goals of the business and ensuring managers can clearly communicate these expectations to everyone on their teams. Technology can help to ensure top company priorities are communicated, team and individual goals are aligned and progress is transparently tracked. Technology can also support managers through the crucial conversations they need to have regularly to ensure expectations are clearly communicated to each employee and to coach them to improve their skills and contribution.