Innovation in Performance Management

Innovation in Performance Management

Introduction

The COVID-19 pandemic has significantly impacted performance management strategies used in organizations because most traditional performance management systems were frustrating, ineffective, and too rigid due to the high-risk business environment created by the pandemic’s disruptions. One of the main innovations in performance management that emerged during this time was the agile performance management approach. The approach includes continuous performance management while considering external and internal changes in the business environment and their impact on individual performance. This research reviews the gaps that the agile performance management approach was designed to address, its implementation and success, how to measure its success and how it can be implemented in our organization.

Analysis

The Gap or Issue Being Addressed

The agile performance management approach was designed to address the infrequent feedback, manager bias, lack of clarity, adverse reaction to feedback and evaluation, and overreliance on pay incentives evident in traditional performance management approaches. The agile approach would address these issues by supporting frequent feedback, creating a two-way conversation check-in to facilitate an adequate flow of communication, and offering regular feedback. The approach would also promote the efficiency of performance management by enabling autonomy in feedback appraisals.

Measuring the Success of the Innovation

The approach’s success can be measured through productivity, predictability, quality, and stability. The approach is anticipated to yield high employee productivity and improved quality of services offered through the implementation of feedback provided by peers and managers during frequent performance appraisals. The ease in predicting the performance of an employee based on how well they implement the feedback from managers and peers also helps to determine if the approach is successful or not. Stability relates to the lack of change in employee performance, which could indicate that the approach is unsuccessful.

Implementation of the Innovation

The agile performance management approach was first implemented by Clydesdale Yorkshire Banking Group in the United Kingdom to eliminate annual performance appraisals (Advanced Clear View, 2018). The implementation included adapting or following various steps. The first step was determining appropriate agile performance management tools. According to Schmidt (2018), agile performance management tools should facilitate more multi-directional and informal feedback through check-in conversations, competencies, and goals. The authors recommend using Totara Perform, an agile performance management system that supports traditional and modern performance management. The second step was introducing regular performance check-ins. Pulakos & Battista (2020) define check-ins as detailed two-way conversations between staff and managers that are usually guided by formal goals. The bank’s check-ins focused on employee development and goals and were an opportunity to enhance employee morale and initiate required action. The third step was establishing objectives and key results. The bank used OKRs to measure and monitor performance.

OKRs include the broad, qualitative, and high-level outcomes that should be achieved and critical results that break down the objectives into specific stages or steps and quantify them to track progress and measure performance. The fourth step was aligning continuous feedback on the organizational culture by creating a constant feedback process. The fifth step was implementing the 360-degree feedback framework. According to Fleenor (2019), 360-degree feedback includes gathering input from everyone in the organization. The other step was identifying the existing and missing competencies and preparing employees for training to equip them with the knowledge and skills required to perform assigned tasks as expected. Implementing the agile performance management approach at Clydesdale Yorkshire Banking Group was a success because the employee’s performance increased through proper training and development opportunities to meet agile goals.

Implementing This Innovation in Our Organization

Accordingly, our organization could implement the agile performance management approach because we operate in a highly dynamic business environment. Therefore, the approach would be effective in determining how the changes in the business environment affect employee performance and the opportunities they create to improve employee performance. However, the future success of the approach in our organization would require implementing 360-degree feedback to get constructive and positive feedback on changes in employee performance based on the changes in the business environment.

Additional Performance Management Strategies

According to Fleenor (2019), 360-degree feedback gives important information that can be used to predict performance by providing a comprehensive evaluation of the individual performance of every employee based on the views of their peers whom they interact with regularly. It also plays a significant role in employee development by identifying areas they should improve and how they will impact the organization. The insights from the 360-degree feedback can be implemented in designing employee training and development programs to sustain continuous improvement. Hunt et al. (2019) argue that 360-degree feedback improves the agile performance management system by mitigating bias because feedback is sought from different people. Therefore, our organization needs to establish the most effective way to combine the agile approach with the existing 360-degree feedback system.

Recommendations For Continued Improvement And Handling Of Legal, Ethical, And Bias Challenges

Another vital factor our organization should consider in implementing the agile performance management approach is continued improvement and handling of legal, ethical, and bias challenges. One of the recommendations to achieve this is to develop a clear performance evaluation structure. According to Spanò & Zagaria (2022), the lack of a proper structure to determine how performance should be measured in an organization leads to bias. Therefore, it is important to create a clear evaluation structure that considers all aspects of an employee’s performance, such as assigned tasks, the skills required to complete the tasks, the complexity of a task, employee gender, and age. The second recommendation is to agree on specific goals. Managers should consider the goals that every employee should meet to determine whether they meet the required performance levels. Employees should also be informed that their performance will be measured against the specified goals.

The third recommendation is to record employee progress to determine the changes in their performance. It is important to acknowledge even the slightest improvements in performance to keep employees motivated. The fourth recommendation is to find common ground with every employee to prevent bias. For example, managers and employees may agree that performance will be evaluated based on the targets set for each employee. The fifth recommendation is to look at performance metrics using analytics to track performance for easy data comparison against performance reviews. According to Spanò & Zagaria (2022), analytics help objectively assess or evaluate employees because the Human Resources department can review the data, compare it against the performance review results, and discuss any discrepancies with the managers to determine the accuracy of the review. I would also recommend gathering feedback from different sources, such as client feedback, peer reviews, and supervisor reports.

The Impact Of New Technologies On Performance Management

Our organization also needs to consider the impact of new technologies, such as artificial intelligence (AI) on performance management. According to Schmidt (2018), agile performance management accelerates the performance management process and guarantees timely feedback, thus enhancing its efficiency. Artificial intelligence can also mitigate biases, particularly when making decisions on employee promotion. The data gathered during employee performance reviews can be quantified to determine employee performance and what needs to be improved as well as the opportunities that can be leveraged to improve performance. Performance ratings acquired through artificial intelligence can be used to evaluate employee performance objectively. Artificial intelligence can also be used to predict employee potential. Palmas (2022) argues that artificial intelligence tools can use data about an employee’s past performance to make rational predictions about how the employee might perform in future roles, thus guiding decisions on the distribution of responsibilities and promotions. It is also important to consider replacing managers’ roles in performance management with artificial intelligence tools. Artificial intelligence also eliminates gender bias in performance reviews because AI tools consider all employees humans when assessing salary, experience, and performance. Therefore, our organization can quickly reduce the gender gap and create equal opportunity for all employees, thus abiding by the Equal Pay Act and other anti-discrimination laws.

Conclusion

Performance management is vital in every organization because it affects organizational performance, reputation, employee turnover, and job satisfaction. One of the main factors that have resulted in the move from traditional to agile performance management approaches is the COVID-19 pandemic. Organizations should consider using the agile performance management approach due to the dynamic nature of the business environment. The approach helps organizations to understand the impact of external and internal changes on employee performance. The approach was also designed to address the infrequent feedback, manager bias, lack of clarity, adverse reaction to feedback and evaluation, and overreliance on pay incentives evident in traditional performance management approaches. The successful implementation of the approach in our organization requires using it alongside the 360-degree feedback approach to reduce bias. In addition, our organization must also embrace artificial intelligence in performance management to prevent bias and discrimination.

References

Advanced Clear Review. (2018). Clydesdale Bank Performance Management Case Study – CIPD conference [Video]. YouTube. https://youtu.be/xRzEMdpe3oQ

Fleenor, J. W. (2019). Delivering 360-Degree feedback. Feedback at Work, 227-247. https://doi.org/10.1007/978-3-030-30915-2_12

Hunt, S. T., Sherwood, J., & Pytel, L. M. (2019). Technological innovations in the use of 360 feedback for performance management. Handbook of Strategic 360 Feedback, 77-96. https://doi.org/10.1093/oso/9780190879860.003.0005

Palmas, F. (2022). Using artificial intelligence to improve human performance: A predictive management strategy. Artificial Intelligence and Social Computing. https://doi.org/10.54941/ahfe1001441

Pulakos, E. D., & Battista, M. (2020). Performance management transformation: Lessons learned and next steps. Oxford University Press, USA.

Schmidt, T. (2018). Neue, Agile performance-management-Ansätze. Essentials, 11-12. https://doi.org/10.1007/978-3-658-20660-4_4

Spanò, R., & Zagaria, C. (2022). Performance management systems: Emerging issues and future trends. Integrating Performance Management and Enterprise Risk Management Systems, 5-33. https://doi.org/10.1108/978-1-80117-151-920221002

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Identify an innovation in performance management that you read about in this week’s reading or read about in the news. Introduce the innovation in 1-2 paragraphs addressing the following questions:

Innovation in Performance Management

What issue or gap was the innovation designed to address?
How was it implemented, and was it successful?
How can you measure its success?
Next, reflect on the following for your organization or one with which you are familiar.

Could you implement this innovation in performance management at your current organization or an organization with which you are familiar? Why or why not?
What additional performance management strategies might you implement to assure future success?
What are your recommendations, or best practices, for continued improvement and/or handling of legal, ethical, and bias challenges?
In what ways might new technologies, such as artificial intelligence, impact performance management?
Be sure to analyze the questions posed and provide supporting rationale. Organize your paper into sections using the following headers:

Introduction
Analysis
Conclusion
Each section should be written using well-developed paragraphs. Within the assignment, reference key concepts in the course, as well as course readings. Cite sources in APA style.

Formatting

Style: Your paper should be written using well-developed paragraphs.
Length: Your paper should be approximately 3-5 pages in length. Points will be deducted for papers that exceed the specified length (see rubric below for more details).