The Perception Change in Performance Management
The need for businesses to operate by significant changes in social, cultural, and political meanings has emerged due to globalization. Organizations have had to re-examine their management styles in this setting and establish new facts and techniques to achieve a competitive advantage and boost efficiency and production to adapt to fast-changing and evolving world conditions. The human component has gained currency as the most critical factor of production held by businesses due to implementing the change as mentioned above. For the human part, which is widely acknowledged as the most significant resource of companies, to be productive, they have to adopt the corporate culture, have a vote in business decisions, and have a clearly defined career path. To determine the extent to which these criteria have been met, they started doing “Performance Evaluations.” Seeing that these are not new issues, we can also say that the usage of performance management has increased even more due to the technological shift in the last 20 years. The technological enhancement caused more positions to require employees with more profound expertise, more dependent judgment, and exceptional problem-solving skills, leading to a need for evaluation.
There are numerous ways for performance evaluation that different managers and companies generated. They were seen as a great way of increasing productivity for a long time, and still, most of the companies around the world use them. However, in the last decade, we were also able to observe many large Fortune 200 companies started to cancel their annual performance reviews. They gave several reasons for eliminating yearly performance reviews, including that judgments were unfair, subjective, and demotivating and that they did little to promote employee performance (Fang & Weisner, 2019). Additionally, supervisors frequently failed to provide honest or constructive comments, citing annual evaluations as too time-consuming and inefficient for reporting input (Stephen Miller, 2019). As a result, many businesses believe data is lacking to make critical personnel decisions.
The traditional way of performance management started to be seen as too output-oriented and regards the process. In some cases, it might result in decreased motivation and confidence of staff instead of higher performance. This is mostly caused by the wrong implementation of the system. This kind of evaluation requires employers to keep track of all employees work and progress detailly, however, just by observation, this is not possible or sustainable. It puts too much work to the manager where the manager ends up with lack of information, biasedness, and the performance evaluation ends up being a waste of time for both sides.
Therefore, we can say yearly evaluations either should be managed in a more professional way where the company keeps track of the employees work or should be eliminated. The first solution is to find a way to keep track of the employees and their works, for this the most efficient and practical way is using technology. Most of the companies continuing yearly evaluations choose to use software solutions to keep data of the employee performance. One of these software solutions is SAP. SAP iView Status Overview and SAP iView allows manager to utilize the iView user interface to prepare evaluations for employees in their scope of responsibility. The manager can also see an overview of all the assessments that need to be processed further, i.e. those that have not yet been finished.
The second option is to cancel the yearly performance evaluations. A firm can choose to employ continuous feedback systems to make successful personnel decisions in the absence of yearly reviews. These systems can be applied in many different ways. For example, some of the best practices of continuous feedbacks can be listed as rating-less performance reviews, ongoing performance reviews and crowd-sourced performance feedback.
Stepping to the integrated way of measuring performance using such methods is a crucial step for companies. Collecting employee data would not only help in performance evaluation but it can also be used for numerous analytics reasons. Companies can then grow and improve their performance management techniques to better align their organization with its values and goals.
Fang, Y., & Weisner, A. (2019). What are Best Practices to Measure Employee Performance to Support Hiring Promotion With No Ratings?.
Stephen Miller, C. E. B. S. (2019, August 16). Ratingless reviews and pay practices. SHRM. https://www.shrm.org/resourcesandtools/hr-topics/compensation/pages/ratingless-reviews-positively-affect-pay-practices.aspx.