How to Master the Shift from Performance to Development Management
Currently, many organizations question their performance management. The reason for that is an increasing number of employees in competence-based jobs as technical and manufacturing jobs are disappearing due to automation. According to a study by the World Economic Forum, cognitive flexibility, creativity, emotional intelligence and active learning are the most important competencies for the future. These competencies need to be learned because they are crucial for the future success of organizations if they want to stay capable of acting in an ever-changing world. So far, however, only around 50% of organizations have already promoted the necessary competencies for the future.
The so-called ‘ranking and yanking’ – the comparison of employees against their colleagues – disappears more and more. Instead, there is a clear focus shift from past-oriented performance evaluation to future-oriented employee development. The stronger emphasis on employee development has the advantage that employees learn competencies that are important for the organization’s success faster, which also leads to a higher employee retention. To obtain this shift in emphasis, the traditional field of performance management gives way to the broader understanding of development and performance management.
Driver: Digital HR
In addition to the trend of shifting the focus from performance to development, another trend emerges. New technologies such as Artificial Intelligence and Machine Learning disrupt entire business areas and they will not leave HR untouched. Employees expect modern technologies at their workplace that help them to work more effectively. Today, software needs to be perceived as a service with a variety of functionalities that can be quickly adapted to the needs of a specific customer group. This is also how HR can use technology to support the development and performance management. The standard market functionalities of existing HR cloud solutions suites, for example, are already suitable for a wide range of HR topics which means that the prototype for a later configuration exists already.
From performance to development management: a case study (I)
One of the most important expectations towards digital tools is that they support the individual development of employees. In this light, at Capgemini Consulting we implemented a modern cloud solution as a tool for development and performance management for one of our clients. The configuration of the tool was conducted over a six-month period in an agile and client-oriented approach. We guided the client over the entire bandwidth, from management and HR consulting to the actual IT configuration of the cloud system to the necessary cultural change management.
In the first phase of the assessment of the current state, a stakeholder analysis was conducted among all hierarchical levels. The goal was to analyze the strengths and weaknesses of the existing development and performance management and to inquire people about their expectations towards a new tool. Secondly – and based on bottom-up, key stakeholder considerations – the major changes and necessary design decisions on the development and performance management were discussed – and determined – by the organization’s leadership.
Since the tool is a cloud solution, the configuration was created based on the pre-built ‘scaffolding’ of the tool, which was improved continuously following an agile project methodology. The approach for the configuration was to start first with major elements and key processes such as target setting and people reviews and to become more detailed with every agile sprint. We invited all stakeholder groups with a special focus on the relevant user groups for the testing to avoid any blind spots in the configuration. Test users received access to the system and were able to give feedback right away. The feedback was considered for every sprint and thereby improved the configuration continuously. After each sprint, a short report-out was conducted with all testers. The goal was to inform them about their impact on the configuration and to motivate them for a further engagement. This client-oriented approach helped to achieve a user-friendly tool and also laid the ground for the subsequent cultural change.
The functionalities of the tool support the shift towards development by giving employees the possibility to keep track of their development goals all year long and foster continuous interaction between all employees across-hierarchies.
Digital tools support the individual development
Since retention and competence development are important factors for financial success, modern development and performance management processes need to focus on the development of employees. The shift from past-oriented performance orientation towards future-oriented employee development should be the number one priority of this new development and performance management approach.
One way to promote the competence development of employees is to promote continuous feedback in the organization. Feedback stands for a constructive response on changeable, observable behavior. Employees want regular feedback because they want to know how their development is going. Through continuous feedback, employees obtain clarity about their strengths and their development potential and can work on their development with a clear focus. This could decrease the onboarding time of employees and thereby counteract the ever-shortening period of organizational affiliation.
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Furthermore, coaching techniques could be used to promote the development of employees. Coaching serves the further development of learning and performance processes and is a result and solution-oriented form of consultancy. Employees want to receive consulting on their career development and leaders can support them in identifying their passions. The development of strengths is highly beneficial because employees perform best if they can work according to their strengths. Hence, the role of leaders needs to be reviewed, because they are first and foremost their employees’ coach, not their evaluator.
In terms of the leadership role, we need to know what characteristics are needed for a transformational leadership style:
- it’s characterized by the fact that the manager motivates employees by sharing a vision and;
- understands the strengths and development potential of his/her employees and;
- develops them through result-and solution-oriented coaching questions.
From performance to development management: a case study (II)
We recently accompanied a cultural change at one of our clients using a specific agile change management approach developed by Capgemini Consulting. In this change approach, the change measures are not completely planned and then implemented according to the waterfall method. Instead, individual measures are tested in short change sprints in a small organization sample and then scaled organization-wide.
The advantages of this agile change approach are that the measures can be tailored specifically to the needs of the employees. Furthermore, the iterative process allows us to develop tangible results faster.
The goal of the cultural change was to promote a culture of feedback and coaching so that employees are encouraged to own their development and follow their individual career path. It was aimed at creating a culture in which it is normal to give and receive feedback on a regular and cross-level basis.
To find out about the needs of the employees, focus interviews were conducted with selected employees on different levels as a first step. Based on these focus interviews so-called development labs were created. These labs were first tested within a few teams that work together closely on a daily basis. In the four-hour lab, feedback and coaching techniques were developed and practiced. Then the employees discussed as a team how they could put these techniques into practice in their everyday work. After the first validation of the format, informal workshops were conducted at different office locations to obtain further measures for the culture change. The development lab was revised and optimized and can now be used organization-wide.
In times of skills shortage and ever-changing working environments, a competence development program that fosters organizational commitment of employees should be the highest priority. Digital tools can be used to support employees in their daily development. To accomplish the behavioral transition from performance to development orientation, a cultural change in development and performance management is required. This can be mastered quickly and effectively through agile change management, as it allows to respond to the needs of the organization and to prototype measures on a small scale before they are applied to the entire organization. The combination of a digital tool and an overall cultural change is the pre-requisite for a sustainable competence development of employees in an environment that allows them to follow their own career path. Focusing on development will secure the long-term success of an organization.
Capgemini Consulting is the global strategy and transformation consulting organization of the Capgemini Group, specializing in advising and supporting enterprises in significant transformation, from innovative strategy to execution and with an unstinting focus on results.