Performance management trends for 2023

“Yay, it’s my annual performance review!” said no one, ever.

That’s because it’s the one time in a year you find out what you’ve been doing right, and (the horror!) what you’ve been doing wrong, and how all this is going to impact not only your bonus but your future in the company. It’s a stress- and often fear-inducing process that most employees would rather go without.

Fortunately, we have entered the age of the employee, and over the last few years, there have been significant changes in performance management.

Performance management software has become the name of the game in 2022, and it’s brought along some friends. Here are some of the top performance management trends you can expect to see in 2023 and beyond.

Up and away we go—but where to?

According to a study by Gartner, 81% of HR leaders are changing their organisations’ performance management systems, and less than a fifth feel that performance management is successful right now. This means that a fundamental shift is certainly on the cards.

For many of these organisations, experimentation will be the major performance management trend because, while they have realised that their performance management processes are ineffective and outdated, they are not sure what exactly their next steps are.

Adios, annual review

By all accounts, the annual performance review has been given the boot. While it was a gradual shift, it has been a dramatic one, and the changes just keep coming.

HR leaders are replacing the annual onslaught with ongoing 360-degree feedback and coaching, allowing employees to keep track of and be supported through their review journey.

This allows managers to regularly check in with employees so that they can keep track of their progress, help them realign with their goals, and maintain focus on current projects and areas of development. The objective is to provide constant feedback by having crucial conversations throughout the year.

Crucial conversations? Sounds like I’m in trouble.

Crucial conversations aren’t as daunting as they sound (and certainly not as daunting as an annual review!) A couple of years ago, the NeuroLeadership Institute developed a roadmap of six performance management conversations.

Here is a guide to them.

Goal-setting conversations

These are the conversations that help an employee see the value they can add to the organisation by delivering on set short-term goals. These goals are often strong motivators of performance.

Feedback conversations

Constructive feedback is known to improve performance. While managers typically give feedback, science has shown that it is equally important for employees to ask for feedback so that they can get it whenever they feel they need it. These conversations can help empower employees to perform better.

Check-in conversations

Ah, there’s that new word again—check-in. What does it mean? It means having conversations about not only the current status of work, but also about expected outcomes, learnings, growth, and employee wellbeing. Employee wellness has become a key focal point in the workplace, and including it in check-in conversations will help foster a culture of relatedness and connection.

‘The end’ conversations

Perhaps another dramatic sounding one, but this simply refers to the end of a cycle, be it the end of the year or the end of a project. Having conversations around the end of a cycle should be a review of an employee’s processes and actions as much as it is about the outcome.

Money conversations

People don’t like talking about money. Period. It makes them nervous and uneasy and often leaves them questioning their worth. To avoid this, it is important to have regular conversations about compensation, explaining how it is structured and what employees can expect as they grow. It is also crucial for employees to be actively involved in these conversations to ensure that their worth and their pay cheque align.

Career conversations

These are crucial conversations that need to happen on an ongoing basis to create a partnership between employer and employee regarding growth and development. Highlighting an employee’s growth and contributions can help motivate them to go even further in their careers.

The human experience

If this is sounding like it’s just about people and meaning, that’s because it is.

Coined in the Deloitte Insights Global Human Capital Trend Report in 2019, human experience is about giving meaning to and personalising an employee’s work. This has shown to be a good approach to productivity as it engages employees and helps them to feel like they are making a positive contribution to the business outcomes.

What’s more, creating a human experience reduces staff turnover as unfulfilled employees tend to either ‘quiet quit’ or find a new job that makes them feel engaged.

So, how do you create and support the human experience?

Software

With rapidly changing performance management practices comes rapid development of performance management software.

New performance management processes are being enabled by next-gen software solutions that plug seamlessly into traditional HR platforms to allow easy access to new technology.

This technology can greatly assist in the personalisation of an employee’s work through automated feedback tools and self-service platforms that provide a level of autonomy not previously experienced by employees.

These tools help integrate meaning into performance management strategies as regular engagement between employees and managers creates a greater connection between performance and the organisation’s goals.

Data

Data-driven analytics is also making its way into the HR space and is having an impact on performance management specifically. Issues like improving the employee experience, reducing turnover, and increasing productivity can all be supported by people analytics, which can also reduce the load on managers, allowing them to focus their efforts where they’re needed most in the employee lifecycle.

While data analytics is a powerful tool when it comes to performance management, it is vital to take a holistic approach to it by considering every aspect of a situation rather than just taking it at face value. Data is meant to be analysed and translated into actionable insights. Using data to guide actions will help people achieve what is required of them.

What role does the cloud play?

Not only is performance management software showing up more, but it is increasingly moving to the cloud and being accessed on any mobile device with an internet connection.

This is important because these cloud solutions allow organisations to create self-service portals for their employees to manage much of their own personal information. From these portals, employees can access their leave accrual, submit their annual or sick leave, update their personal details, access their feedback notes, KPIs, and much more—all they need is access to the app.

How tech meets mental health and wellness

Mental health and wellness have become a top priority in the workplace, and, as such, organisations are beginning to incorporate support into their performance management practices. Supporting employees’ mental health helps maintain productivity and builds strong relationships in the workplace.

Technology can help employers continue the mental health conversation through their performance management software. The software can be programmed to offer alerts for mental health check-ins, reminding managers to take some time out to check in on their employees’ mental wellbeing.

What’s the short version?

• The nature of performance management is changing, and organisations are adapting their strategies to fall in line.
• The annual review has been replaced by ongoing feedback and crucial conversations.
• The human experience trumps all.
• Data-driven analytics need to be approached holistically and turned into actionable insights.
• Cloud-based performance management software is becoming a thing.
• Mental health and wellness check-ins are a crucial part of performance management.