Good performance management in 2024 is like navigating a smart garden. You have tech assisting in monitoring and optimizing the growth conditions for each plant—just like how good employee performance management tools and software use their capabilities to tailor development plans for each employee.
In this garden, sensors (akin to performance metrics and feedback tools) provide real-time data on the health and growth of each plant (or employee). The gardener (you) uses this data to adjust resources like water and nutrients (training, opportunities, and support) to ensure each plant not only survives but thrives.
The best performance management tools (or gardeners) recognize the unique needs and potential of each plant, while understanding the goals and objectives of the entire garden and surrounding ecosystem. This creates an environment where everyone can grow to their full potential.
Tools, software and action items to drive performance for today’s employees
In this piece, we'll go over why the best performance management tools prioritize real-time employee feedback, data and analytics, flexibility, ownership and the immediate needs of your employees.
You'll also get examples of the best performance management software that action each of these performance management techniques and strategies.
Real-time feedback over periodic reviews
When we think of traditional performance management tools, the classic annual performance reviews definitely come to mind.
When examining performance management tools or performance management software look for tools that prioritize and center frequent and real-time feedback over periodic reviews. Here’s why:
Moving beyond traditional annual or bi-annual performance reviews
Businesses are starting to catch up to the fact that annual performance reviews can often do more harm than good when it comes to performance.
Harvard Business Review reports that more than one third of US companies have left traditional annual performance reviews behind. This includes industry leaders like Adobe, Deloittte, Accenture, Microsoft, and IBM.
Companies are moving beyond traditional annual performance reviews because they often can’t fully evaluate employee performance and are ineffective at driving employee growth development.
“With their heavy emphasis on financial rewards and punishments and their end-of-year structure, annual performance reviews hold people accountable for past behavior at the expense of improving current performance and grooming talent for the future, both of which are critical for organizations’ long-term survival.” - “The performance management revolution” by Harvard Business Review
Recency bias and one-way communication
Recency bias can further sway managers' perspectives in annual performance reviews. Managers may disproportionately focus on the employee's most recent performance, overlooking important contributions or issues from past performance.
Further, annual performance reviews do not encourage two way communication, or a holistic view of employee performance as they are typically one-way.
Annual reviews usually only reflect the perspective of the direct manager. This leaves out important feedback that could come from peers, subordinates, or other leaders your employees work with.
Annual reviews also increase employee anxiety and stress–to only hear your manager’s perspective on your performance once or twice a year is intimidating and nerve-wracking to say the least.
"The way human beings make progress is through small steps, not through a bizarre conversation once a year." - Robert Sutton, Professor of Management Science and Engineering at Stanford University
Shift to real-time feedback
Prioritizing real-time feedback in your performance management tools is a direct path to increasing employee performance.
Why? Real-time feedback is immediate and actionable. It allows employees to quickly understand what they’re doing well and what needs improvement soon after specific incidents, projects, or behaviors.
This means employees grow and apply learnings to their work as they go, improving the quality of their current and future projects.
Improving employee engagement
Employees feel more engaged and valued when they receive regular feedback for performance management. Ongoing communication helps build stronger relationships between employees and managers, and can increase job satisfaction and motivation.
Align with organizational objectives
Real-time feedback helps in aligning employee goals with the organization’s objectives more effectively. It makes it easier for your employees to understand the direct line between their own individual performance and organizational goals.
Further, performance management tools that prioritize real-time feedback allow for quicker adjustments to individual employee goals and projects in response to changing organizational priorities and focuses.
Finding a balance: Creating a performance management system
Not every business is the same and neither is every employee on your team. So, you'll have to find a balance in your performance management tools that works for your unique team and business.
Traditional review processes shouldn't be thrown out the window entirely. Dedicating regular time to talk about performance outside of regular check-ins is important. However, a review process should happen at least quarterly, and be paired with real-time feedback.
Ongoing feedback and regular performance reviews should be a part of each employee's performance management plans or performance review process.
This is how you establish a culture of continuous feedback, performance evaluations and employee growth.
Recognition to increase performance
For our most recent report: “How to motivate employees in 2024,” we surveyed 3000 employees across industries to uncover what drives motivation for today’s employees.
- When asked what demotivates them most at work, survey respondents ranked “no recognition for hard work” in the top four.
- 22.5% of surveyed employees selected “no recognition for hard work” as a top demotivator at work.
- Further, when asked “what does good management mean to you?” consistent recognition and development from managers was a top four theme that came up throughout survey answers.
Surveyed employees noted good managers focus on growth, recognition for performance and skill development, consistently. Proving ongoing feedback that happens in real-time should be prioritized in your performance management strategy and performance management software.
Performance management software for real-time feedback
Here are some examples of a performance management solution or performance management software:
Lattice: Offers features for goal setting, one-on-one meetings, real-time feedback and performance reviews.
15Five: Performance management platform that centers continuous feedback and performance reviews. Employees are encouraged to seek feedback themselves, so what they learn is useful, actionable, and ownable.
Trello or Asana: Teams can track progress, set goals, and provide updates on tasks, which can include feedback components.
Data and analytics
You know data is important. But, determining the right data set and analytics that drive the behaviors you want to see in your employees is critical for a performance management tool or effective performance management system.
Key performance indicators (KPIs) and goals
Be sure to identify and define the key performance indicators that are most relevant to your organization's current goals and the performance of your employees.
In addition, create employees KPIs and goals that are personalized to them and their strengths and areas of improvement. These could include productivity metrics, sales figures, customer satisfaction scores, and more.
It's important to look for performance management software or a performance management tool that allows for organizational, team and individual goals and KPIs that can differ for each employee.
Many of us think about siloed events when it comes to the performance of our employees.
When thinking about your performance management processes for someone on your team, you may often think of separate points of time. For example, different projects, aspects of their role, how they communicate with other team members or behavior in specific situations.
Examining performance and performance management in silos, drives inconsistency. It can also be frustrating for your team as they may feel their performance isn't being looked at holistically. In addition, performance can’t really be measured by relying on spontaneous or intuitive observation.
So, when examining performance management tools and performance management software, be sure to look at those that can:
- Draw data and analytics across your employee’s performance to create a holistic view
- Rather than examining different points in time separately.
In Fast Company’s article “Performance analytics: A blueprint for optimized employee performance,” they discuss what to look for in analytics in performance management software.
The best performance management software or performance management tool should have the following capabilities.
- Analyze current conditions (descriptive analytics)
- Discover what drives present performance (diagnostic analytics)
- Anticipate future performance (predictive analytics)
- Engineer improvement for future performance (prescriptive analytics)
Capabilities for ongoing and consistent performance analysis are also critical for any effective performance management software or performance management tools.
Employees as co-owners of performance management
A direct way to ensure employee goals and KPIs are personalized to employees is transferring power to your employees. Gartner explains in their “Redefining performance management to drive impact” piece:
“Leading organizations diagnose what employees need and expect from performance management.They ensure that employees are the creators, not just consumers, of broader performance redesigns as well as what performance management looks like within their relationships with their managers.”
When you allow employees to become co-owners of their performance management and performance management tools this not only reduces the workload on managers but also improves the utility of your performance management tools.
Gartner reported that organizations that maximize utility by closely aligning performance management with employee and business needs saw a:
- 24% boost in workforce performance
- 7% higher proportion of high performers in their workforces
Collaborative solutions where employees can have a say in what performance really means for their own role, goals and areas of expertise is key for performance management software and the best performance management tools.
Flexibility in performance management
When employees are treated as co-owners of their performance management systems, this creates some needed flexibility that is very motivating for today's employee.
Work-life balance, tools and policies that allow for flexible working hours, remote work, or compressed work weeks can enhance employee satisfaction and productivity. Flexibility should be central for your performance management system.
Personalization in many ways has become the norm, and it’s something that today’s employees are expecting more and more throughout their performance management process and the performance management software they use.
“Gone are the days when simply focusing on compensation, job title, and financial security was enough to keep most of a workforce satisfied (and performing). It’s about providing any or all of those things in the proportion that’s best suited to a particular segment of your workers.” - Mckinsey & Co, State of Organizations in 2023 report
Depending on where someone is in their life, a certain development opportunity or increased flexibility can be more important or motivating for performance management than a small salary increase.
The right performance management software and performance management tools should allow flexibility and ownership for your employees.
Performance management software for holistic data and analytics, personalization, flexibility and employee ownership
Here are some examples of the best performance management software:
Lattice: Focuses on performance management, including goal setting across the employee lifecycle, one-on-one check-ins, and data collection for employee engagement surveys.
Other performance management software can also be used as indirect performance management tools including:
- SAP SuccessFactors: Provides a range of capabilities including performance and goal management, learning and development, and employee engagement analytics.
HR analytics tools
- HireRoad: The platform streamlines every stage of the hiring journey and fast-tracks the time it takes to turn new recruits into major contributors.
Employee engagement and feedback tools:
- Culture Amp: Specializes in employee engagement, performance evaluation, and development planning through surveys and insights.
- Glint: Offers real-time employee engagement surveys and people analytics.
Financial wellness program analytics tools
- ZayZoon’s Employer Connect: Determine which worksites are using your EWA program and how often, unlocking insights into workplace financial stress and productivity.
Employee financial wellness as a performance management tool
It’s no secret that your employees are struggling with their finances. 60% of Americans are living paycheck to paycheck. 51% of people who earn more than $100,000 reported living paycheck to paycheck in the U.S. today.
Employee financial wellness is an indirect performance management tool as it reduces employee financial stress and increases employee motivation, leading to increased productivity.
What is employee financial wellness?
Providing employees access to tools like financial educational resources, budgeting tools, debt management resources, and retirement planning. These resources can reduce employee stress and turnover.
A popular employee financial wellness tool for employers is Earned Wage Access. Which empowers employees to access their earned wages ahead of payday.
Earned Wage Access to drive performance and productivity
EWA wouldn't fall under performance management software, however it does drive employee motivation.
We asked employees, who currently use ZayZoon’s Earned Wage Access, a few questions to see the impact of using this tool on their performance, tenure and motivation at work.
When asked, “on a scale of 1 to 5, how much does the availability of ZayZoon’s earned wage access motivate you to perform well at work?” 78% answered 4 or 5.
We know that wage and salary can increase employee motivation and performance. However, the rise in popularity of EWA shows businesses are beginning to understand this also includes financial wellness and empowerment programs like Earned Wage Access.
Addressing the immediate needs of today's employees
As you know, employee performance management is a multifaceted task. And, we don’t think Earned Wage Access is a magical silver bullet that drives performance at every business.
However, EWA is a critical piece in the puzzle of comprehensive financial wellness tools that addresses the immediate needs of your employees.
From what our employer partners and research tell us, EWA is a significant draw for today’s employees to join your business and stick around. Today’s employees want to work for employers that understand, value and are responsive to their financial wellbeing.
For ADP’s “Earned Wage Access: Tapping into the Potential of Flexible Pay for Today’s World of Work'' report, they interviewed 600 businesses and 1,000 workers. They found:
- 96% surveyed businesses stated EWA helps them attract talent
- 76% of surveyed employees across all age, education and income levels said it was important for their employer to offer EWA.
- 93% surveyed businesses stated EWA helps them retain talent
Financial wellness softwares like ZayZoon can also provide employers with data on employee financial health, allowing them to tailor benefits and support more effectively. This can lead to more personalized and holistics performance management strategies that were discussed in section 2.
Next steps: performance management for 2024
Your role as a people leader, or gardener, is to create an environment where employees feel valued, understood, and motivated. By embracing the performance management software and tools discussed, you can foster a culture of continuous improvement and performance for your garden.
Remember performance management tools, performance management strategies and performance management software should prioritize:
- Real-time feedback
- Holistic data and analytics
- Employee ownership
- The needs of today's employees, including financial wellness
This is how you ensure your performance review process has real utility instead of being a check-box exercise.
ZayZoon & enabling employee performance management
The best performance management tool is no longer just about assessing; it's about enabling and empowering your employees. Financial empowerment is not just a benefit; it’s a high performance enhancer.
If you want to talk to a real human being to learn more about how to empower your employees, financial wellness programs and Earned Wage Access or how ZayZoon can help improve your performance management, feel free to get in touch. We’re always happy to talk.