Pangea’s network of HR leaders dive headfirst into the choppy waters of performance management and pick out the key trends to follow in 2023.
At our latest Pangea HR Lab, our network of HR leaders dove headfirst into the choppy waters of performance management. From reviews and ratings to promotions and titles, the group shared their collective experience on different performance management approaches and discussed best practices for 2023.
Here are the core performance management trends to consider this year.
Have ‘annual reviews’ gone the way of the dodo? Yes and no. On the one hand, the idea behind ‘annual reviews’ – i.e. looking back at achievements, looking forward to future goals, assessing business outcomes and identifying support needs – are all still prevalent. On the other hand, they are happening more regularly than ‘annually’.
Given much can change over the course of a year, many companies are undertaking full review processes (i.e. employee self-assessment, manager feedback and 360s from the wider team) every six months to determine promotions, rate increases and adjustments. For example, Meta has two six-month reviews: the first, looking back (reviews) and the second looking forward (promotions). These regular reviews are also supplemented with frequent 1-2-1 manager meetings for continuous feedback and recurring coaching conversations focusing on employees’ strengths and further potential, which has improved participants’ engagement with the review process.
According to Gartner research, almost a third (30%) of HR Leaders plan to remove ratings in the near future and 12% already have. As more companies pay attention to performance in the wake of tough economic conditions, what alternative methods are they using?
Some companies are moving from forced rankings to broad, tiered targets. In this set-up, a maximum 30% of employees can be allocated to the top tier with managers able to decide who should be placed in the middle and lower tiers. However, really high performers have found the ‘top 30%’ quota diluting and the use of managerial decision-making opens the door to unconscious bias.
Most companies are trying to focus on quantitative ratings rather than qualitative ratings this year to ensure all employees are evaluated from the same lens. For instance, companies that had used general managerial observations to determine ratings are moving to three-point rating systems to remove manager bias, boost accountability and create an equitable process for promotions.
Making promotions more objective – i.e. based on tangible scorecards rather than managers’ decisions – is a primary focus for HR leaders, but there has also been more of a spotlight shone on celebrating promotions. Promotions can not only change an individual’s life, but also motivate others (especially if it’s a diverse promotion), reinforce goals and embed a culture of recognition.
Most companies celebrate promotions via social media shoutouts (as anyone on LinkedIn recently will know), but some companies are using innovative internal methods to make promotions more meaningful. For example, some announce promotions at an event with the partner/family of the employee in attendance, while others use an internal platform to announce promotions where employees could comment and ‘like’ it. But, on the whole, companies are not doing enough to celebrate promotions given the associated benefits and should consider introducing recognition activities, such as a team dinner, lunch with the CEO or notifications on a recognition platform.
‘Title inflation’ or ‘overtitling’ is a problem usually exacerbated by growing and hiring fast. It can demotivate employees (who think others have a better/undeserved title) and cause confusion in the decision-making process. Given titles vary from company to company, how do you decide what’s the appropriate level for you?
Some companies are consciously clearing up their titles by giving employees the ability to change their titles to others in a set framework. This initiative not only levels up titles, but ensures employees are satisfied with their current title. For instance, a mid-sized company of around 250 people could create a number of title levels with certain impact-related competencies attached to each one and a clear ladder for employees to climb (using Learnerbly’s Career Framework is a great place to start).
Others create a clear structure – i.e. C-Suite, Management, Specialists, Operations etc – based on their company culture (i.e. how decisions are made) and comparable organizations in the sector, and then make job descriptions uniform.
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Pangea HR Labs bring together HR leaders from high-growth tech companies to share perspectives on what’s happening and what’s moving the needle as the HR landscape evolves.
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