Future-Proofing Your Organization: Performance Management, Recognition and Rewards, Culture, Values, and Behaviors
This is the fourth and final installment of our series on Future-Proofing the Organization. At Carnrite we think about Human Capital across eight elements, and here we will focus on what companies should consider as they modernize performance management, recognition and rewards programs, and take another look at the health and wellbeing of their culture.
Performance Management, Recognition, and Rewards
Performance management is a strategic approach to creating and sustaining improved performance in employees, leading to an increase in the effectiveness of companies. As ways of working, workforce demographics, and critical skills change, the processes used for performance management must change with them. Effective performance management should align the requirements of the organization with the needs and contributions of individuals. Key objectives should be consistent with the organizational strategy and should help to develop individual performance. The process should also clarify roles and priorities and reinforce accountability. This means regular two-way communication, that adapts to changing circumstances, underpinned by coaching and development.
Annual reviews and goal setting are becoming antiquated and may not be the best ways to measure and manage employee performance in a more fluid workforce. They focus on outcomes instead of behaviors, are transactional in nature, and don’t allow for changes that may occur throughout the year. Employees are rated and often force-ranked based on a scale, which is often inconsistently applied across departments or functions. Conducting the traditional performance review once each year is time-consuming, complicated, and disliked by managers and employees alike. Furthermore, it is fruitless for the employee to wait all year long to hear the feedback toward year-end. Performance management, when not done the right way, can lead to lower employee engagement and productivity.
It is not necessary to radically overhaul existing processes. Rather, it can be supplemented with new methods such as social recognition on an ongoing basis, setting regular goals that can be tracked at quarterly intervals as business needs change, or providing opportunities for employees to give feedback to their managers. Additionally, incorporating behaviors and critical skills into performance management processes is a great way to reinforce culture and provide the basis for leadership and employee development.
Companies that are future-proofing their organizations will need to find new ways to assess and improve employee performance. The first place to start is by aligning a company’s culture with performance goals. This will reinforce the company’s values, provide a clear understanding of expectations, and allow the employee to connect with their work, driving better overall performance and enhanced employee engagement throughout the year.
Culture, Values, and Behaviors
Culture is the heartbeat of the organization. As Peter Drucker said, “culture eats strategy for breakfast.” It is a function of who a company wants to be (mission and vision), how the company will achieve the vision (strategy), and how the company will operate (values and operating model). These three facets must be aligned to drive engagement, else getting it wrong can negatively affect the bottom line in a very direct way.
In addition to the stressors companies are facing to future-proof their organizations – the pace of innovation; increased use of technology and artificial intelligence; sustainability and diversity, equity and inclusion (DE&I); and generational differences – a company’s culture may also be bruised or in need of repair due to past restructuring, staff reductions, portfolio changes, evolving priorities or reduction in staff involvement. The cultural attributes that may be negatively impacted and are necessary to compete in the future include innovation, empowerment, transparency, flexibility, and collaboration.
The first step to understanding the health of a company’s culture is to conduct an assessment to understand the current culture within the organization – what is voiced, how it is modeled, and how it drives processes and policies. This is more than an employee satisfaction survey. This assessment is designed to provide deeper insights on:
- Gaps between current and aspired culture
- Communication needs
- Human capital issues and considerations
- Opportunities to improve workforce engagement
The outcome is a detailed narrative of the culture and the adjustments that should be made within the organization’s human capital strategy and operating model to close gaps and reach the aspired-to state.
Allowing culture to evolve naturally through growth or reaction to external forces (e.g., the pandemic driving remote working) can be risky. The key to deliberately stewarding or changing culture in a positive way is awareness, openness, and the discipline to continuously learn what is working and what is not. Conducting cultural surveys provides a baseline for communication among leaders and is a direct input into the design of the company’s operating model.
We hope you enjoyed the Future-Proofing Your Organization Series. If you would like to go back and revisit the previous articles, you can find them on our Insights page.
If you’re interested in learning more about Carnrite’s Human Capital Services, contact Gillian Tilbury, Partner and Human Capital Lead.