Your Action Plan for Pay and Performance Management in an Agile World

At Workhuman Live^® Online, we offered five content tracks tackling HR’s most pressing issues. The result is more than 30  sessions of on-demand content featuring workplace experts from around the world. 

Use these action plans to assess and tweak your HR strategy and better position your organization for the future of work.    

Below are five areas of focus when building an action plan for your organization to embrace agile pay and performance management, with insights from: 

• Joe Hirsch, managing director, Semaca Partners
• Tamra Chandler, partner/principal at EY
• Stacia Garr, co-founder and principal analyst with RedThread Research

1. Embrace the revolution.

For years there has been whispers throughout the HR space about the death of traditional performance management. In fact, Tamra Chandler’s research has found about 70% of businesses agree there must be a better way. So why have only 20% of businesses jumped off the performance management train in search of something better?

The notion of embracing the performance management revolution is more important than ever. Chandler reflected: “In the world we’ve been living in – this disrupted, dispersed, distanced world – we need something different. We need a way to check in more frequently and need our people to really understand what’s expected of them now, in a way that enhances their performance and lowers their stress.”

Ideally, engagement drives performance. Yet, as Chandler recognized, traditional performance management actually drives disengagement. The new era of performance management must develop employees, help them grow, build leadership, and coach humans so they can achieve their full potential.

“The new era of performance management must develop employees, help them grow, build leadership, and coach humans so they can achieve their full potential.”

2. Take the bias out of performance management.

Even with the right framework for performance management, other issues can block the feedback cycle from operating at full efficiency. Stacia Garr, who has studied performance management for years, often finds employers who do not believe systemic biases apply to their organizations.

After digging into the data, however, she explained, “There is systemic bias, particularly in the types of feedback that different populations receive.” Regardless of if the employees receive similar scores, she continued, “the information they’re getting about how they are performing is different … And that certainly impacts promotion rates.”

When leaders are trained to give feedback equitably, regardless of race, gender, sexual orientation, or age, “the quality of the feedback goes up and the objectivity goes up, allowing for fewer biases to creep in.”

Even without the danger of conscious bias, Joe Hirsch explained, “The reason why feedback so often feels judgmental is because it is. We’re not just getting someone else’s perception of the work that we do. To the recipient of feedback, the message can even sound like a verdict on who we are.”

In fact, Hirsch said most feedback says more about what the feedback giver believes than what he or she actually sees. This means that any of the 150 types of unconscious biases common to the workplace can muddy the feedback intended to help an employee.

Rather than be a “window gazer,” or someone who looks at an employee’s progress and judges it for themselves, Hirsch encouraged striving to be a “mirror holder.”

3. Get real with rewards.

The future of work is agile, meaning that both performance and pay need to be reimagined. One of the most common mistakes Chandler sees when organizations begin reworking their performance management strategy is leaving out rewards and recognition.

For too long, organizations have believed that external motivations drive sustainable performance. Chandler, with a mountain of research supporting her, knows this isn’t true. Data has shown that merit-based pay doesn’t provide desired results, yet organizations continue to live by this broken standard.

To create a well-rounded performance management solution, we need to move away from the traditional “pay for performance” and shift toward a “pay for capabilities and recognize for contribution” model. After all, Chandler asserted, “There is a very short half-life on annual bonuses. And I think we need to be willing to step away from them and move to more micro ideas that are tied to the impact that people have.”

4. Replace power with partnership.

Performance reviews can be daunting. Receiving criticism is never easy, especially when it’s coming from someone who essentially controls whether you’ll collect your next paycheck. But it shouldn’t be this way. Reviewing an employee’s performance should be an open, two-way conversation.

“As organizations continue to define and redefine how and where work gets done,” Hirsch explained, “the time has come to democratize performance by replacing power with partnership.” This requires open dialogue, continuous collaboration, and authentic feedback in order to, as Hirsch put it, “unlock fresh insights about human potential and set the conditions for more candor, clarity, collaboration, and humanity in the workplace.”

Further, Garr recognized the importance of candor cannot be understated, both in terms of feedback and psychological safety. “People need to feel like they can share what they need to, but they also need to feel that others will share what they need too.” Only when employees feel safe talking, questioning, and accepting feedback can true growth occur.

5. Keep it simple.

In the end, rolling out an immersive and agile pay and performance management strategy should be simple. Chandler’s concluding remarks in her Workhuman Live Online session sum it up perfectly:

“The solutions that are more human-centered often are far more simple. There are fewer actions, fewer checkboxes, less documentation, fewer forms, less policing and oversight. But getting there is rarely simple, because it takes us changing our habits, letting go of those myths – courage, frankly – to lean into what science tells us works. That truly is human-centered and powerful for your people and your organization.”

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