A key tool in recruitment and retention
This dilemma has been particularly prevalent when it comes to our customers in the third sector. We recently spoke at the Third Sector’s Breakfast Briefing to outline the importance of having a strong reward strategy in the context of the employee value proposition to drive both recruitment and engagement; but this is equally applicable across all sectors. According to data collected from our UK Reward Management Survey, 69 per cent of third sector employers have experienced recruitment difficulties and 56 per cent have experienced retention issues within the past 12 months. 63 per cent have had to offer new recruits higher salaries than those offered to existing employees. Organisations’ handling of performance management is a critical tool to address this recruitment and retention challenge as it has such a profound impact on its culture.
Beyond the snapshot
Many organisations agree that the traditional annual, point based system may be of limited help on a day-to-day basis. This stems from the competing aims of performance management: both to measure performance, looking back over the year, whilst aiming to develop and improve performance, looking into the future. Whilst the traditional system is often a snapshot of the year with some employers reporting that it is used purely for informing annual pay reviews, truly effective performance management uses interim reviews to revisit the outcomes and ensure that values and behaviours are being embedded in the ongoing employee-employer relationship. This goes beyond individual reviews and can widen the lens to look at the whole team’s way of working.
Individual goals and behaviours aligned with purpose
Transparency and fairness is key to making the process as useful as possible. Behaviours often form a core part of the performance review process, alongside competencies and meeting agreed objectives or targets for the year. Employers often say that the biggest challenge they face is putting in place a consistent framework that can address the different approaches taken by each arm of the organisation. Behaviours and competencies that are valued in the sales orientated elements of the business differ to those required by the more philanthropic, customer serviced roles. Producing balanced scorecards tailored to each function is a common approach when assessing each role or job family across the business. Separating out behaviours and competencies may in fact result in values-led behaviours remaining consistent for all employees, with each function being truly differentiated by their own set of competencies.
Behaviours underpin culture
Organisations are increasingly identifying the required behaviours that align with the desired culture that they wish to protect or create. Unifying workforces to deliver upon the wider vision of the organisation can be the key to unlocking employee engagement. Values and behaviours are more than just ‘nice to haves’ and more than just words on a poster. They should guide and underpin everyone’s way of working and empower employees to respectfully call each other out when it comes to everyday actions. Upholding values and behaviours embeds and reinforces the expectations that become the DNA of a company. Creating an open environment that supports individual progression as part of a collegiate environment can have a more sustained impact than discrete annual conversations. This takes performance management beyond the tick box exercise for which many criticise the process.
A holistic approach
With an emphasis on mental and financial wellbeing in the workplace, it is important to view performance management as part of this wider movement to unlock the potential of individuals so that they flourish and do not burn out from stress and unrealistic expectations. This is a key dimension of the employee experience. Effective management is critical to make the most of this opportunity to truly support employees. Equipping managers with the tools and resources to mentor their teams is essential, transforming performance management from an annual appraisal to an ongoing conversation. Dan Pink defined pivotal motivators at work as autonomy, mastery and purpose. These drivers can be built into this open approach to your performance management system, enabling your employees to achieve their full potential.
Employers have to be more innovative given the recruitment and retention difficulties that they are facing. Mobilising all employees so that they understand their role in the delivery of the organisation’s vision and purpose can overcome the more granular differences in the key capabilities that are expected of different departments. Culture can be used as a compass to ensure that the behaviours are not wildly different across functions, but serve to complement one another, avoiding a culture clash. Building an environment where everyone is united behind a common vision and purpose can avoid inter-departmental culture clashes.