Recognising employee performance is an increasingly important area for CEOs to get right if they want to remain competitive and develop future leaders.
As CEOs and managers face an increasingly competitive environment, where the need to identify talent within an organisation is essential, leaders need to have the right tools at their disposal.
The result is that companies are now investing more money than ever in measuring and understanding the performance of their company and their leadership development.
Leadership pipelines more important than ever
Recent research from Bersin, a organisation within Deloitte, has revealed just how widespread the need to build a strong leadership pipeline is across the world.
The study found that 85 per cent of business and human resources leaders see the acquisition and management of a talent pipeline within their organisation as the among the most pressing issues their organisation faces.
What’s more, businesses are struggling to implement strategies to build a pipeline of talented workers who will be able to fill high-ranking positions in the future. Of those surveyed, only 15 per cent felt they had a ‘ready’ pipeline of talent within their organisation.
Even fewer have programs to identify leadership potential within their business. Among those who took part in the research, 10 per cent have a program that caters specifically to Millennials – those workers who currently make up the youngest cohort in a company.
While a lot of the challenges that come with developing a successful talent pipeline arise from changes in the workforce, the Bersin study also pointed to the difficulty of assessing the skills of workers.
In particular, the research found that purely numerical assessments of staff performance actually undermined their productivity. In particular, high-achieving staff members found themselves struggling to remain motivated following formal assessment programs and numerical scores for their performance.
Instead, the study found these workers are looking for positive feedback that can help them develop leadership capabilities and grow within an organisation. The result is that many businesses are now reevaluating how staff are assessed – in fact 70 per cent of respondents to the study are looking to redesign their processes for measuring the performance of employees.
While companies are clearly struggling to develop a pipeline of talent for their organisation, businesses are also finding it difficult to measure the value of individual workers.
Personality differences may impede staff progression
As companies invest more in understanding how their staff are performing, the perceptions workers have of one another is becoming an important factor behind a worker’s advancement within a business.
However, these personality differences can also lead to imbalances in the way staff acknowledge the success of one another, at least according to research from Oregon State University.
The two studies carried out at the University revealed that, when asked to rank their co-workers skills, introverts awarded lower scores to their extroverted colleagues. The research suggested that introverted workers reacted negatively to their extroverted coworkers approach and this was then reflected in their evaluations.
However, introverts did rank other introverts highly in the study, while the scores awarded by extroverted staff members recorded no difference between introverted and extroverted workers.
‘We found that introverted employees are especially sensitive to their co-workers’ interpersonal traits, in particular extraversion and disagreeableness,’ said Associate Professor Keith Leavitt.
Leavitt went on to state that this shift is especially important as companies use peer assessments as a tool to measure the performance of staff.
‘That gives employees a tremendous amount of power to influence their peers’ career opportunities,’ said Mr Leavitt. ‘It’s something individuals and employers should be aware of.’
So if identifying and promoting staff is more important than ever, and employee assessments can be distorted by personality differences, how can companies accurately measure employee performance?
New approaches to managing performance
A Harvard Business Review study has attempted to identify exactly how companies can identify and promote workers who are engaged with their work and performing highly as a result.
The research suggested three approaches that companies will need to incorporate if they want to understand employee performance. These three were:
Aligning every stage of a business
Companies which place a high priority on identifying and encouraging engagement among employees are also those that have prioritised the issue at every level of their organisation. This also means senior managers within these organisations have taken the time to align internal structures with the overall goal of identifying and encouraging high-performing staff.
This alignment also needs to take place at every level of an organisation, from the C-Suite to middle managers and individuals within each team. By aligning each level to the overall goal of recognising employee performance with that structure of a company, organisations are better able to develop a talent pipeline.
Avoiding rote surveys
Among the biggest mistakes that businesses make is relying on rote surveys when they are looking to boost employee performance. The study suggested that instead, companies need to be more careful with the surveys they prepare so that the information they gather is actually addressing the issues an organisation is facing.
The research also found that senior managers and C-Suite executives need to be invested in this process – when processing and understanding data gathered from employee assessments and then using these insights to build a stronger business.
The final ingredient for companies that are looking to improve their measurement of staff performance is to focus on data – both the results of employee assessments but also from other measures like customer satisfaction surveys.
Combining data points from numerous sources will also help companies overcome any issues that arise when their staff lean too heavily on a single metric like peer reviews which may distort the end result.
By taking these steps, companies will be able to overcome the variety of challenges they face around identifying and promoting high-performing staff members. As competition between organisations increases, taking these steps will be essential for building the next generation of leaders within a business.