Performance and reward – a relevant approach

Performance and reward – a relevant approach

Assessing progress and setting goals just once a year won’t do organisations or their employees any good in the immensely fast future of work, so new approaches are needed to benefit both the company’s strategy and the engagement of people.

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Partner, Performance & Reward

KPMG Australia

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As job design becomes more fluid, workforces more agile, strategies more dynamic and deliverables more diverse, an environment is created where long-standing approaches to performance management are no longer relevant.

“Traditionally, we’ve been dealing with hierarchical organisations that are designed for regular review and reward,” says Jason White, Director, Performance & Reward, KPMG. “We’re now facing different systems that are more focused on a disparate set of outcomes, with virtual teams, working in different matrices.”

Traditional performance management systems, including the process of setting goals, providing feedback and offering reward, are very process driven and management lead. However, Tim Nice, Partner, Remuneration & Reward, KPMG, says with project-based work and collaboration between teams more common, this approach is out of step.

“Both leaders and employees and are getting frustrated with performance management in its traditional form,” he says.

Owning accountability

White says a more suitable approach to performance management for the future is giving employees greater ownership and accountability for managing their performance and results. This needs to be underpinned by the right mix of tools and support including the supply of real time data and continuous feedback.

“When new teams get together to collaborate on a project there is no time to do a detailed job design to work out the discreet nature of who is doing what. It is better to focus on team outcomes and an accountability culture,” he says.

Nice says that allowing people to set their own goals and allocating accountability for deliverables should be coupled with more on-the-spot performance feedback from leadership and colleagues.

“They (employees) are saying, I know what I’m being asked to do, and what I am held accountable for, and I will evidence that. I don’t need to wait for a form at the end of the year to catalogue my work, I can grab feedback as I go,” he says.

That on-the-spot feedback can help build a narrative about how the employee is tracking, shifting the performance management from happening ‘to’ employees, to a process that they are more actively controlling.

“The emphasis is on having a regular dialogue about how people are going, how they can improve, and to add to their development tool kit to help them with the next assignment,” Nice says.

Technology can help

To gather and facilitate more ‘real time’ performance data, a range of crowdsourcing and online feedback tools can help employees and leaders manage real time feedback.

“The tools allow individuals to profile their own performance. They can help you build a footprint of activity over time,” he says.

Interactive dashboards can enable employees and leaders to capture information, contact colleagues and comment on work well done.

White adds that this also saves managers a lot of administration and time. He recently helped a client transform their approach from one they felt was ‘process-led and bureaucratic’, to one that uses online feedback collaboration to keep pace with how they now operate.

“Their view was, we spend so much time and effort, but it’s a process that runs you over,” he says.

Conversations still count

While technology is useful, there is still a need for face-to-face conversations. However Nice says thanks to real-time feedback gathering, they should ideally be more relevant to the individual than generic.

“The emphasis is on meaningful performance conversations instead of hiding behind the annual process questions. It could be the employee bringing to the table that powerful information,” he says.

Leaders used to following annual procedures may need some coaching to get the most out of this approach, White suggests.

“It’s also about helping managers to monitor high and low performance, and giving them the tools to manage those two ends of the spectrum,” he says.

The connection to reward

This leads to the issue of reward, and knowing who and what to reward in complex working structures. Bell curves, ratings and score cards are traditional approaches, but may now be less useful.

“Those processes are not really in line with employees’ experiences. For example if a leader is choosing between two employees to try to fit them into a bell curve, it can lead to a dissatisfying outcome for everyone,” Nice says.

It could be more effective to ‘decouple’ performance management and reward processes and outcomes, he explains.

“Managing the high and the low from a reward perspective is about who needs help, and how do we get them back to the ‘mighty middle’. Then giving them equitable rewards. For the handful of high performers, you can give them something different to what is going on in the middle.”

He explains that this puts emphasis on the two spectrums – “and less time on deciding minute differences in that middle group”.

A fundamental shift

When organisations shift into more fluid review and reward processes, it should enable them to be more proactive with strategy shifts and use of talent. It should also boost employee engagement, Nice says.

“This continuous improvement and feedback offers a lot of opportunity and enables a lot more real conversations about work that will stretch them and where they might move next within the business.”

White sums up that it should encourage people to be more innovative and take ownership of their futures.

“It becomes much more of a more mutual discovery than a single point of view from management,” he says.

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