Mastering Performance Management: Expert Insights from HR Leaders

In the dynamic world of HR, performance management stands as a pillar of employee growth and organisational success.

Recently, a discussion among HR experts – Barbara Petančič, Head of HR at Zavarovalnica Generali Ljubljana, and Juraj Krnjević, Senior Director People & Corporate Brand at PharmaS – explored practical approaches to optimising performance management systems. Moderated by Nina Visočnik, People & Culture Manager at Agilcon, the conversation delved into the challenges, solutions, and essential strategies for making performance management an effective and strategic part of any business.

Here’s a recap of the key insights shared by the experts at the AdriatiCON 2024 conference, spotlighting their proven approaches to successful performance management.

1. Keep Performance Management Simple

Complexity is often a barrier in performance management, especially for managers who are responsible for conducting reviews and evaluations. Both Petančič and Krnjević stressed that simplicity is key in making the process approachable. If managers are asked to answer countless questions or complete lengthy forms, they may not fully engage with the process, which can dilute the intended outcomes.

When the process is too complicated or too manual, managers don’t see its purpose. Keeping it simple and understandable is the best way to get them on board.

By reducing complexity, HR can encourage managers to engage more confidently with employees, creating a streamlined approach to setting goals, assessing performance, and gathering feedback.

2. Simplify Your Competency Matrix

Competency frameworks are common tools in performance management, often providing a standard for evaluating employees. However, the panel cautioned against using complex and many competencies as rigid measures. Instead, they suggested that competencies should serve as a guideline to steer conversations and inspire growth, rather than as checkboxes that employees must tick off.

If you give managers and employees competencies as a guideline to prepare for a performance review, it becomes a helpful framework rather than a strict assessment tool.

Simplified competencies offer direction without stifling individual performance, fostering a supportive and constructive review process.

3. Encourage Your Managers

Performance management doesn’t just evaluate employees – it’s also a development tool. However, managers often resist embracing it, either due to lack of experience in managing expectations or fear of difficult conversations.

Managers may be afraid to have tough conversations. But these dialogues are crucial for growth. Supporting managers with resources, training, and guidance before, during, and after the review cycle can make a significant difference.

HR should empower and support managers to approach performance management as an opportunity to identify strengths, address weaknesses, and set employees on a path toward development. Tools like AI-driven feedback support can also help managers prepare for these conversations, as discussed by the panel.

4. Leverage AI as Communication Support

Modern technology, especially AI, is reshaping the HR landscape. Nowadays, AI-driven solutions, such as chat tools can be incredibly useful for managers who might hesitate to deliver critical feedback.

AI can provide talking points, suggest phrasing, and even offer role-playing scenarios to help managers prepare for challenging conversations.

The speakers suggested that AI might eventually be able to review employee interactions and other communication channels to summarise an employee’s performance patterns, offering insights for end-of-year reviews. While this technology isn’t quite there yet, the discussion revealed optimism that AI will soon play an even more pivotal role in reducing the friction managers feel around performance reviews, and in helping them add value and deeper meaning to conversations.

5. Align Performance Management with Business Strategy

Another recurring theme in the conversation was the need for HR to approach performance management with a strategic lens. Petančič shared that her team aligns performance goals with organisational objectives, cascading them down from senior management to every level of the company.

By linking individual goals with business objectives, HR ensures that performance management isn’t just a tactical exercise but an integral part of company strategy.

This alignment allows managers and employees alike to see how their contributions fit into the bigger picture, fostering a sense of purpose and commitment. If you design processes with both the customer and company strategy in mind, it becomes easier to show how each role is important to the company’s success.

6. Track Key Performance Indicators (KPIs) like Engagement and Turnover

Both speakers shared insights on how to measure the effectiveness of performance management. While many HR teams track numerous KPIs, Petančič and Krnjević both agreed that employee engagement and turnover rates are the most telling indicators.

High engagement and healthy turnover signify that the organisation is retaining motivated employees who feel valued and connected to their roles.

Regularly tracking these two metrics can reveal trends, strengths, and weaknesses, allowing HR to refine the processes as needed.

7. Continuously Improve the Performance Management Process

No process is perfect from the start, and performance management systems require continuous fine-tuning. The speakers emphasised the importance of gathering feedback from managers and employees, assessing what works, and making changes accordingly.

Soliciting feedback from managers after a performance review cycle helps HR teams identify unnecessary questions or steps and replace them with more relevant ones, keeping the process efficient and meaningful.

Engaging managers in the improvement process is especially important, as they are the ones who drive performance management forward on a day-to-day basis. “Ask them, ‘How did it feel going through this?’” Petančič advised, noting that managers often provide valuable insights into what aspects of the process could be streamlined or improved.

Key Takeaways for Successful Performance Management

To sum up, the expert panel shared several invaluable lessons for HR professionals looking to elevate their performance management processes:

• Simplicity Drives Engagement: Avoid making the process overly complex to ensure that managers and employees are more likely to participate effectively.
• Competencies as Guidance: Use competencies as a guiding tool rather than a rigid measure, allowing for more personalised development paths.
• Support Managers: Provide managers with resources and training to enable meaningful and constructive performance conversations.
• Embrace AI Tools: Leverage technology to support managers in their role, particularly when they need to deliver critical feedback.
• Align with Business Strategy: Connect performance goals with organisational objectives to give purpose and direction to performance management.
• Focus on Engagement and Turnover: Track engagement and turnover as core indicators of performance management effectiveness.
• Commit to Continuous Improvement: Regularly gather feedback and refine the process to ensure it remains relevant and effective.

By implementing these practices, HR leaders can create a performance management process that not only assesses performance but also empowers growth, aligns with business objectives, and strengthens employee engagement.

In today’s fast-paced business environment, performance management is evolving beyond annual reviews to become a strategic tool for building a resilient, motivated workforce – and with the right approach, HR can drive this transformation.