Reinvent or decline: Why it’s now or never to get performance management right 

Managers who understand how to create a sense of purpose, challenge, attention, growth, recognition and choice for their employees are way ahead of their competition when it comes to unlocking the full potential of high performers.

Around the world, inflation remains sky-high and the clouds of economic instability and volatility seem to grow darker every day. What was once abnormal has become the new norm as companies struggle with a dense fog of uncertainty that stands in their way. 

Some companies have already taken decisive action — laying off thousands of workers and slashing budgets. Many more are revisiting their performance management systems to create a clearer path toward better results.

Earlier this year, Google scrapped a time-consuming, twice-a-year performance review process to improve morale. Under their new system, managers categorize the worst-performing 6 percent of employees, or roughly 10,000 people, as low performers.

Other companies, especially in the tech industry, have scrapped traditional performance reviews altogether because of their potential to do severe harm. 

When conversations around performance arise, tensions ride high for both the evaluator and the evaluated. For example, formal reviews that focus on a person’s weaknesses dampen their performance by up to 27 percent. 

But instead of giving up on performance management, research shows employers need to adopt new strategies that are validated by empirical evidence. 

Getting people to perform at the top of their game isn’t based on process design, inventory management, forensic metrics or sparkling new IT systems. It’s based on the science of human behavior and knowing how to apply the right psychological conditions to fuel a high-performance work culture. 

High performance starts with the right conditions  

MindGym’s behavioral science research proves employers can generate lasting, high performance by enriching their workplace culture with purposeattentionrecognitionchallengegrowth and choice

This is how they work and why they’re critical:

Purpose: When employees understand the bigger picture and how their role fits into it, they develop a shared purpose and are more motivated and engaged in producing their best work. Top-performing businesses are 20 times more likely to have every manager’s goals aligned with the company strategy and 46 percent of their employees’ goals are explicitly aligned with the company. 

Challenge: A six-year study of 229 entrepreneur CEOs concluded that business growth was largely driven by giving employees stretching goals and helping them believe that they could achieve them. High-performing employees thrive on challenges and constantly seek ways to improve and grow. A workplace that offers suitable stretching — or high, yet attainable, goals without the penalty of missing them — is vital to unlocking high performance.

Attention: Employees respond well when they feel others, especially leaders, are paying detailed attention to how they are doing. In a study of more than 19,000 employees, the strongest lever of increased performance was the fairness and accuracy of a direct manager’s descriptive feedback, i.e., reporting on specific examples of what they saw without evaluating it. Think about the difference between asking someone, “what are you working on?” vs, “how is your consumer analysis for client X going?” The latter creates room for a specific conversation about a project and shows the employee that their work is seen.  

Growth: MindGym’s behavioral scientists conducted a study with the retail division of a UK telecommunications business and found that managers who received coaching from their line manager were more likely to say their performance had improved. Also, in the period that the coaching was rolled out, the branch’s ability to meet revenue targets rose by a whopping 29 percent. A workplace that prioritizes growth and development will see a boost in performance as employees are able to take on new responsibilities and contribute to the organization in new and innovative ways. 

Recognition: There is a natural human tendency to desire acknowledgment and encouragement for the effort we put forth. In the workplace, people are more motivated when they feel fairly recognized for their work. Employees are far more likely to feel fairly recognized when they know what criteria they are being assessed against in advance, how they are doing along the way, and that the assessment is on the same basis for their colleagues. When these criteria are met, employees tend to perform better.

Choice: While all six conditions will get people to the top of their game, freedom of choice is the condition that gives people the greatest chance of staying there. From their viewpoints to their support system, employees value autonomy and the ability to make appropriate decisions about their work. When times get tough, the more choices they feel we have, the more likely they will keep going. And when they believe they can succeed on their terms, they are more likely to view challenging problems as tasks to be mastered. As a result, they recover more quickly from setbacks and disappointments and keep performing effectively for longer.

Bringing the six conditions for high performance to life

For a high-performance work culture to be reached, the whole organization needs to buy into it from the bottom up. The right conditions only make an impact when well-meaning employees actively collaborate with open-minded management teams to create tangible behavioral change.

When it comes to purpose, managers can help by clearly communicating the organization’s vision, mission and values and how each employee’s role contributes to achieving these common goals.  

Like most things, communication is key in goal-setting as well, a crucial part of providing an appropriately challenging environment for people to thrive in. Managers can work with employees on goal-setting, revision and celebrating when people do well against challenges. 

With a continued focus on strong communication, managers can prioritize attention by creating a culture that values open and honest feedback that is specific and descriptive rather than just evaluative. For example, instead of simply saying “good job,” comment on a specific piece of the project that was presented clearly and concisely.

Outside of providing attentive feedback, managers can foster growth by providing employees with opportunities to learn new skills, take on new challenges and advance in their careers. They can also provide resources and support for employees to pursue professional development opportunities, be it through regular coaching, mentorship or other programming.

When things go well, it’s important for managers to recognize and appreciate employees for their contributions by providing ongoing feedback and rewards. End-of-year reviews shouldn’t be a daunting process but rather part of an ongoing conversation that includes recognition as well as feedback. More informal but impactful forms of recognition might include thank-you notes or shoutouts in team meetings. 

While managers have a big role to play when it comes to guiding their employees, it is equally important for them to provide employees with a sense of choice by allowing them to make decisions about their work and by valuing their input and ideas. In doing so, it becomes easier to create an environment that encourages employees to take ownership of their work and contributions. 

Putting it all together

Managers who understand how to create a sense of purpose, challenge, attention, growth, recognition and choice for their employees are leaps and bounds ahead of their competition when it comes to unlocking the full potential of high performers. Fostering these conditions is about providing employees with the resources, support and opportunities they need to thrive and recognizing them when they do.