As we close out 2022, a year where we’ve adjusted to hybrid workplaces as the new norm, tried to understand quiet quitting, navigated ongoing inflation and economic uncertainty, and faced increasing demands for compensation and employee engagement, it’s time to look ahead to see what the next year will hold for organizations and HR teams.

1. HR will have to bridge the divide. 

Companies are going to over-index on performance — and risk damaging the employee experience.

We are still dealing with a global pandemic, and on top of that, we now also have inflation and economic uncertainty to contend with. As businesses look for ways to cut costs and increase productivity, organizations have tried various tactics to get more out of their current workforce, including requiring employees to return to the office at least a few days a week or using surveillance software to track employees.

Increasing productivity is easier said than done. Gallup found that highly engaged teams are 18% more productive and 23% more profitable than low engagement teams. However, only 21% of employees are engaged at work globally, with workers in the US and Canada slightly higher at 33%, meaning the majority of employees worldwide are disengaged. Low engagement teams have 18% to 43% higher turnover rates than highly engaged teams, which is costly to the bottom line.

Disengaged employees are leaving companies, but the reasons why they’re leaving and the reasons that executives believe they’re leaving are mismatched. Executives attribute attrition to transactional elements — compensation, poor health, and employees looking for a better job. Meanwhile, employees have reevaluated what they want in a job in the last few years, and it now takes more than money to retain top talent. A Lattice survey of 2,000 US and European employees showed that younger workers are looking for a place to belong. Work flexibility has also risen in importance: Recent Lattice research showed that 59% of Gen Z and millennial employees would consider walking out of a job over a company’s remote work policy. Plus, in light of layoffs and cost-cutting efforts, employees are being asked to do more with less, which is a surefire recipe for burnout.

HR teams have the difficult job of finding the middle ground, working with executives to set realistic goals for the organization while also trying to increase employee engagement and retention in order to achieve those goals. HR teams can create or revisit their employee value proposition (EVP), which is the promise the organization makes to employees and candidates that incorporates company values, compensation strategy, learning and development opportunities, and more. Employees are looking at their work experience in its entirety and are looking for businesses that align with their values. By emphasizing deeper connections, personal growth, flexibility, well-being, and a shared purpose, employers can shift their EVP to be more human-centric to show employees that they are valued as people, not just line items on a spreadsheet.

Your employee experience doesn’t have to be at odds with your business performance. Check out How to Use Performance Management to Inspire Employee Growth to learn how.

2. Your managers are not okay.

Manager engagement and retention will be a mission-critical priority for HR and business leaders this year. 

It’s clear that employees at all levels have faced challenges these past years, and that is certainly the case for managers, who sit in the wide middle area between C-Suite executives and employees and have to balance the priorities of both. Good managers have a specific set of skills and are more than just advanced individual contributors. They lead, manage, and develop their teams and reports. The past few years of the pandemic and shift to hybrid work have made managerial responsibilities multiply and grow in unexpected ways — not only do they have to champion their employees but they’ve also had to help employees navigate an unsettling economy and potential job insecurity, and managers are reaching a breaking point.

With engagement and retention more important than ever, the brunt of this responsibility falls on the shoulders of managers. Gallup data shows that team engagement depends heavily on the manager, who can account for a 70% difference in engagement rates. Employees want purpose in their jobs, but the “who” that can drive employee engagement is a caring manager. A GoodHire survey of 3,000 American workers showed that bad managers not only impact engagement, but also retention, and 82% of workers would potentially quit their job because of a bad manager. One of the top reasons employees leave their jobs is because they don’t feel valued by their manager.

But managers are also struggling with engagement. According to Gallup’s State of the American Manager Report, 35% of US managers are engaged, and 14% are actively disengaged. With these rates, it’s no wonder that employee engagement rates are also low, as employees who work for engaged employees are 59% more likely to be engaged themselves. And it’s not just that managers are disengaged; they’re also burned out and leaving their jobs. Lattice research also found that middle managers (defined as managers who oversee teams of managers) were the most likely cohort of employees to be actively looking for new work (70% in the UK and 50% in the US). 

Microsoft’s 2022 Work Trend Index showed that managers felt like they were stuck between managing executive and employee expectations, which often aren’t aligned. Over half of managers surveyed felt that their organization’s leadership was out of touch with employees. But managers felt powerless to create change, with 74% of surveyed managers saying they lacked the resources and influence to make changes for their team.

The role of the manager as a team motivator is more critical than ever, but managers are facing an extraordinary amount of pressure to have their teams deliver while trying to balance heavy workloads, manage people, engage employees, and maintain everyone’s well-being. Most managers do not have the resources or bandwidth to combat burnout when they’re facing it themselves. 

Companies need to find ways to support their managers, as they are a crucial part of improving engagement and company culture. That means including managers in the employee experience to get a full picture of how employees are doing, and implementing the right systems and processes to enable managers to succeed. Managers are less likely to know what’s expected of them than the people they manage, and over 40% of managers surveyed say they have competing priorities, so setting clear priorities and expectations can help managers focus on the most impactful business goals instead of trying to do it all. Organizations should provide career development opportunities to help their managers grow, as well as performance management resources (best practices in giving and receiving feedback, conducting one-on-ones, etc.) to help their teams succeed. And there should be a focus on well-being initiatives or programs to help managers combat burnout for themselves and their teams. 

Lattice’s 2023 State of People Strategy (SOPS) showed that manager training was the second highest priority for HR leaders in 2022, behind employee engagement. Investing in managers helps invest in the teams they oversee. Bad managers negatively impact engagement and retention and are therefore costly, but good managers give employees a reason to stay and perform to their best ability.

See what HR professionals around the globe had to say about this year’s priorities, successes, and challenges in The 2023 State of People Strategy Report.

3. Pay transparency is coming, and it’s going to be a mess.

Creating a compensation philosophy is only half the equation; employees want to know where they stand.

California recently passed a pay transparency law requiring all companies with more than 15 employees to list salary ranges for jobs. California joins the growing number of states, including Colorado, Connecticut, Nevada, and Washington, that have passed similar legislation requiring employers to disclose pay. The laws vary from state to state, which may be difficult for job seekers to navigate. Still, pay transparency has benefits, such as helping to counter the gender pay gap, the difference in salary between men and women in the US. Research from 2022 shows women earn $0.82 for every $1 men earn, and the gap is even wider for women of color.

Pay transparency is also in line with what employees want from employers. A Lattice survey on compensation found that 67% of US employees agreed their company should have transparency around pay policies, and over half of respondents think companies should disclose how much everyone is paid.

Companies, on the other hand, are still catching up. Lattice’s 2023 State of People Strategy found that pay transparency within organizations is still low, and even lower at smaller companies.

  • 54% of HR leaders said only HR and finance know pay bands.
  • 25% of employees know the salary band for their job level, but only 9% know the pay band for the next level up.

With 59% of companies investing in pay transparency, and 21% investing considerable effort in it, companies are making some progress. Pay transparency helps employees have trust in pay equity across the organization and can also increase engagement and retention. For example, if employees see a comparable job listing with a salary that is much higher than theirs, that information may help them negotiate during the next round of performance and compensation cycles. It can also save time during the recruitment process by weeding out candidates who are looking for a role that pays differently.

Compensation transparency can’t happen without proper planning and strategy. Businesses need to be clear on what they are going to disclose and how. To achieve that, People teams need to develop a compensation philosophy that provides clear guidelines, ties back to company values, and explains how salaries, raises, and bonuses are structured. Creating the compensation philosophy is only half the equation; organizations then need to develop a communication plan so all employees know where they stand and what the potential opportunities are for movement within the company.

Keep in mind that compensation goes beyond salary, and a compensation philosophy should factor in a total rewards package, which can include benefits, health and wellness programs, learning and development, and paid time off. These additional items may not show up directly on a paycheck but can still positively impact the employee experience. 

One way to add structure to your compensation strategy is to use a compensation tool, which can help HR teams securely share data, collaborate across teams, and implement updates as needed.

Fair compensation can improve retention, employee motivation, and overall business performance. Download How to Reward Top Talent With Pay-for-Performance to learn more.

4. We’re returning to fundamental workforce strategies.

The world of work is moving on from gimmicks like quiet quitting, productivity paranoia, or the hybrid push/pull.

Changes in work norms have led to rebranding of old trends with new terms in an effort to describe the shifts in employee expectations. For example, “quiet quitting” is simply a new term for employee disengagement, and “productivity paranoia” is when leaders are worried their teams aren’t working hard enough with hybrid work models, despite 87% of employees reporting they are productive. And even employees recognize that these are just new names for old stories: Recent Lattice research found that 45% of employees reported that they were not very familiar, or not familiar at all, with the phrase quiet quitting — and yet 36% of those same employees self-reported having “quietly quit” in the last year when it was defined as disengaging from their work. 

Neither of these trends began during the pandemic, but coining phrases for them highlighted the fact that engagement and productivity have always been organizational priorities, and HR teams have been at the forefront of navigating this new world of work. According to Lattice’s 2023 State of People Strategy, HR leaders expect some, if not all, of their workforce to be remote, and have prioritized employee engagement; manager training; learning and development; diversity, equity, inclusion, and belonging (DEIB) programs; and performance management over talent acquisition.

As employee expectations change and organizations adapt to meet them, we’ll see a shift from The Great Resignation to The Great Recognition. Organizations will recognize that the best employees are engaged employees and that listening to workers’ feedback is not only good for employee growth, but for company growth as well.

5. “Hybrid work” is just “work” now.

Employees who have embraced it will increasingly shape where the new workforce is headed. 

For better or worse, a majority of workers have gotten used to remote work and all that it offers: no commute, comfortable work clothes, and more flexible schedules. According to behavioral economics, people avoid loss more than they seek gain, and thus they are not likely to want to give up remote or hybrid work, no matter what the additional in-office perks are. In fact, six in 10 fully remote employees and three in 10 hybrid employees said they are “extremely likely to change companies” if remote flexibility is not an option. Even though a company’s percentage of remote workers varies significantly by industry and organization size (for example, professional services and tech companies will have more remote employees than manufacturing companies), for most employees and employers, hybrid work is not an option anymore, but rather a requirement. 

Some of the early concerns with remote work were about how managers and employees needed facetime together for productivity and engagement. However, managers have become comfortable managing their teams remotely, with 45% saying they have enough facetime to effectively manage most employees and situations. Even the 26% of respondents who would prefer more facetime feel they have enough of it to handle major issues. This is consistent across companies whether they are 10% or 90% remote. HR professionals who feel there should be more facetime cited engagement and culture as their top concerns, with productivity ranking second to last.

Employees have realized that they don’t need to go to a physical office to do work and that they want increased flexibility so work can fit into their lives instead of the other way around. Smaller companies can shift to hybrid and remote work models more easily, and traditional businesses will have to follow suit to retain talent. Gen Z not only places greater importance on purpose at work, but will also be the first generation that has not been required to be in the office five days a week. Gen Z’s percentage of the total workforce will only grow over time, and as a result, as an increasing number of hybrid or remote employees move into leadership and manager roles, hybrid strategies will improve and solidify in the long term.

A shift in employee values and demographics, new and hybrid spaces where we physically do work, and an ongoing struggle to maintain employee engagement despite internal and economic pressures have all upended traditional organizational playbooks. HR teams play an increasingly important role in balancing priorities at all levels of the organization, evolving company culture to meet dynamic needs, and driving employee and business success.

‍Resources for Humans is Lattice’s Slack community of over 18,000 People leaders. The community is designed to help HR professionals connect, share advice, and ask questions. Together, we help each other navigate challenges by sharing resources and firsthand experiences. Click here to learn more about the free community.

Diversity and inclusion aren’t nice-to-haves. Today, they’re table stakes. So if “D&I” is a part of your company’s OKRs this year, where do you begin?

Goals give professionals something to work toward. But concepts like belonging or inclusion can’t be measured the way sales goals or revenue targets are. Setting D&I goals takes a different approach — and for leaders, a lot more listening than talking.

1. Identify your “why.”

Last year, over 800 CEOs from companies like JP Morgan, McKinsey, and Ford pledged to tackle unconscious bias and prioritize diversity. Why?

Kellie Wagner is the founder and CEO of Collective, a diversity, equity, and inclusion consultancy. According to her, teams often rush to set goals without intent. We all intuitively know that diversity is good, but that rationale won’t sway a skeptical CFO or boardroom.

“A lot of companies are unclear about why they’re setting these goals. They’ll set arbitrary goals and have a hard time sticking to them because they don’t actually understand how they’re going to benefit the business,” she said. You need to identify your “why” first.

Incentives aren’t hard to come by. There’s no shortage of studies correlating diverse teams with better returns and more innovative ideas. When employees feel like they belong, they’re more productive. In the current market, the most compelling reason to invest in D&I might be to attract and retain talent — most CEOs’ top priority in 2020, according to a recent survey.

“A lot of people want to work at places that are inclusive and diverse. If you aren’t offering that, it’s going to be harder for you to pull in talent,” Wagner said. Thanks to Glassdoor, Blind, and similar platforms, candidates can look before they leap. If your company doesn’t value diversity, that can wreak havoc on your employer brand and reputation. “People care now if your leadership team is all white men. People will call you out on that,” she said.

2. Make the process collaborative.

Who sets your company goals? There’s a good chance it’s leadership, the segment that’s often the least diverse. An industry study found that women and minority employees accounted for less than 30% of the highest-paid employees. Your HR department, likely involved in setting D&I goals, has its own representation challenges.

To Wagner, setting goals is a lot like launching a new product. You wouldn’t do it without conferring with key stakeholders or even customers. In this case, employees.

“We do focus groups for product design. We get input from the people who are going to be the most impacted. The idea that we wouldn’t do that with our culture initiatives or our HR-related processes doesn’t really align,” she said.

Employee surveys can help you arrive at those insights, as can in-person interviews. Wagner recommended a few specific questions, including:

  • How do you want to be treated?
  • How do you want to treat others?
  • How do you want your manager to treat you?

“Start to pull out some of the behaviors that people associate with feeling included, like they belong, [feel] respected, and [are] valued,” Wagner said. That feedback won’t just be eye-opening, it’ll also clarify what you should prioritize. “It’s an opportunity to get a definition of inclusion straight from employees. Then you’ll get really clear benchmarks for what you should be measuring,” she said.

Focus groups are another effective tool, one Wagner and her team often turn to. “A lot of times, we’ll do design thinking workshops to start thinking about what the goals for our strategy should be. We’ll look at the challenges and understand what we’re trying to solve for,” she said. While employees should do most of the talking, leadership can’t be left out entirely.

“You don’t want the employees leading it completely because you need to understand what’s feasible and what’s sustainable for the business,” she said. And while leaders know they should invest in D&I, hearing it face-to-face will make them realize they need to. 

3. Look beyond recruiting quotas.

Some teams respond to employee feedback by setting “diversity hiring” quotas. It’s an approach that seldom works. “It can be a money pit if you’re only focusing on the recruiting side. You really don’t want to be spending money only to have them leave, just because you didn’t properly invest in inclusion and equity,” Wagner said.

Don’t let arbitrary quotas get in the way of setting more impactful goals around inclusion and pay equity. Draft targets that get to the heart of the concerns your employees voiced in your surveys or workshops. Hone in on topics like compensation, career growth, and belonging. Here are a few sample goals:

  • Introduce unconscious bias training by the end of the year.
  • Launch new inclusive job descriptions ahead of the summer hiring season.
  • Facilitate the launch of employee resource groups this quarter.
  • Commission a pay equity audit ahead of this spring’s compensation cycle.
  • Decrease pay disparities by 10 percent next year. 

Don’t lose sleep trying to tie every goal to a number. Inclusion doesn’t always lend itself to being measured that way. Prior to founding Collective, Wagner spent years in technology, a sector that’s obsessed with the quantitative. Tech giants like Google and Apple regularly publish their diversity numbers despite making little progress. “A lot of companies will focus on the quantitative only, so they miss out on hearing what programs are effective or where employees need more support,” Wagner said.

It’s not just that diversity numbers don’t tell the whole story — they don’t tell the most interesting part.

“Seeing that, ‘This is a place that’s promoting people of color at the same rate as white people,’ is a different narrative that shows the effort that’s really going into it beyond just recruiting,” she said. Data points like those are something that Wagner thinks more companies should try to track and measure. In other words, meaningful goals that make a lasting impact, not arbitrary quotas that look good on a corporate website.

For the targets that can’t be reported on, turn back to workshops and surveys. For the latter, consider checking in with employees more frequently than just once or twice a year, as arrivals and departures can skew your insights. “Ongoing feedback can be really helpful if you need to nip things in the bud. A lot of people are moving toward or adding in pulse surveys on a regular basis to gather that feedback,” Wagner said.

There’s a reason why companies still struggle with moving the needle on diversity, equity, and inclusion. It’s hard setting goals, let alone achieving them. It takes introspection, uncomfortable conversations, overhauling old processes, and exposing yourself to failure. But when the majority of job candidates value diversity, making that leap isn’t just the right thing to do — it’s a business imperative.

Register for the Resources for Humans Slack community to learn what other HR leaders are doing to make their organizations more inclusive.

Starting a new role is daunting at any level. Not only are you tasked with a new set of responsibilities, but you’ll also need to acclimate to a new culture and learn a new business. Glassdoor reveals that it can take up to eight months for a new employee to fully onboard. It’s important to set realistic expectations and clear milestones to help new hires ramp up.

A 30-60-90 day plan empowers hiring managers to set clear expectations, benchmark performance, and ensure new hires deliver value within their first few months. It also gives managers an incentive to do right by their employees and set them up for success. We’ll dive into how 30-60-90 day plans work and how to make them a part of your onboarding process.

What is a 30-60-90 day plan?

In its simplest form, a 30-60-90 day plan acts as a roadmap for your new hire’s first 30, 60, and 90 days on the job. While some managers prefer just setting a 90-day plan, the additional milestones give new hires more clarity into what’s expected of them in their first weeks. This not only helps them perform but also lets the manager focus their coaching and 1:1s against a clear set of objectives and expectations.

Proactive candidates may come to an interview with a proposed 30-60-90. That’s helpful when evaluating candidates to get a sense of their understanding of the role and what they bring to the table. However, even in senior positions, the candidate will likely be unfamiliar with how your team has operated in the past. In cases like these, managers should work closely with new hires to align expectations.

How do you write a 30-60-90 day plan?

The details of your new hire’s plan will depend on their specific position and job level. That said, there are some best practices to keep in mind when building out their 30-60-90 day plan. Consider these five tips when writing a successful 30-60-90.

1. Set realistic expectations.

By the time you identify the need for headcount, get approval, post the job description, and find the right candidate, you’ve likely been in dire need of that person for a while. It’s tempting to want them to come in and make up for lost time. That just sets them up for failure, and you’ll be disappointed to find they can’t do everything within their first few months.

Start by identifying the top two or three priorities for the role and outline the steps to get there. While you don’t need to give them a step-by-step guide, identify key milestones at the 30 and 60-day marker to keep them on track.

2. Make it collaborative.

Whether or not new hires come in with a specific plan, they likely have a vision for their first few months. During the first week, make time to talk through your plan and learn about their personal goals and objectives. Work together to modify and develop a 30-60-90 day plan. This ensures that they understand the expectations and are excited about the work.

New employees bring a lot of fresh ideas to the table, so let the 30-60-90 day plan serve as a roadmap. They should still have the freedom to execute using their creativity and expertise –– that’s why you hired them.

3. Check in regularly.

You should be spending a lot of time with your new hire as they ramp. There are certain things they simply won’t know unless they ask. The more time you dedicate to them early on, the faster they’ll be able to work on their own. Weekly 1:1s are an industry standard, but in the first week you should consider checking in with them daily.

Making yourself available early on will also give you a better sense of their strengths and weaknesses. You might find that they’re hitting their goals quickly but struggling to integrate with the team. This will help you tailor your coaching and give them the support they need to excel.

4. Celebrate milestones.

Starting a new job is hard. Not only do you have to acclimate to a new social environment, but it can also feel like you’re slow to make an impact early on. As a manager, it’s crucial to provide positive feedback at every milestone. Use recognition tools, communication channels, and 1:1 meetings to celebrate wins, accomplishments, and good work. 

If new employees feel like their work doesn’t matter, it’s natural for them to question whether joining was the right move. Highlight their accomplishments and coach them through the more challenging aspects of onboarding so they stay motivated. 

5. Measure impact.

Be sure that the objectives in your 30-60-90 day plan are measurable. You can even use the SMART goal rubric for inspiration. This demonstrates the role’s ROI to leadership, provides the new hire with a sense of accomplishment, and gives you a metric of success to help guide performance conversations.

We all know what it’s like to start a new job, and having a clear 30-60-90 day plan in place makes onboarding easier and more efficient. No matter your plan, you should be prepared to spend time with your new report to ensure you’re providing adequate support and resources to set them up for success.

Lattice empowers employees and their managers to seamlessly set, track, and achieve goals. Our software integrates goals into everything your team does — meaning more productive 1:1s, targeted feedback, and stronger performance scores. To see our platform in action, schedule a demo today.

Performance management is about more than annual reviews. It’s a key part of the strategic work to ensure that not only are employees performing well at an individual level, but growing in their careers and working toward company goals

For employers, there’s a strong business case for a robust performance management system, too. Top-notch systems establish a foundation for setting bonuses and raises, identifying high-performing workers, boosting employee engagement, and retaining great workers. 

And employee engagement and retention, in particular, are more important than ever as workers quit their jobs at escalating and historic rates nearly two years into the COVID-19 pandemic, according to the US Bureau of Labor Statistics (BLS). 

A performance management system provides the transparency required to stem that tide of resignations, said Jennifer Durbin Tuffy, founder of executive coaching practice Scoutenger. “There’s less angst about a performance review process if you know what’s going to be in the system, when to expect the cycle to start, and what to expect throughout the cycle,” said Tuffy. 

But often, as businesses launch, investment in anything beyond spreadsheets to track performance reviews gets pushed down the to-do list. Performance management is an investment that comes with a significant payoff, though, in terms of employee growth, engagement, satisfaction, and retention — and failing to institute a comprehensive, cohesive performance management system can be to the detriment of the organization.

So how do you know if your company needs one? Here are 10 signs it’s time to invest in performance management software and systems to support the growth of your employees and your organization.  

10 Signs Your Company Needs a Performance Management System

1. Your organization has more than 20 employees.

When companies first launch, employees often wear multiple hats, said Jana Tulloch, principal consultant for Tulloch Consulting, an HR strategy consultancy. Because the team is small, “it’s easier to keep in your line of sight what the deliverables are,” said Tulloch.

But, as teams scale, communication and clarity about individuals’ roles becomes more complicated, Tulloch noted. In her experience, companies should start streamlining performance management processes and consider investing in automated systems that make it easy to track, in real-time, how employees are performing, once they hit 20 team members. 

“As team size grows, managers suddenly find it harder to keep that communication line open around deliverables all the time like they once did,” Tulloch said. “And now they need to document it more closely. 

“Time is money, and having a system in place that helps you automate is key,” she continued. “Automation saves time, and it also becomes your record of the process that a deliverable has taken.”

2. Employee retention is a growing problem. 

Employees who say that their manager involves them in goal-setting are 3.6 times more likely to be engaged at work, according to one Gallup survey. And engaged employees, according to the Corporate Leadership Council, which is now part of technology research and consulting company Gartner, are 87% less likely to leave their employer. A performance management system can help to ensure that employees and managers are effectively communicating about goals, objectives, and career growth.

“Today’s talent expects that you’re going to partner with them to develop and grow them,” said Jessica Donahue, founder and Human Resources consultant at Adjunct Leadership Consulting, an HR consulting firm. “Without [a performance management process] in place, [employees] start to question, ‘Will there be a plan for me?’”

3. Company targets and organizational goals are frequently missed.

Without the right performance management system in place, HR teams and executive leaders may not have the metrics they need to diagnose why company targets are missed, said Rahul Bhargava, partner at management consulting firm PurpleCrest.

“Because of a broken or inefficient performance management process, employees do not know [how] their everyday work or their individual goals contribute to the overall strategy,” Bhargava noted. A performance management system can bridge that gap in strategy execution, identifying problem areas and ensuring that everybody is moving in the right direction, he said.

4. High-potential employees aren’t delivering.

You may have hired those hot-shot software developers to tackle long-standing product issues. But if they aren’t delivering, that’s a warning sign that you need better workflows to rate employee goals and performance and highlight competencies for those individuals, Bhargava said. A performance management system can do that.  

“If the high-potential employees you hire are failing to perform under established quality standards and your HR department cannot identify any interventions that could help, then it’s a sign of needing an enhanced performance management system,” he said. 

5. Performance reviews aren’t fact-based. 

For many employers and employees, annual performance reviews are a drain, requiring a scramble to remember the important wins and missteps over the previous 12 months. When organizations don’t have a system in place that makes it easy to note those highs and lows throughout the year, it can be impossible to pull up factual information when it’s needed. Conversely, a strong performance management system can track important performance metrics and pull in data that allows for 360-degree feedback from across an organization.

“An employee performance review that doesn’t contain facts is unhelpful. It often leads to more problems than solutions,” said Bhargava. “Facts can come from everywhere in the organization — peers, managers, direct reports — even from external clients and partners. It’s a warning sign when the performance review is becoming challenging.”

6. Performance management practices aren’t consistent.

As companies scale, the work to deliver performance appraisals, continuous feedback, talent management, and other initiatives becomes more complicated. And, over time, especially when performance management is tracked via spreadsheets and other manual processes, departments may develop different policies and practices around employee reviews.

The accounting department, for example, might have a holistic, formal approach, while the product development team may be more scattered. That can lead to unhappy workers, Tuffy cautioned. “Once you hit scale or become a more complex organization, systemizing it is so critical,” she said.

Performance management systems add consistency to performance reviews across a company, ensuring that individual employees — regardless of their role or department — are evaluated in the appropriate way and at the right cadence, and that this process is conducted uniformly throughout the entire organization.

“When you’re managing everything through a document and not a system, you don’t have a way to centrally manage all of the reviews,” Tuffy said. “You don’t actually know if all of the managers across the organization are evaluating their staff on a consistent basis.” 

7. New managers don’t know how to evaluate their direct reports. 

Performance management systems help organizations set clear expectations around annual reviews, performance appraisal, continuous performance management, and employee development. When these systems are clearly spelled out within a formal system, managers — especially new ones — don’t have to figure it out on their own. They have a template.

“For new managers, this is incredibly helpful,” noted Tuffy. “They just have to follow the process. They have a resource to go to if they have questions.” 

8. The company is gearing up for big growth — and funding.

A performance management system provides a proof-point for investors that an organization is making smart decisions around its workforce, Donahue said. She recently worked with a startup that hadn’t formalized its performance review and improvement plan processes; it was only able to secure funding after promising to put them in place.

“If you think about a performance improvement plan [and] being able to put an employee on [one], you don’t just need the PIP — you need all of the policies and processes behind it,” Donahue pointed out. “It has to be a holistic approach to how an organization [is] going to monitor the performance of [its] people, assess it, and use it to make decisions.” 

9. Claims of wrongful termination are popping up.

Without a system that formalizes the process to review employee performance and provides regular feedback to employees, organizations often don’t have the information they need to support the firing of an individual.  

“It’s a liability issue,” warned Donahue. “If you don’t have a way that you are measuring performance and then you willy-nilly decide that you’re letting someone go, you’re firing someone without any data to back up that decision [and] you put yourself at risk of a wrongful termination claim.” 

10. Job candidates go elsewhere.

Career development and advancement is important to today’s workers, especially millennials. Gallup research found that 87% of millennials rated growth and development as important to them in a job. A clear process for growing within an organization — and earning the merit raises that go with it — is essential even during hiring, said Donahue. During the interview process for potential new hires, if an organization can’t spell out their processes for doling out feedback, raises, and bonuses, that’s a red flag for some, she noted. 

“If there’s another organization that they’re talking to that has a very clearly laid-out way where success is identified [and] rewarded and they are financially recognized for that, then they may be more inclined to go with that proven system,” Donahue explained. “People care about their pay. Anything where you can tell them, ‘This is how we can help you make more’ — that’s something that’s going to be a priority for them.”

The best and most effective performance management systems provide a blueprint for employee success and organizational growth. Instead of reviews and metrics scattered across emails and spreadsheets, automated platforms package everything together in a single, integrated product

That one-stop shop cultivates productive conversations between managers and employees about strategic goals, employee development, and employee experience. And it ultimately provides the framework to ensure that employees are focused on driving their careers and their employers’ success forward. 

The workplace — and workers’ expectations — are shifting tremendously. A comprehensive performance management system like Lattice, which spells out not just expectations for employees, but provides opportunities for them to learn and grow in their careers, will be essential. Contact us to learn more and schedule a demo.