Businesses looking to improve productivity and gain competitive advantage in a complex and uncertain trading landscape need to have a much clearer understanding of employee performance and motivation. Organizations are becoming flatter, less hierarchical and more agile, and employees need to be assessed accordingly.

In a hyper-connected, collaborative working environment employees no longer want to be part of a passive process over which they have little control or input, nor do they want to be ranked and rated. Instead they look for regular feedback and coaching from their managers, and simpler processes with more flexible goals that are responsive to changes in trading environment and business culture.

There are four ways in which we are seeing this happening:

• Performance Management is no longer an event, but a collaborative and transparent process of continuous dialogue and feedback
• Feedback itself now comes from peers and collaborators as well as managers. 95% of participants now use some input from colleagues as part of the process
• Transparency is key with goals visible to all stakeholders; employees see their managers’ goals too
• Performance is no longer restricted to individual tasks and outputs but is now redefined as actual impact that an individual has on their team, internal networks, business or customer
• All of this requires an organizational culture that promotes transparency and that values open, honest and constructive feedback. And a leadership culture that recognizes the ability to give such feedback as a skill in itself - one that should be embedded right through the leadership journey and not something learned on promotion.

The onus is on managers to discover and develop the potential in their team and regularly talk to them all about work and progress. They also need to embrace new ways of thinking about how to define performance.

Employees have their own responsibilities; take ownership of their performance and development and have awareness of how they have contributed to the wider business performance and to the development of others within the organization. This is no longer a passive process but a two way dialogue, so they now play an active role in providing input to their own evaluation and for their individual goals.

The link between performance and pay is also changing. Too rigid a connection places a strong emphasis on individual performance and is therefore ineffective when trying to look a performance in a wider team and work environment.

There is little doubt that Performance Management is evolving. What was previously an annual, fixed, top down and static approach is now becoming something that is much more transparent, agile, engaging, relevant…and fun.

Read more in the Performance Managament Report of Top Employers Institute.