Company culture

Performance Management Considerations That Will Mold Your Company Culture

Over the past few years, our understanding of company culture and its importance has skyrocketed. It has been the subject of many discussions, and experts have discussed at length how a healthy company culture positively influences retention, productivity, performance and overall reputation.

In an age where employee experience has been touted as the “future of work,” it is clearer than ever that wise, forward-thinking companies of all sizes should prioritize the development of excellent company culture to guarantee long-term success.

The issue for many companies is that they don’t know where to start. Acknowledging the importance of great company culture is one thing, but actually taking steps to develop one is quite another, particularly when management and HR are uncertain as to what elements are most critical.

The good news is that with time and dedication to constructive change, you will be able to develop a company culture that will attract top talent while retaining valuable employees. It all begins with certain performance management trends that are being adopted by the biggest and most influential companies around the globe.

Regular performance discussions

It is no secret that great communication is critical to the smooth running of an organization, but according to a Gallup poll, the relationship an employee has with his or her manager has a huge influence on engagement levels.

For this reason, there has been a performance management shift over the past few years, with notable companies such as Adobe and Microsoft abandoning annual performance appraisals. In their place, companies have been incorporating continuous performance management, which entails monthly performance check-ins.


Related: What is Working (and Living) Life Like for Digital Nomads?

These performance check-ins allow managers and employees to develop more meaningful relationships. They encourage frank discussion in relation to progress and areas of concern, and they allow employees to give managers feedback on how the company is being run. If they think a certain process is outdated or not conducive to an engaged, happy workforce, they are more likely to raise it with a manager they trust. In this way, the company and its culture experience continual improvements.

Regular recognition of a job well done

When discussing company culture, the topic of perks inevitably comes up. Many SMEs are concerned that in order to develop a great reputation or culture, they will have to start handing out impressive bonuses or pay increases that they simply can’t afford.

The good news is, many times employees are not entirely motivated by the prospect of a raise. Rather, they just want to know that their hard work and constant efforts are being acknowledged and appreciated. Regular expressions of thanks and encouragement can do a lot to improve company culture, and it is an affordable and easy place to start. Show your employees that they are part of a team, and that they are just as important a part as any other.

To rate or not to rate?

Like annual performance appraisals, performance ratings have seen their day. It seems that on a near daily basis, companies are abandoning their rating systems, or their particularly old-fashioned ranking systems. This is due to the fact that reducing employees to numbers has a terrible effect on motivation levels. It produces a “fight or flight” response in the majority of employees, and even top workers grow concerned about the consequences, should their number be docked the following year.

Ranking systems are even worse, as employees are pitted against each other. Employees are marked on a bell curve in this “rank or yank” system, and the consequence for the “low” performers is that they are let go. For one employee to do well, another has to fail, which is terrible for company morale and, inevitably, crippling for company culture. Companies would be better served abandoning ratings and rankings, while encouraging an atmosphere of teamwork.

Flexibility and autonomy

Flexibility has recently been named the number one workplace perk. Old-fashioned 9 to 5 hours are redundant in an age of constant communication and advanced technology. Many employees can work from home and, according to recent studies, they perform better and experience greater overall morale.

For this reason, companies wishing to improve upon their company culture should seriously consider incorporating more flexibility into their performance management system. This will demonstrate a high level of trust in your employees, which they will be keen to repay in the way of performance.

Transparency and honesty

Employees want to feel part of a wider, well-functioning team. As such, transparency is critical to overall culture. Take time to give employees context on their roles, their importance and how their efforts contribute to organizational aims and objectives. Transparency in relation to company aims will allow employees to make more appropriate decisions in relation to their work and, when they are writing up their SMART objectives, they will be able to ensure they are aligned with the company’s direction.

Remember, employees should be given the benefit of transparency even in relation to more negative aspects of the company. If the business is suffering for a particular reason, share this with your employees. Your workforce is not a collective of children you need to protect; they are adults who prefer (and deserve) to remain informed on matters that directly affect them.


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Opportunities to develop and grow

Millennials are dominating the workforce, and despite everything you may have heard, this generation is thirsty for knowledge. They want to constantly improve and grow, and they regard their careers as learning opportunities.

Employees who aren’t given the opportunity to develop are more than likely going to jump ship for a competitor, who will be happy to invest in them. If, on the other hand, your company helps its employees develop relevant skills and strengths, you will benefit from an engaged, skilled employee, who is likely to stay with your business for years to come.

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