Performance Management in Times of Uncertainty

Amidst the uncertainty and the disruption of the normal business flow, along with an undefined strategic direction,most members of any organization are facing “uncharted territory” and learning as they go. This includes managing complexity and thriving through the disruption by weighing in a variety of factors and using the pandemic to their own advantage. HR Professionals are also being pulled in a new direction and are required to wear a strategic hat ranging from crisis response planning, to communicating business as usual, to maintaining some level of continuity in business operations. Nonetheless, soon enough, the focus will have to shift to restoring productivity and aligning performance with the new strategic direction. Scattered question marks will follow. How can we assess the performance of someone who is assigned a whole new list of tasks they’re not yet accustomed to? What about the indicators that have been changing since the beginning of the pandemic? Do we abandon the current performance cycle? Do we continue with evaluations as planned? In this age of transition and dynamism, and when agility is most needed, calibrating the performance framework may help in setting up a successful organization in the post-pandemic phase. Analyzing the following three questions based on your organizational context and the maturity of the present performance management process can provide the right insights towards better situational adaptability.

1. Is your performance assessment process periodically set (for example, do you lead two appraisal cycles annually)
2. Is the majority of your staff, despite the lock-down, still working?
3. Do you tie compensation and succession planning to performance results?

If the answer to the first two questions is yes, your business is partially running as usual and you might be able to apply some minor adjustments to the performance evaluation plan including the scheduled timeline. However, if the answer is negative, you might need to consider a plan B revolving around the new strategic direction as well as the current responsibilities and duties. This can be implemented through transparent communication and continuous feedback.

Scenario 1: Lighten the evaluation process

During the COVID-19 pandemic, many employees are subject to a “new normal” and are required to deal with unexpected changes while juggling between their new duties, virtual work and their personal lives at home. The inevitable set of worries accompanying the adaptation to a crisis might affect productivity and result in a temporary drop in performance even among star performers. Consequently, performance evaluations in these circumstances can feel like a burden. Even though we at ideas group (ig) encourage the avoidance of false positivity, this doesn’t signify the avoidance of optimism nor does it encourage missing the right opportunities. These circumstances might constitute a great opportunity for HR leaders to evaluate what is essential, and to reconsider structures, schemes and systems, including the performance framework and certain procedures and policies. The latter is especially true when strategies are being redefined and expectations are being reset, as is the case in most companies. Crisis dictates fundamental adjustments fueled by labor and market circumstances. This consequently affects business operations and individual performance indicators.  The most crucial consideration when deciding to lighten the evaluation process is to enforce a framework wherein employees are still able to provide and receive regular documented feedback, following a methodical approach, in order not to hinder career development. This will help sustain a healthy organizational culture with a growth-committed workforce. Finally, and when revisiting the compensation and succession planning question in our research framework, performance appraisal results will assist managers in deciding whether to keep labor financials as is or to reduce expenses to get through tough times. A study conducted by the Boston Consulting Group during the 2008 crisis found that cutting back labor expenses had a negative effect on employee commitment on the long run, and a strong negative correlation with both business and individual performance. However, and in the course of a pandemic, some businesses might simply not have the financial capability to keep the workforce intact. After all, continuity is what matters and this “temporary handshake” could be imperative to keep the organization afloat. This decision might be perceived as cumbersome, but transparent communication with employees will allow them to look at the impact from a bird’s-eye view and the direction will become clearer and more understandable.

Scenario 2: Cancel the performance reviews

Performance management in general can take a great deal of time and deliberate effort from any leader. Weighing in on the subordinates’ performance, clarifying and applying ratings, followed by succession planning decisions, along with pay increases, performance improvement plans, and new performance indicators are all key milestones that cannot be disregarded. With all these changes and uncertainties, abandoning the performance reviews is especially appropriate when the perception of fairness among your employees isn’t quite agreed upon and when the culture of your company classifies performance management as an unfair evaluation tool. However, canceling performance reviews can backfire in different ways. The loss of this specific communication, even if the feedback is given informally, might lead to a loss of continuity that the regular performance evaluation enables. The main focus in any performance management framework is to keep employees on track through continuous constructive feedback while encouraging them to work towards the cascaded strategic goals. Additionally, it helps them experience a sense of connection, recognition, development and most importantly, psychological safety, which is particularly crucial during times of crisis. The lack of performance data for this specific period is another factor which can be damaging during a time in which leaders are expected to shift resources and re-plan the workforce, and it may lead to poor and inaccurate decisions.  Furthermore, turnover might increase on the long run when star employees fail to receive the recognition and opportunities they believe they deserve. On the contrary, organizational performance might be at risk, or ultimately become stagnant, when poor performance is not identified and addressed. According to Boston Consulting Group’s Research, “learning and development opportunities are crucial during times of crisis to maintain organizational effectiveness when it is most needed”.

Scenario 3: Maintain the framework as is

For some industries such as information technology, insurance, healthcare, and pharmaceutical, the pandemic had a reverse impact on their business operations. And if these organizations were able to successfully shift to remote work, the resulting disruptions are few. For companies that belong to such industries that are still operating close to business as usual, conducting the performance evaluations as planned is the best approach, though the short- and long-term business goals need to be re-calibrated. This might help employees experience a sense of regularity and stability, in an adjusted pattern, and remain resilient during and after the pandemic.

Put people first when determining your most appropriate scenario

Choosing the scenario that best fits your company’s needs highly depends on your business context and the maturity of your performance evaluation process. It is recommended to evaluate the current performance management system and to fine-tune the framework in order to adapt to this unprecedented transformation in the organizational environment. Overlooking this could have multiple negative consequences on employee motivation and, ultimately, performance.Top performers could lose motivation if their hard work goes unrecognized, leading to a potential drop in productivity and an increase in turnover risk. The low-performer could view this silence as a sign that a mediocre input might be disregarded, or even accepted. And the motivated employee who was working hard, but was just not there yet, might miss out on constructive feedback and key development opportunities. Being a leader in times of crisis means being so busy that you run the risk of overlooking the most important element in your business: your people. People-related processes should change and performance management is no exception. The skills and characteristics that thrive in this volatile context will be promoted. The main role of leadership will also vary. Leaders will have to guide a process of continuous re-calibration of structures, objectives, and activities.