9 fundamental principles for the future of performance management

Anne Haker from HR Pepper and Johannes Müller, CEO of Workpath, spoke about the radical change and the future of performance management. What needs to change in terms of processes, tools and culture as well as strategy and people. This has resulted in nine principles that can be used as a guideline to rethink performance management. Both of them are convinced that it is time to build performance management on the principles of a new working world. And not on those of a past industrial era.

1. More focus on teams - less individual goals

Where value creation is driven much more by teams than by individuals, and where the increasing complexity of the tasks to be performed makes it almost impossible to manage them outside the team, performance management must start with the team.

2. More joint negotiation of strategy - less rigidly cascaded goals

Those who demand more personal responsibility and entrepreneurial thinking from their employees must also involve them in the setting of goals in an appropriate manner. Teams should therefore define clear but broadly defined entrepreneurial guidelines themselves and the strategy process should be opened up to impulses from the employees.

3. A more iterative approach - less waterfall

In light of the constantly and rapidly changing circumstances and the increasing complexity of the (working) world, goals must be regularly reviewed and, if necessary, adjusted at intervals of 2-4 months. In most work contexts, the classic annual planning is no longer suitable for the speed of change of the environment.

4. More interdepartmental cooperation - fewer silos

If cross-functional teams can find the best solutions for upcoming challenges, their cooperation across previous departmental boundaries must be supported. Instead of incentivising departmental thinking, it is therefore essential to facilitate flexible team composition and teamwork.

5. More transparency - less secrecy

In order to be able to make decisions on their own authority, every employee must have the necessary information basis at their disposal. This means, for example, transparency about relevant company data, available competencies and company goals.  Only in this way can employees take responsibility for goals and synchronize themselves independently.

OKR and Performance Management

6. More regular, multi-perspective feedback - fewer annual performance reviews

If you want to develop yourself continuously, you need regular, honest feedback from the people who can best assess the effects of your own behaviour. And this is not always just the manager, but often the team colleagues with whom the company is working particularly closely, or even the customer. Ideally, feedback should become daily practice and go in all directions: From bottom to top, from top to bottom, collegially and from the customer's perspective.

7. More continuous, self-directed learning for all - less focus on training catalogues

Anyone who is supposed to take over responsibility and actively participate in thinking and designing, needs the necessary skills and relevant knowledge. However, as knowledge becomes obsolete more and more quickly and competence requirements are constantly increasing, continuous learning and further development must be given a far greater priority. Modern performance management relies on strong self-control and multiple learning opportunities and moves away from the classic training catalogue.

8. Changing role and team compositions, less rigid boxes in the organization chart

Development takes place not only through explicit learning and further training measures, but also implicitly by taking on changing roles and responsibilities. Performance management must actively promote this flexibility. This also means that job and role descriptions should be more openly based on overarching principles, such as the degree to which responsibility is taken over, than on concrete positions.

9. More focus on value creation - less actionism

Traditional cascading of goals has so far usually been accompanied by a large number of measures which - once decided - have been successively processed and rarely put to the effectiveness test again. In the future, the value created for the company should be the guiding principle for action, and this should be accompanied by the courage to remove activities from the list that have not been identified as creating value.