When digital technologies are making in-roads into many businesses, competitive advantage is achieved through resource orchestration driven by employee engagement. Industrial-era performance management practices in enterprises should attune to the newer, collaborative, and connected platform business models to deliver superior customer experience and employee engagement.
Growth of Digital Technologies: Shift from Pipelines to Platforms
By 2021, IDC expects organizations will invest about US$2.1 trillion in cloud, mobile, Internet of Things (IoT), and other next-generation technologies. At the same time, research by Frost & Sullivan suggests the global economy is moving towards a state of “connected everything” -- connected work, homes, and cities, and an INSEAD survey found senior executives of large companies expect the use of artificial intelligence (AI), Internet of Things (IoT), blockchain, and big data analytics are likely to increase in the next couple of years,
The connected workplace incorporates mobility (mobile email, enterprise mobile apps, people locator, bring your own device or BYOD), communication (unified messaging, remote desktop access), and networking (web-based project collaboration tools, cloud-based file sharing services).
These digital technologies are expected to assist companies achieve their strategic goals by improving operational efficiencies, creating new revenue streams, reinforcing core business, acquiring new customers, and retaining existing customers.
Resource control to resource orchestration
While these technologies are becoming a staple to business, the INSEAD survey suggests what has remained untouched or unexplored is the attraction and retention of talent. Companies have to be wary of the widening digital chasm existing between other business functions and the area of human resources for all practical purposes. If the central purpose of digital transformation and the investments in digital technologies is to secure a sustainable competitive advantage through improved digital experience, it is vital to satisfy both external users (customers) and internal users (employees) and to keep them engaged and loyal.
Undoubtedly, industrial-era companies find the transition from “pipelines” to “platforms” precarious as new core competencies have to be built and new rules of strategy written. The traditional pipeline model seeks to gain competitive advantage through resource control, while the platform model resort to resource orchestration deploys tech-driven strategies to accelerate employee engagement. With this model, employees must also have necessary platforms for communication and collaboration, and tools to connect with each other to create an alignment between the company's vision and performance measures.
Performance Management: Rooted in industrial-era and yet to cross the Chasm
Gartner research shows many business leaders look to human resources to lead their digital transformation to achieve the strategic goals. Yet, fewer than 40% of the Chief Human Resource Officers surveyed agreed their performance management process is effective and keeps pace with rapidly evolving business needs. Strategies ranging from coaching to employee self-service are deployed, but it is the impact on performance management that is the important facet of enterprise digitalization.
The adoption of digital technologies in processes like customer service, delivery, and operations is growing, however, performance management is still rooted to industrial-era systems and practices. McKinsey, in one of its articles on the future of performance management. likened the prevailing situation to conducting modern financial transactions with carrier pigeons. Employees are not able to make sense of the performance feedback and compensation that is time-consuming, subjective, and probably basing it on recency and spillover biases.
What lies ahead for Performance Management?
The right solution starts with the implementation of technology to accelerate employee engagement. Strategies include gamification to make employees aware of their own progress, internal social/collaborative platforms to strengthen employee bonds and team work, and the sharing of best practices. Companies must test with systems that provide continual feedback and coaching by collecting more objective unbiased performance data. This fact-based method focuses on frequent development discussions rather than a year-end backward looking and unsophisticated ritual many people try to avoid.
The new technology solution must improve goal-setting or KPIs. This will be more effective than the symbolic act of installing a new performance management software in the company. Yet, the proliferation of numerous and irrelevant KPIs has to be curtailed as collecting data for those KPIs is a cumbersome process and weans employees away from their core focus. In an increasingly connected, collaborative, and interdependent business ecosystems, the performance management system should allow inputs with a 360-degree view, including an employee’s peers, leaders, and even external partners such as customers and vendors. With features like check-in and task management enabling regular performance updates, managers and employees can resolve challenges in a collaborative and democratic approach.
The evolution of performance management has begun and companies that embrace the transformation will create the workplace of the future that is aligned with the organizations’ strategic goals. After all, digital transformation aims to deliver the best digital experience for all internal and external stakeholders: employees, customers, and partners.