Covid-19, Says Goodbye to Traditional Performance Management > Insight

As anybody can expect, it looks unlikely that meeting and reporting at the office every day will become routine even if the covid 19 is over. According to a survey by PwC¹, workers around the world are already used to working remotely. Working half the week (2 to 3 days) at home will be New-Normal.

Remote-work is expected to be a standard in the post-corona era, but it is also true that there is a different aspect among generations, companies, and countries. While Generation X generally prefers to return to office, Generation MZ hopes to work from home after covid 19². Among 'FANG', industry leaders of the tech sector, While Google and Facebook plan to enlarge remote-work, Apple and Netflix are planning to reduce or to abolish it.

There are usually two negative stance on enlarging remote-work, but the reasons and objectives are quite different.

The first is the case with Apple and Netflix. They say that creativity and innovation does not work well because employees who need to communicate and collaborate closely with one another work remotely. The second reason, often mentioned in domestic companies, is that it is difficult to manage whether employees are working or taking a break if they work from home.

This perception is well illustrated in a survey conducted by KCCI³, which found that remote work is generally perceived as good 

in terms of efficiency and employee satisfaction, but 70.8% of participants have no plans to continue it after covid 19.

As such, while new generation (MZ) employees value the right to determine its own work time and place. If companies deprive them of the opportunity to work from home simply because of difficulties in attendance and performance management, 

it will inevitably lead to lower employee engagement and recruitment competitiveness. Therefore, according to a recent survey by HR Insight⁴, many companies consider 'Managing performance in remote environment (27.3%)' and 'Improving performance management (18.1%)' as key HR initiatives for 2021.

The end of traditional performance management and 

The beginning of agile performance management

So, what is the problem with traditional performance management – annual&relative evaluation based on MBO? 



According to CEB⁵, managers spend more than 200 hours on activities related to performance evaluation. 

While 90% of HR leaders said that "annual assessments do not provide accurate information." Additionally, according to WSJ⁶ employees are put into a 'fight or flight' mode when they hear their rating.

In fact, Adobe also said that after the year-end evaluation, a significant number of employees had a severe decline in engagement and resigned, which was an important reason for abandoning the annual&relative performance management. 

Not to mention of complicated studies, Major complaint in the companies is "After evaluation is over, the organization suffers from the aftermath for a month." Regarding the disagreeable result, the superior says, "I tried to give a good grade, but…" and the employee complains, "Why should I receive a lower rating than that guy?". Subordinates are in a hurry to complain and superiors to make excuses and avoid responsibility. It would be nice if it could be discussed with each other, but in many companies,

the evaluation results are retrieved from the system, and there are no explanations or feedbacks on it. Angry employees are busy looking for another job, and superior are busy trying to keep them. 

As such, annual evaluation is just old custom told to do and is of no value and meaning. It has been a long time since it has been reduced to an act to determine limited extent of compensation and promotion, and has managed to maintain life due to lack of proper alternatives. In addition to the perception that traditional performance management triggers internal competition and causes demoralization rather than improving performance, rapid environmental changes represented by the Fourth Industrial Revolution and the emergence of Agile organizations and Millennial generations have accelerated the transition to agile performance management.

5 Trademark of Agile Performance Management

According to HCG analysis, agile performance management has five characteristics that differentiate it from old practice.

Each characteristic corresponds directly with the limitations of the traditional evaluation system. 

For example, Rating-less evaluation helps to prevent a psychological aftermath after year-end evaluation and to reinforce developmental feedback. Frequent goal setting helps to alleviate difficulties in responding to environmental change and modifying goals. The use of collective intelligence in evaluation(Crowd-sourced) helps to gain credibility by resolving arbitrariness. Recognition-based evaluation can be a remedy for conflicts after evaluation and declining employee morale and helps create 

a positive & cooperative culture. 

In fact, agile performance management is widely spread even in Korean companies, but there are not only companies that possess all five characteristics. Many people are to some extent agreed on the necessity of ongoing review & feedback and the need to utilize collective intelligence. Therefore, POSCO and Hankook Tire are using continuous performance management (ongoing review), while Naver and SK Telecom are operating a peer - reviewed performance management system. 

On the other hand, the characteristics of agile performance management which is difficult for Korean companies to accept is not to set goals at the beginning of the year or not to give year-end ratings. In fact, continuous reviews and feedback are fully possible without setting goals. Nevertheless, there is a strong prejudice that employee's individual goals linked to the organization should be established and evaluated. What is more difficult to accept is absolute rating or no rating. They are wondering if absolute evaluation does not result in leniency error/upward appraisals, and don't understand how compensation and promotion can be operated without rating… For someone, it is simply not realizable.

SK Group is leading innovation in various aspects. According to Company A, which has introduced absolute evaluation since 2016, "Contrary to common concerns, there has been no excessive upward evaluation due to objective evidence accumulated through quarterly reviews(Check-ins)." Rather, the fairness of the evaluation has increased through sufficient grounds and conversations." According to Company B, which introduced an unrated evaluation since 2017, "The manager's satisfaction and responsibility 

has improved as they freely decide the compensation/promotion based on the data from multi source without grades."

Why Agile Performance Management for Remote Working?

As remote work has become more common, the existing performance management based on attendance and process has become difficult to continue, and companies are strongly feeling the need to maintain productivity and manage performance focused on objective results. 

It should be evaluated by results but in order to get the desired results, paradoxically, process management to the extent that employees do not feel interference and distrust and nurturing through appropriate level of intervention and advice must be strengthened. At this point, it is judged that agile performance management have validity. 

1) Agile performance management aligns daily tasks with performance goals.

Rather than setting evaluation-oriented goals that are not even related to actual work, it is desirable to have goals and expectation agreed with one's superior on regular basis 

2) Agile performance management strengthens timely feedback. 

The year-end feedback is a beat late. What employees need is not a supervisor or any audience, but a playing coach who will give necessary advice on a regular basis

In fact, there is no more convincing evidence that agile performance management is optimal for remote work than the fact that agile performance management is already common in global IT companies that pursue Anytime & Anywhere. 

According to BetterWorks⁷, companies with agile performance management could 'maintain at least 31% higher productivity throughout the year' than those without. It is a very good way to make performance evaluation a natural and repetitive part of daily coaching and process management rather than an annual event(Too Long) or a frequent supervision of remote work (Too Short). 

After all, successful remote-work requires four things. ① The company's clear policy on remote work ② Digital infrastructure that promotes communication and collaboration ③ Systems and tools that can manage work and performance ④ Managers' leadership that can clarify the expected performance and can coach members efficiently.

Are our employees really not ready to accept agile performance management? Or are the companies assuming like that not ready? If a company is insisting on traditional performance management, I would recommended to prepare and respond to the agile performance management which is expected to be a new normal.