How to strategically align compensation and performance management?

Read this article to learn the pros and cons of linking compensation and performance, 5 compensation best practices and do-s and don't-s of pay transparency

7

min read

The right compensation management practices and policies can make or break your employee experience. Of course, there is merit in linking compensation and performance to drive organizational success, it can lead to several questions and implementation problems as well. 

Read on to get all your compensation management related questions answered.

Why is fair compensation important?

Let’s start with the very basic question of why fair compensation is important and the merits it brings along. It is no surprise that if you are paid more and are compensated according to your efforts, you are likely to give in your 100% and stay with an organization longer. However, there are other factors that support fair compensation:

  • Reduce the risk of turnover: 50% employees are more likely to leave if they believe they are paid below market
  • Retain high-potential performers: High-potential talent brings 91% more value to an organization
  • Increase job satisfaction: Compensation/pay and benefits are 2 of the top 3 drivers of job satisfaction 

Thus, fair compensation as a part of compensation linked performance management has the potential to facilitate better employee outcomes such as engagement, experience and performance. 

Should compensation be tied to performance reviews?

To make compensation fair and inclusive in all aspects, it needs to have a clear foundation. Most organizations have relied on performance reviews as a way of reflecting on performance as a means of compensation decisions. However, there are several competing views both for and against tying compensation to performance reviews. 

Benefits of tying compensation and performance reviews

  • Compensation can act as a great motivator for employees to perform well, which can be reflected in their performance reviews
  • Enable employees to get a clear understanding of what rewards or recognition they get with an increasing level of performance
  • Give employees the opportunity to see the direct value of their performance in tangible ways
  • At an organizational level, it helps to align inputs (compensation) with outputs (performance), enabling efficient resource allocation
  • Ensure that compensation hikes and appraisals are seen as transparent and not arbitrary

Pitfalls of tying compensation and performance reviews

  • It focuses on only those aspects of performance which are under review and not the overall and subtler forms of organizational contribution for employees
  • Performance linked compensation system leads to employees giving themselves  more lenient ratings during self reflection during 360 performance review. Thus, driving the focus away from self reflection as a development practice
  • Biased peer review can also prevent fair compensation, especially when the departmental budgets are limited
  • Sometimes, it creates a blame oriented workplace culture and discourages collaborative problem resolution

Clearly, there are both sides to the story.

The most favorable outcome will be to keep performance as one of the parameters for compensation, but not the sole foundation.

Additionally, as one of the best practices, performance reviews can be conducted on a regular basis, where some are only developmental in nature and others can be tied to compensation management. 

5 compensation best practices today

As discussed, focusing only on performance reviews for compensation management needs a relook. Working with growing organizations, we have curated a list of the top five performance and compensation management practices you can leverage:

1. Keep up with market trends

Ensure that your compensation structure aligns with the market trends so your employees don’t feel underpaid and leave.

  • Conduct a dipstick survey to understand appropriate pay scales
  • Keep your pay structures updated based on market corrections
  • Leverage custom employee pulse surveys to regularly to check their perception on compensation according to market trends

2. Be clear about relationship between performance and compensation

Provide complete transparency and clarity to your employees on what constitutes high levels of performance and what it will take to earn a raise or appraisal.

  • Highlight specific job competencies that link compensation and performance management
  • Don’t rely completely on performance reviews as a means to determine compensation, let them be developmental in nature
  • Gauge performance against pre defined competencies over time

3. Have well defined criteria

Have specific, well defined and measurable criteria for the compensation strategy to ensure that there is complete transparency. 

  • Develop or choose metrics which are easy to comprehend
  • Try to quantify the value for each criteria, including years of experience, education, etc.
  • Account for difference in compensation based on skills, performance levels, among others

4. Communicate benefits effectively

Salary in hand or the pay check your employees receive is accompanied by a range of benefits that are a part of the compensation structure and cost to the company, but are often overlooked by employees. Make sure they are widely communicated.

  • Create a list of all benefits offered to employees and communicate to them via different ways, email, discussion sessions, etc.
  • Be vocal about the value these benefits are able to add over and above their monetary value
  • Illustrate how these benefits also act as tax saving options at times, leading to a more efficient compensation structure

5. Have a standard pay range

Ensure that there is a base pay range for every role and profile with variable additions based on candidate competencies.

  • Have clear guidelines and pay range for each position to set the right expectations
  • Illustrate the competencies/parameters based on which deviation from standard pay range will be acceptable
  • Have a well defined strategy to evolve the pay range and support employee transition from one range to another

How to ensure distributive justice?

The idea of fair compensation and linking compensation and performance management, leads to a very interesting concept of distributive justice. On a broad level, distributive justice essentially focuses on ensuring that the compensation received by employees is fair and equitable and is based on objective and rational grounds which are uniform for all. Here are a few ways to ensure distributive justice:

  • Be transparent about the criteria for compensation and what constitutes as parameters for raise
  • Ensure that measuring of performance/ other criteria for performance is bias free and doesn’t fall prey to halo, horns or recency effect
Measure potential and market value of the employee in addition to experience and expertise to ensure distributive justice for high potential employees 
  • Be fair in your compensation and appraisal assessment

Pay transparency: Merits and demerits

Another interesting component of compensation and performance management that you must acquaint yourself with is pay transparency. Essentially pay transparency refers to how openly or freely employees within an organization can discuss their compensation with others. 

This is not only limited to the check they take home but other perks and benefits they are entitled to. Invariably, many platforms today also enable individuals to anonymously share their salaries online and get insights from others doing the same. However, there are diverse views on when it comes to pay transparency for an organization. 

Merits of pay transparency

Those who advocate for pay transparency believe that it can enable large scale impact for the organization across performance management.

  • Meet employee expectations, build greater trust and augment engagement and overall experience
  • Attract the best talent by showcasing competitive compensation at market standards
  • Reduce chances of biases in salary negotiations and increments
  • Ensure fair compensation and distributive justice among employees
  • Greater employee motivation leading to better organizational outcomes
  • Fewer negotiations allowing employees to focus on adding value to their work

Demerits of pay transparency

However, there is a flip side to pay transparency too with some common pitfalls that need to be addressed proactively.

  • Risk of resentment and conflict if pay scale is not uniform and balanced
  • May lead to comparison of pay scales among peers in the organization with possible backfire
  • Requires strategic planning and meticulous implementation
  • May lead to high levels of turnover in case employees feel they are paid less than what they deserve, in comparison to others
  • Employees might have privacy concerns about their salary being shared with others

How to guide managers to have better compensation conversations?

In the last section of this article, we will focus on how managers play an integral role in compensation and performance management and the best practices to guide managers to have effective compensation conversations with their team members.

Almost 58% organizations do not train managers on pay communications 

This startling statistic clearly highlights how despite the apparent importance of compensation management, the focus on ensuring a seamless process is rather limited. However, organizations today can play a leading role in enabling their managers to have better pay communication and conversations by following these tips:

  • Create a communication toolkit with all the resources including compensation structure, criteria, performance linkage, etc. and share it with all the managers 
  • Conduct regular surveys to gauge employee pulse and data from employees on their compensation and share insights with managers to help create a conversation flow
  • Leverage tools for NLP led sentiment analysis of open ended responses and share guided 1:1 conversation templates for effective compensation conversations
  • Encourage managers to keep compensation conversations and performance reviews as separate
  • Give proper context, especially during an appraisal or raise, with both internal and external factors that led to the compensation decision
  • Communicate the value and importance of the employee to the organization, don’t rely on numbers and monetary increase do all the talking
  • Prepare for the conversation and be prepared for response, be an active listener and patiently address grievances, if any

Final Thoughts

It is quite evident that compensation and performance management are intrinsically interlinked and if leveraged well, compensation has great potential to not only drive performance, but also facilitate engagement, retention and much more.

However, to ensure the same, you need to have a very structured, transparent and fair compensation strategy and policy. Furthermore, you must, don’t forget to invest in training your managers to bridge any gaps and constantly gauge and address employee pulse — to ensure fair compensation for all.

Suggested Reading

10 tips for managers to effectively conduct performance reviews

How often should you conduct performance reviews?

How to use competency framework as a talent management strategy

Sudeshna Roy

Marketing, SuperBeings

Hi There! I am Sudeshna. At SuperBeings, I lead our content strategy to bring you the best and latest on everything related to people management

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Engagement
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min read

Employee Net Promoter Score (eNPS): How to Use eNPS for Better Engagement

“Every employee can affect your company’s brand”- Tony Hseih, Former CEO, Zappos

TL:DR

Employee NPS is a key component for your organization if you wish to create a culture which engages, motivates and inspires employees and encourages them to recommend it to their friends. Here are a few quick points that you should not forget:

  • It helps organizations gauge the level of engagement and experience for employees by segmenting employees into promoters, passives and detractors (discussed later)
  • eNPS is important as it helps in employee retention as well as facilitate fast and effective hiring by ensuring a winning employer brand
  • It is best to conduct eNPS surveys on a regular basis to gauge trends over cycles and address fluctuations in real time
  • To improve your eNPS, you must focus on understanding each segment of employees and taking appropriate action
  • You must acknowledge that passives have a great potential of changing your eNPS and you should focus your efforts on bringing them up the score spectrum
  • Finally, you must use eNPS as a means to boost employee morale and track level and reasons for disengagement

Now let’s get into the nitty-gritties of employee Net Promoter Score (eNPS) and how you can use them effectively.

What is employee Net Promoter Score?

eNPS is or employee NPS is a measure of employee loyalty and how they feel about your organization. It is a scoring mechanism that employees can use to share their satisfaction/ dissatisfaction with the company culture, which in turn helps leaders to gauge the impact it will have on the organization. 

The advent of eNPS came as a result of realizing that employees have an equal impact on an organization as the customers

For instance, if any employee leaves a bad review or reports a bad experience about your organization, it might act as a deterrent for other high performing candidates from applying to your organization.

In a nutshell, eNPS is one of the top tools you can use to gauge how satisfied your employees are with your company culture and measure whether or not your employee engagement and other efforts are actually bearing fruits. 

How to calculate eNPS?

You can calculate the eNPS for your organization by subtracting the percentage of promoters from the percentage of detractors. Let’s quickly understand what this means. 

You will start by asking your employees to rate their experience on a rating scale of 0-10. You can have questions like ‘How likely are you to recommend the organization to your peers or friends, on a scale of 0-10’. We will talk more about potential questions in subsequent sections. Depending on their experience, your employees will share their rating. Based on the rating, you can segment your employees into three categories:

  • Promoters: With a rating of 9-10; they are highly loyal, motivated and inspired and show full commitment to the organization
  • Passives: With a rating of 7-8; they are generally neutral, while they are happy with the experience, their level of loyalty and commitment may not be as high as the promoters
  • Detractors: With a rating of 0-6; they are generally dissatisfied, lack loyalty, inspiration and motivation and may not recommend the organization to others
eNPS= %of promoters - %of detractors

For instance, if your organization has a total of 100 employees and 61 are promoters, 18 are detractors and 21 are passives, then your eNPS= 61%-18% = 43

The higher the eNPS, the more advocates you have. This suggests you will have an ecosystem of high percentage of employees that are loyal, inspired, motivated and committed. 

enps

Why does eNPS matter?

For growing organizations like yours there are several reasons why eNPS matters to create a sustainable workplace. Such as —

1. Get a picture of your employer branding

Research shows that the majority of candidates read six reviews before forming an opinion about a company and 70% of people look to reviews before they make career decisions

With employee NPS, you will know how likely your employees are to recommend your organization to others outside. This ensures employer branding which determines the quality of talent you will be able to attract. 

By ensuring a good Net Promoter Score from employees, you will be able to manage the reviews effectively. 

2, Identify your advocates in a simple and quick manner

Employee NPS is very easy to execute, fast and cost-effective. At the same time, it gives you a clear picture of who are the advocates for your organization vs those who are disengaged and are unlikely to make recommendations. This information has two-fold benefits:

  • You can create personalized plans to engage the different employee segments based on results
  • You can leverage the reasons your promoters or advocates list for high level of loyalty and focus on enhancing the same

3. Reduce employee turnover

It is very rare that an employee will one day decide to leave your organization out of nowhere. Often, the decision to quit starts in advance and can be attributed to several factors including disengagement and dissatisfaction. eNPS, conducted regularly, can help you anticipate potential turnover in advance, when the employee rates low on the eNPS survey. You can use this data to fine tune your engagement plan and identify and address specific challenges. 

🚀 Predict and prevent turnover with employee experience surveys by SuperBeings. Learn more 

4. Hire faster

As stated above, eNPS directly impacts the quality of the talent you attract. Similarly, it also impacts how fast you are able to close an open position. If you have a high eNPS, you will receive a higher inflow of applications because your organization will be branded as a preferred place to work. This higher number of applications will translate to faster interviews and closures. Invariably, this will prevent the loss of work hours between transitions. 

5. Gauge employee trends over time

Finally, eNPS can help you track employee loyalty and engagement over time. If individual and overall employee NPS increases, it reflects that your interventions are moving the needle. However, if the score drops, you may need to relook at your practices and understand the root cause. 

Employee NPS cycles

As mentioned before, employee NPS is generally measured with eNPS surveys. Therefore, like any other feedback cycle, your eNPS surveys should also follow a structured and cyclical approach. Here are to create an effective eNPS survey process —

1. Ensure anonymity

Make your eNPS ratings confidential and anonymous. Do not force your employees to give names along with ratings or do not disclose ratings of one to another even if you know who it is from. One of the easiest ways is to use a platform that doesn’t capture respondent data, except the rating. Anonymity will help build employee trust and ensure honesty in the rating received

2. Keep it short

Refrain from adding too many questions in your eNPS rating. A maximum of 2-3 questions is more than enough. While most organizations use 1 central or core question, you can supplement it with another one to augment impact. For instance, one question can be about probability to recommend, while the other could be on motivation, inspiration.

3. Make it frequent

Having an eNPS rating at regular intervals is important. Ideally, as a growing organization, you should have a monthly cadence. However, if that seems overwhelming, you can start with a quarterly rating, and gradually increase the frequency. 

4. Use a 10 point rating scale or open ended questions

While a 2 or 5 point rating scale can also capture data, a 10 point scale and open ended questions enable employees to be more specific about their answer by giving them more options to choose from. The deeper your eNPS survey insights are, the more accurate actions you can take to improve your score.

5. Follow up

Just because responding to an eNPS question requires one click, you cannot assume that you’ll receive 100% participation. You must follow up a couple of times. Using employee survey tools to increase survey participation rate can be useful here. For example, SuperBeings sends reminders and follow up nudges at preset intervals via existing chat tools (Slack, Teams, Gchat etc) directly in the flow of work to maximize response rate. 

6. Encourage authentic answers

Finally, you must encourage your employees to be honest in their rating. Anonymity will help you achieve this. Additionally, explain to your employees that the answers will not have an impact on their appraisal and their negative rating will not land them in a backlash. 

eNPS survey questions

As a best practice, you can start your employee NPS survey with a core question and then you could follow it up with a few open ended questions. Your first question must follow a rating pattern to get your employee Net Promoter Score. Some of the questions can be:

  • How likely are you to recommend your organization as a workplace to your friends/ peers?
  • On a scale of 0-10, how inspired do you feel to work at this organization?
  • What is the primary reason for the score you gave?
  • What can the organization do better to get a higher score?
  • What is one reason that is preventing you from recommending the organization to your friends?
  • What is one reason why you enjoy working here?

Here are a few best practices you can use while preparing your follow up questions:

  • Don’t be too vague with your questions
  • Try to keep your questions open ended to get support for your core questions
  • Try to get specific answers with 1 or 2 instances

What is a good employee NPS score?

While it is difficult to pinpoint the exact score which can be considered good, there are a few ways to measure how well your performance has been on eNPS. 

If you look closely, by formula, your score can range from -100 to +100, depending on the ratio of your promoters and detractors. Generally, any positive score, that is, a score above 0 is considered to be a good starting point. This indicates that there are more promoters in your organization than detractors. This translates to the fact that more employees are likely to recommend your organization than those who will not. 

However, only a positive score is not the end of the story. While a positive score represents retention and recommendation, the higher the score, the greater will be propensity and impact.

Use eNPS benchmarks

Furthermore, you must also align your eNPS with other organizations in your industry. For instance, while 60 might be a great score, if all organizations in your industry have an eNPS of 70+, then you may need to relook at your numbers. 

Here, studying industry benchmarks can help. However, eNPS is not a data point that is publicly available that you can consume. 

At the same time, your own eNPS can also be a benchmark for you over time with an aim to increase every time. The idea is to track your own company’s fluctuation, positive or negative, to identify the reasons or interventions behind the same. 

Unlock top engagement survey question templates and advanced employee analytics. See SuperBeings in Action

How to improve employee NPS?

eNPS surveys can disillusion even the most people friendly organizations. It is not rare to have a survey score below expectations. But improving eNPS is easier than you think:

1. Capture eNPS regularly

You must have heard that what gets measured, gets improved. The same is true for eNPS. When you capture employee NPS on a regular basis, you can track fluctuations and gauge whether or not the needle is moving. You can get a real time picture of whether the promoters or the detractors are increasing. Furthermore, the fluctuations can help you identify how specific interventions or regular organizational activities impact eNPS. 

2. Share the results

No matter what the results say, share it with your team members. Even if you have a negative score, share it with the team to facilitate collaborative thinking on what is going wrong. This will help you create an image that you are truly listening to your employees and are taking action. After sharing results, follow up and communicate the next action steps so your employees know that their voices are being heard and impact is being created. 

3. Understand the rationale

To improve eNPS, you need to understand the rationale or the reason behind each rating. Here, you should ask follow up questions to your employees on what contributed to this particular rating. On one hand, it will help you understand the motivation or the inspiration for promoters as well as you will be able to identify what is stopping detractors from recommending the organization to others. 

Put simply, the factors mentioned by promoters can be augmented and focused on, while those from detractors must be addressed or resolved 

4. Take action 

Once you share the results and engage in collective brainstorming, you must take action. 

  • Example 1: If the major reason behind low eNPS is lack of work-life balance, your focus should be on addressing the same, by facilitating workplace boundaries. 
  • Example 2: If lack of career growth is stopping your employees from recommending the companies to others, investing in mentorship, learning and development, career coaching, etc. can be extremely helpful.

5. Communicate with all segments

If you think that you only need to focus on detractors to improve your eNPS, you are mistaken. While you definitely need to pay attention to them, the other two segments, i.e. promoters and passives must not be left attended. 

  • When it comes to detractors, your focus should be on their pain points, how it translates to a poor experience and what you can do to reverse the same. 
  • For promoters, while you may think they are happy, engaged and don’t require any intervention, you must not lose attention on them and focus on keeping their rating high. Furthermore, when you communicate with them, you will be able to get insights for long term strategies. 
  • For passives, focus on understanding what would make their experience within the organization and the role even better and more meaningful.

6. Improve continuously

When it comes to improving your eNPS, there is no stopping point. Just because you improve your eNPS by 20 points, doesn’t mean you have reached the pinnacle, even if you are above the industry average. 

  • While in the first few years of your employees’ lifecycle, you will focus on retention and loyalty by ensuring a positive score,
  • In the later years, your focus should be on making the employees feel inspired, motivated and committed to unleashing high levels of innovation and productivity. 

7. Follow up with more comprehensive feedback

Employee Net Promoter Score must be a part of a more comprehensive employee feedback framework. The idea is to get more qualitative feedback and insights to compliment the score. You can use open-ended survey comments for this purpose. Such feedback will help you understand where the score came from and how you can take steps to move in the right direction. 

8. Understand the passives

Finally, to improve your eNPS, you need to focus on the passives. Based on the formula, you might think that passives have no role to play in eNPS. However, you must understand that they are just one point away from falling in the detractor or the promoter category. Here, your focus should be on moving them up the spectrum. Getting qualitative inputs from them is very important as they have some level of commitment and positive regard towards the organization already. 

How to use employee NPS for better engagement

With eNPS, you can turn employee feedback into a growth strategy both as a business and as an employer. Here’s how:

1. Boosts morale

First, employee NPS boosts the morale of employees who believe that their voice has value and is being heard. It makes employees feel included in the process of building the right culture. Employees who participate in eNPS come with a sense of pride as being a contributor to building the overall experience in the organization. It also comes with a sense of respect when an organization asks the employees for their perception.

2. Understand level of disengagement

Low or negative eNPS is a clear indicator of the level of disengagement. It shares an inverse relationship.

Lower the eNPS, higher will be the disengagement

Obviously, only when employees feel disengaged at work, will they not recommend it to others in their network. This can act as initial information for your organization to create strategic plans to reverse the trend. Furthermore, fluctuations in eNPS can be useful when it comes to sudden disengagement which may not be very apparent, but can lead to mass turnover. 

3. Gauge factors contributing to engagement

A deep dive into the qualitative aspects of eNPS can help you understand the factors contributing to engagement or disengagement. For instance, if a promoter claims that they gave a high score because of the focus on wellness, it becomes clear that wellness programs can augment engagement. Similarly, if the reason for a detractor is high workload, effective distribution can help improve engagement levels. 

Increase employee NPS with SuperBeings

Creating, communicating and analyzing employee surveys can be intimidating and time taking. To conduct eNPS in a comprehensive and hassle free manner, you can partner with SuperBeings. Here’s what you get with our employee engagement survey feature —

  • Built-in survey templates: Reduce the time to create survey questionnaires by using science backed, best practices pre-built survey templates. You can customize them as you need.
  • Choose the most suitable rating scale: You get full flexibility to customize each question by choosing from a wide array of rating scale options — 2, 5, 7 or 10 point scale, multiple choice and open-ended.
  • Filter options for better comparison: For each question you can filter the responses at manager, department or org level and compare them on a single dashboard. Also, you get deeper insights into each question on the Insights tab
  • Use comments for qualitative feedback: Understand the sentiments behind each response by looking into open-ended comments left by participants
This is just the tip of the iceberg of what you can do with our engagement survey tool. At SuperBeings, we are constantly trying to improve the engagement processes and make it easier for the people leaders. 

Need a helping hand? Talk to our product expert. 💡

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Performance
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min read

7 Steps to Effective Performance Management You Need to Know

“Most organizations fail to manage performance effectively because they fail to look into the system holistically.” - Pearl Zhu, Author of Performance Master

The impact of having an effective performance management system goes way beyond hitting quarterly targets, it also facilitates employee development, high levels of retention and a high performance culture. 

Yet sadly, most organizations do not spend nearly as much time and resources into planning and developing a wholesome performance management process as they do chasing goals.

In this article, we break down the components of an efficient performance management system and how you can achieve them in 7 easy steps.

7 tips for effective performance management

We spoke with several HR practitioners and below are the 7 steps they recommend to build a super effective performance management system.

But before that, it’s important to understand that — 

Improving performance is a collective responsibility. And it starts with shifting the mindset around performance — from appraisal to improvement, from annual to continuous. 

As HR leader and author of Nothing About Business says —

“Performance management is so tightly integrated with the business that Business has no option but to do it on its own.” 

1. Adopt a continuous approach

First, you need to start with a continuous approach to make your performance management effective. Simply relying on traditional approaches of annual check-ins, feedbacks and reviews will have limited impact considering the dynamic and volatile market ecosystem. To adopt a continuous approach for effective performance management, you should:

  • Promote regular check-ins and employee pulse surveys
  • Facilitate consistent and dynamic goal setting
  • Foster a culture of constant appreciation and recognition
  • Ensure frequent feedback, evaluation and interventions
  • Set regular cadence to reflect on diverse aspects of performance management

Read our detailed article on Continuous Performance Management to learn more.

2. Capture performance feedback regularly

Next, a major component of strategic performance management is capturing and analyzing performance feedback. You need to ensure that your employees are offered adequate and comprehensive feedback on their performance and areas of development are worked on. 

You can use our Performance Review Phrases template for such performance feedback recommendations.

At the same time, there should be focus on seeking feedback from your employees for self evaluation and to understand what they feel about their work and the organizational culture as a whole. 

Here adopting an employee feedback tool can enable you to find success easily. It can help you to not only capture feedback, but also generate insights and share heatmaps on how certain areas of performance can be improved, which is essential for finding success with your performance management initiatives. 

3. Facilitate meaningful 1:1 conversations

A good performance management goes way beyond just reviews and evaluations on how the performance of an employee has been. You need to equip all your line managers and leaders within the organization to conduct powerful and meaningful 1:1 conversations with their team members. 

The right conversations have the potential to preempt any potential risk of turnover, drop in productivity, low levels of motivation etc.

Once you have been able to identify any potential challenge, you need to ensure that the conversations take a new avatar. The idea is to have conversations that can address the surfacing risks. 

However, conducting directed conversations on different challenges can be overwhelming at times. Therefore, you may want to leverage a guided 1:1/ Meetings tool to train and equip your managers.

4. Identify learning opportunities

Based on the feedback, conversations, reviews, surveys that you conduct, you will have a clear picture of what factors are promoting high performance and which ones are deterrents. The latter ones form the areas of development and learning opportunities. You need to identify these areas of intervention and provide your employees with adequate resources and support to hone the skills and competencies that are needed for effective performance. 

Pulse surveys can be an effective way to gauge employee sentiment on a regular basis. 

Frequent pulse surveys are excellent for understanding how employees feel about their current capabilities vis-a-vis their role and the external support they need.

Ideally, you can also look at industry benchmarks to understand the types of learning opportunities available for different roles and provide them to your employees. 

Thus, to make the most of your performance management, you need to identify and acknowledge the strengths and weaknesses of your organization as a collective measure of your employees and work towards them.

5. Promote coaching and mentoring

While effective performance management requires learning and development interventions, it is equally important to focus on guidance via mentoring and coaching. Your employees need the right mentorship to help them navigate through professional challenges that may not require upskilling but a change in mindset. Here setting up a formal mentorship program can contribute to effective performance management. 

Read: How to use employee coaching to unlock performance

You can also enable your managers to provide the right mentorship and coaching support. You can count on SuperBeings to help you ensure the same. 

  • On one hand, it offers opportunities for manager development with a focus on key leadership competencies that can enable your managers to become better leaders.
  • Additionally, the guided 1:1 conversations act as a mass coaching initiative where gradually your managers will master the art of coaching and mentoring. 

6. Navigate collaborations

Undoubtedly, a key step for effective performance management is to navigate collaborations for different aspects of the employee lifecycle. You need to adopt the right tool to capture employee pulse, feedback, review, facilitate continuous performance improvement and much more. Fortunately, today you can find all these features in a unified solution to relieve yourself from the costs of different tools and the added administrative hassles. 

7. Ensure recognition and reward performance 

The last and the final step for effective performance management is to ensure that you recognize and reward a job well done. This will catalyze a high performance culture by positively reinforcing those who performed well and encouraging others to improve their performance in a bid to achieve rewards and incentives. A few things to keep in mind:

  • Recognize efforts and results
  • Track performance continuously to reward consistency
  • Ensure that recognition translates to rewards, even if it is just an extra day off
  • Encourage career planning and mapping to illustrate recognition

Importance of effective performance management 

Before we finish, let’s quickly discuss the tangible benefits you will get if you have a solid performance management system. This will help you build a stronger case for performance management and secure leadership buy-in.

1. Employee development

Efficient performance management can help you in facilitating the right development opportunities for your employees. Based on a combination of expectations, feedback and conversations, you can enable your team members to grow in their professional journey. This will also facilitate higher retention

94% of employees say they would stay at a company longer if it invested in their learning and development. 

2. Organizational success

Effective performance management has the potential to create an equal impact on organizational success. When the performance of the teams and individuals increases, it will invariably positively impact the organization as a whole. As employee performance becomes better, productivity, quality of work and other related parameters also improve and impact the bottom line. Furthermore, it leads to creation of a high performance culture. Research shows, that good company culture could help you increase revenue by more than four times

3. Strategic allocation

If your organization is growing fast, you may have financial and budget constraints to spend towards employee development and training. 

47% of HR leaders are not aware of employee skill gaps, and 60% of HR leaders say that building new skills and competencies will be their top performance management priority.

An efficient performance management process can help ensure that you are able to allocate your resources to interventions that actually make an impact and eventually monitor, track and measure the return on investment

4. Clarity of expectations

Performance management goes beyond feedback and performance evaluation. In fact, it actually starts with creating a clarity of expectations. 

Most fast growing organizations are chasing multiple priorities and this leads to a confusion among employees on what is expected out of them. In fact, only 50% of employees would “strongly agree” they know what’s expected of them at work. A practical performance management process can help you and your managers create a clear path for employees with a focus on OKRs to ensure everyone is on the same page

5. Better engagement

Finally, performance management sets the stage for greater levels of engagement and a better employee experience. When employees feel valued and believe that you are taking genuine interest in helping them grow, the motivation, morale and commitment is bound to rise. As a result, they will be more engaged at work which will eventually show in their performance, productivity and quality of work. The impact on the bottom line is also phenomenal. 

Companies with a highly engaged workforce are 21% more profitable

Get started with effective performance management

Use the following resources to get started on everything you have learned so far —

And finally, to see how SuperBeings can help, talk to one of our experts today.

OKRs
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Agile and OKRs: What You Need to Know to Thrive in a VUCA World

It is no longer an assumption that the traditional approach to annual goal setting and review has run its course. The VUCA world demands more quick and adaptable business models.

While the agile values and methodology was initially created for software delivery, you can apply the same to transform how you set and achieve your business goals. 

In this article, we will focus on:

  • Relevance of agile and OKRs in the VUCA world
  • Importance of leveraging agile techniques for OKRs
  • Best agile and OKR framework for growing organizations

Why you need to reimagine goal setting in the VUCA world

Traditionally, goal setting has been a very static and long-term process for organizations. Here are a few key components of traditional goal setting and performance management:

  • Annual or multi-year goals with little or no interventions at regular intervals to realign on changing priorities
  • Top-down approach — goals being set by those at the top with minimal inputs from those working on the ground
  • Only annual feedback cycles and the inability to identify or address challenges in real time
  • Lack of flexibility to adapt to changing circumstances or situations, which are uncertain and ambiguous

This form of goal setting and performance management had relevance for organizations operating in steady and stable market conditions. 

However, in today’s VUCA world, the pace of change is skyrocketing and organizations unable to tide with the same are finding it extremely difficult to survive, let alone thrive. 

Some of the reasons to reimagine goal setting for VUCA world include:

  • Increased globalization requires businesses to be agile and adapt to changes at all times
  • Focus on creating short term goals and action plans
  • Need to relook at business priorities due to changing market conditions and customer expectations 
  • Need to incorporate constant feedback from diverse stakeholders
  • Need to focus on collaborative goal setting over top down command

Relevance of agile and OKRs for growing organizations

While it may not be apparent in the first look, agile and OKRs are quite complementary and combining the two can be a great step for growing organizations. Here’s why —

  • OKRs can help you understand the end goal and envision what success will look like. 
  • On the other hand, the agile methodology can enable you to create the right roadmap with frequent experimentation to reach the OKRs successfully. 

Here are a few reasons why you should combine agile and OKRs for your organization:

  • Set shorter goals for each quarter with the flexibility to look at the results in real time
  • Agile iterations based on learning which can be communicated across teams 
  • Shorter feedback cycles which prevent investment losses that might occur if the whole project/ goal has to be reworked
  • Continuous improvement with frequent retrospectives which can enable you to reflect on what is working well
  • Focus on collaborative goal setting and performance management with team autonomy
  • Agile approach to progress tracking

How to use agile techniques for OKRs

Now that it is clear why working agile and OKRs together makes sense for growing organizations, let’s quickly explore the top ways in which you can apply agile techniques to your OKR framework to make goal setting and performance management suitable for the VUCA world. 

Agile Value 1: Individuals and interactions over processes and tools

  • Ensure collaborative OKR setting, assigning OKR champions and the right team members to execute the same
  • Facilitate clear understanding and communication of the intention and expectation behind each OKR and the responsibility for every team member

Agile Value 2: Working software over comprehensive documentation

  • Focus on clear outcomes and key results instead of comprehensive literature on why something is important
  • Facilitate shorter feedback cycles to gauge challenges early on and ensure feasibility of the OKRs
  • Reduce administrative overheads and complex processes related to OKR setting and progress tracking by using a simple, integrated OKR tool

Agile Value 3: Customer collaboration over contract negotiation

  • Ensure continuous development by taking real time feedback from internal customers i.e. stakeholders in the leadership

Agile Value 4: Responding to change over following a plan

  • Facilitate dynamic planning over a static plan with quarterly OKRs
  • Ensure adaptability to change, uncertainty and ambiguity
  • Promote short cadence to gauge achievability and relevance of key results early on

Best agile and OKR framework

In this last section of agile and OKR for better goal setting and performance management, we will uncover the top framework. 

We have combined the best components of different frameworks like waterfall goals, delivery agile, scaling, full stack agile, into a single framework with 5 major components that can help you enhance the complementary potential of agile and OKR 

This approach can help you leverage the benefits of agile methodologies and OKR framework to impact all aspects of organizational structure for achievement of goals, including the culture, strategy, initiatives, tactics, etc. The framework is premised on:

1. Create value based OKRs

  • Focus on creating value based OKRs instead of activity based
  • Activity based OKRs are effective for specific projects, but for organizational goals, the focus should be on value
  • Instead of focusing only on the outcomes, have a clear understanding about how each of the outcomes can create value for the organization
  • The activities for each OKR should be a part of the agile roadmap and not the end destination

If you are struggling with combining agile and OKRs for your organizations, chances are you are focusing on activity based key results which often resemble agile steps, leading to confusion and inability to meet goals. 

2. Facilitate horizontal alignment for shared OKRs

  • Encourage collaborative OKR setting with realistic timelines and short intervals
  • Make OKRs team/ department specific and acknowledge avenues for collaboration and alignment between teams on shared OKRs
  • Acknowledge OKR dependencies between teams and facilitate transparency and horizontal alignment
  • Avoid splitting OKRs for a shared goal between teams, rather create opportunities for working together

For instance, if you have an event coming up and wish to successfully execute the same, the objective will be common, with specific value based key results for each team.

Objective: Successfully execute the 7th edition of our annual event

Key Results

  • Get 1000+ unique registrations
  • Raise INR 20,00,000 in sponsorship
  • Curate 5 high impact panels
  • Get 10+ media and affiliate partners
  • Get 5000+ impressions on social media with organic promotion

If you look closely, while the objective is shared, key results are spread across sales, marketing, and even product/ services teams

3. Combine quality and quantity results

Your agile and OKR framework should enable you to get the best of both worlds when it comes to results. Agile results by nature are qualitative in nature and focus on the features that you wish to ascertain in a specific period of time. On the other hand, OKRs are driven by metrics. Thus, you can use a combination of the two for effective results:

  • Use OKRs to validate goals set using the agile methodology
  • Ensure each key result has a quantitative (data) and qualitative aspect (value)
  • Use a combination of agile and OKRs to ensure that your progress is positively impacting the organization

The combination can help you create an ideal balance between outputs and outcomes which are both critical when it comes to goal achievement and performance management. 

4. Promote use of data

  • Leverage data and evidence to create your agile based OKRs
  • Instead of creating OKR based on leadership opinion alone, validate the same with market study
  • Don’t rely completely on hypothetical representation, undertake primary and secondary research to ensure relevance and perceived achievability

Pro-tip:

Using data and not relying solely on opinions will help you set agile OKRs which don’t under or over estimate the goals. For instance, if the market data on traffic to a new website in your industry is 20,000 clicks in one week, your OKR can focus on reaching 25,000 to make it aspirational but achievable up to 80%. 

However, if you set the target at 50,000 or above, it will become too far fetched and the team might not even strive for it. On the flip side, if the target is only at 10,000, it will not encourage your employees to push the boundaries. Thus, you need to replace opinions and command OKRs with data backed experimentation.

5. Build self organizing teams

  • Provide you teams with a clear idea of what the larger vision looks like
  • Encourage them to set their own OKRs and help with a direction to achieve the same
  • Facilitate team autonomy and empower your team members with the right tools and resources like SuperBeings to not only set OKRs, but also track progress in real time and grade them at the end of the cycle. (Learn more)

Self organizing teams are important for growing organizations as they proactively take onus and ownership of achieving OKRs and lead to a greater degree of success. Step away from controlling detailed plans for each OKR and encourage the leadership to provide direction. 

Wrapping Up

To conclude, if you combine agile and OKR, you have for yourself a clear model for success which you can easily apply to goal setting and performance management. Having the right technology to support your rapidly changing businesses processes is a must for any organization looking to thrive in a VUCA world. With SuperBeings you can:

  • set, track and update goals/ OKRs whenever you need in just one click
  • update goal progress quickly and directly in the flow of work (via Slack, Teams, or other chat tools you already use)
  • have goal based 1:1s and performance check-ins to understand where your employees are stuck
  • align all internal stakeholders with the constantly changing needs of the organization easily
  • and much more

💡If interested, you can talk to one of our product experts to find out if SuperBeings can help you solve your specific challenges. We keep the call short at 15 minutes.

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