It’s time to stop checking the annual appraisal box and start measuring performance beyond productivity “outputs."

For years, organizations have been talking about reinventing performance management, but new ways of working since the pandemic — particularly the rise of hybrid work models and the desire for employees to be seen as people, not just workers — make this a critical moment to rethink the purpose and value of performance management programs.

“In the future, leaders and managers will move beyond just measuring employees’ outcomes and consider the context in which employees’ outcomes are achieved: their personal goals, the circumstances in which they work, the teams to which they belong and the type of work they complete,” says Blakeley Hartfelder, Director, Gartner.

We predict that over the next three to five years, employers will shift to a performance management approach that views performance differently in six ways:

No. 1 Goals will be personal as well as professional  

Goal-setting and feedback conversations are meaningful when they help employees directly link their contributions to the organization’s goals. However, personal context is also important. Eighty-two percent of employees polled in the Gartner 2021 EVP Employee Survey said they wanted their organization to see them as people, not just employees.

82% of employees polled say they want their organization to see them as people, not just employees.

In the next evolution of performance management, HR leaders will seek to integrate personal goals, such as wellbeing or acquiring skills not directly related to their work. Fostering an environment in which employees can openly and honestly discuss these personal goals with their managers will include equipping employees with self-assessment tools to evaluate their progress against both personal and professional goals.

No. 2 Performance reviews — and pay decisions — will shift to be project-based 

Many organizations and employees alike have moved toward a project-based work model. Coupled with a rise in the shift to contingent workers, these new work models are influencing many organizations’ postpandemic planning.

In a world of project-based work, employees want leadership to evaluate their performance after each project — and they expect to regularly see the explicit link between evaluations and compensation. For organizations, assessing employee performance regularly allows the making of staffing and resourcing decisions as projects conclude. This shift will:

·         provide employees with feedback, evaluation and rewards based on their project-to-project performance.

·         evaluate employees based on outcomes achieved and critical feedback from peers and clients.

·         clearly define and explain how employees’ performance on each project affects their pay.

No. 3 Performance ratings will reflect more context and empathy

Context affects outcomes, and performance reviews will begin to more accurately reflect that. Did a top-performing employee take on a new-in-kind role on a project to learn new skills? Did an employee find it hard to focus on work because of a personal tragedy? Are teams struggling to achieve their goals due to recurring hiccups in collaboration technology?

Designing more empathetic performance ratings, such as “learning new skills'’ (for the top performer learning new skills in a challenging project) or “focusing outside of work'’ (so an employee facing tough circumstances at home is not penalized) will be especially important to attract and retain high performers looking to grow their career at a given organization. 

No. 4 Feedback and development will become more automated

Employees understand, even better than their managers, the kind of feedback and development support they need to improve their performance, but they often lack the facility to participate actively in the process. 

Many organizations have increased investment in employee-productivity-monitoring technologies, especially in our hybrid world. Automated data collection and analytics around employees activities can be powerful for helping individual employees understand how they are performing and where there is room to improve. In the future, this technology will automate feedback processes and provide timely, data-based feedback to employees.

No. 5 Managers will no longer manage performance 

As the use of technology grows, and employees become more proactive in day-to-day management of their own performance, the focus for managers will turn from performance management conversations to supporting employee career pathing and development. HR leaders will need to equip managers with the resources to nurture talent, tackle challenging work situations and help employees make decisions about their next projects and skills.

No. 6 Team performance management will emerge as a separate focus 

As teams adjust where, when and how they collaborate in hybrid and distributed environments, team performance will emerge as a separate focus. Teams will be asked to more actively work together to track progress against and improve both project-specific performance and team dynamics. Teams will need tools and resources to assess important parts of their health, such as inclusivity, cohesion, accountability and customer centricity, and to diagnose problems.

“Emerging ways of working have made it urgent for performance management practices to transform to become more human,” says Karishma Sahai, Senior Specialist, Gartner. “HR leaders can use these predictions to frame how their organizations think about performance management moving forward.”