Performance Management

COVID-19 and "The Great Resignation" have led to a war for talent; an increasingly competitive landscape for recruiting and retaining talented employees. To secure the best talent, organisations can offer employees what they need, such as market-leading renumeration packages and a good work-life balance. But beyond this, organisations can also build a workplace that prioritises Diversity, Equity, and Inclusion to meet their employees’ core values. DEI are a set of principles that seek to promote the diversity of a workforce while at the same time striving for equitable opportunities for the individuals among that workforce, all while ensuring that the environment that workforce operates in is as inclusive and welcoming as possible. For individuals, these principles are delivered in the form of action that contributes to their wellbeing, to equal access to opportunities, and to the fair treatment of those individuals.

For businesses, commitment to DEI principles means creating the structures that nurture and reward a vast range of diversified talent, voices, and communities within their organisations. While many organisations see ‘DEI’ as part of their core values, it is still common to see institutional and structural biases embedded in them. A Performance Management (PM) Framework which is DEI-centric could address this issue by targeting processes such as objective setting, manager feedback, performance assessments, and reward. Organisations that have a DEI-centric PM Framework facilitated by training, guidance, and support to encourage inclusivity, not only improve the employee experience and shift organisational culture, but also see better outcomes for talent engagement and retention.

What does DEI-centric PM look like? And how can organisations design it?

Based on our experience, a DEI-centric framework should be Focused, Fostered, Fair, and Transparent (F.F.F.T).

Focused:

Considers who the PM Framework targets and individuals’ needs to avoid widening achievement gaps and inequality of representation at higher levels of responsibility. It uses tools to understand, recognise, and map individuals’ unique PM requirements.

Fostered:

Supports employees in achieving performance standards, rather than selecting out underperformers. This also benefits the employers, often saving an average of 18% - 20% on external hires salaries premiums. It fosters "psychological safety"; an environment where an employee feels comfortable communicating a grievance, the desire for development, or requesting feedback. Demonstrating and prioritising employee development over firing and re-hiring encourages employees to actively pursue development opportunities and reduces the incidence of “quiet quitting”.

Fair:

Is as unbiased as possible. It should prioritise facts over opinions so that the effects of unconscious or conscious biases are limited. Through assessing employees based on clear and fair performance metrics (e.g. Amazon’s Takt Time), organisations can minimise the influence that subjective opinion and prejudice can have on measuring an employee's performance and reward decisions.

Transparent:

A DEI-centric PM Framework can't rely only on being implicitly effective. For employees to see the purpose of the PM Framework, they must perceive it as a meaningful, consistent, and authentic process rather than a check box exercise. It is crucial employers communicate other "F" tenets transparently to their workforce, so they understand the PM Framework is Focused on them, the business priority is to Foster an environment to develop everyone, and it will be Fair for all.

Organisations that prioritise DEI not only boost the wellbeing for the workforces but also see tangible benefits to their business. For example, organisations with executive teams made up of higher percentages of women and ethnic minorities see higher profitability and consistently out-perform against key targets. Recent initiatives at organisations such as SAP, Microsoft, and JP Morgan Chase have observed that initiatives designed to attract and develop neurodiverse employees saw benefits such as increased productivity, innovative capacity, and employee engagement. A DEI-centric PM Framework can aim to realise these benefits and serve as a beacon to attract talent in a competitive market where employment choices lie with the employees.

What challenges organisation often face when creating a DEI-centric PM Framework?

Although we’ve established the “what” of DEI-centric PM, it is the “how” to build it which is challenging. While the intent is in the right place, with leadership across organisations around the world looking to invest more into their DEI efforts, these initiatives often fail. Almost 62% of employees claiming that DEI programmes are not effective or have failed them personally. Below lists the two biggest challenges that organisations face when building a DEI-centric PM Framework:

Those same near 62% of employees find DEI programs ineffective or personally disappointing, despite global leadership's increased interest in investing in such efforts. Here are the two main challenges organizations encounter when constructing a DEI-centric PM Framework:

1.“Feelings and perception” based performance

Without setting clear goals and objectives, employees will not be clear on what level of performance is expected of them by the business. This opens the flood gates of reviewing employee performance based on feelings and perceptions, therefore, fail to achieve the ‘Fair’ element of F.F.F.T.

Overcoming this means the PM Framework should begin with a structured goal-setting phase, which is subject to review and monitoring over the course of the performance year to ensure employees can constantly check if they are on track against clear goals. This not only ensures performance decisions are based on tangible KPIs but also facilitates a greater level of the ‘Transparency’ element of F.F.F.T.

2.Difficulties in collecting and analysing the effectiveness of PM Framework

Data creates a form of accountability. It can reveal whether the DEI-centric PM Framework is working effectively and can highlight the pain points which then can be targeted and addressed. However, while 83% of business leaders believe in the benefit of collecting and analysing worker data, only 19% of them believe they are ready to do so because employees are only willing to share their data if they believe it benefits them in some way.

To leverage data insights and achieve continuous improvement, organisations need to build trust and seek mutual benefits. For example, organisations should communicate to their employee the purpose of getting feedback on the PM Framework and how they will leverage the outcomes to build a better performance journey for everyone.

Why is it so important to make your PM Framework DEI centric?

In summary, organisations with a DEI-centric PM Framework not only enshrine positive moral and ethical standards within their organisational framework but could also potentially be boosting their employees productivity by 17% and organisational revenue by 19%. It enables employees to set up personal goals that align with business values, be more motivated and engaged to develop their career. People who have picked up on organisational inequalities and feel that they do not have a real seat at the table are not likely to be fully engaged in their work, especially if they are in the minority group. As a result, they end up underperforming in their roles, struggle with making quality decisions, and can suffer performance loss in collaborative exercises. Organisations will benefit from the psychological safety and positive cultural environment they’ve created through encouraging employees to share their thoughts when they feel they belong, which enables organisations to make insight-driven decisions, continuously improve, and therefore, retain the best talent and maximise their potential.

Author

Lewis Owen-Nunes

Analyst, Deloitte