People often criticize the value and accuracy of performance data. Performance management data is frequently seen as being too subjective or incomplete to be useful. These are valid concerns for a lot of performance management data.
One of the best ways to address these concerns is somewhat counter-intuitive: to start using the data despite its imperfections.
When customers ask me how to increase completion of performance management activities related to setting goals or providing ratings, one of my first questions is, “Who will look at this information other than the employee and their manager?” If no one else looks at this data, then why should managers and employees put it into the performance management system? Conversely, when managers and employees know performance management data will be used by other people in the company to guide decisions that could impact their lives, they put more effort into ensuring the data is as accurate as possible.
The following are a few ways performance management data can be used to guide workforce management decisions.
Tracking turnover by performance level
Knowing whether high-performing employees are leaving the organization faster than average or than low-performing employees provides tremendous insight into workforce health. It also drives constructive conversations around what defines high performance and what factors matter most for engaging high-performing talent.
Tracking associations between performance, compensation, and promotion
It can be insightful to look at relationships among employee performance, pay, and promotion in different areas of the company. This includes analyzing whether certain aspects of performance have stronger links to pay and promotions. For example, are employees with strong relationship skills more likely to be promoted or receive a higher salary compared to people with strong analytical skills? It is important to remember that compensation and promotion decisions are influenced by many factors other than employee performance. But there should be some association between what people contribute and how the company makes pay and career decisions.
Diagnosing workforce strengths and development needs
Data on employee performance, goals, and development objectives can be analyzed to surface general trends related to workforce strengths and weaknesses. This can guide organizational development and training strategies.
Measuring managerial effectiveness
Performance management data can be used to evaluate how effectively managers are engaging their employees to set expectations, clarify roles, plan development, and address performance concerns. It provides a way to measure if managers are doing the things required to be good managers.
Identifying talent potential
Data reflecting different performance capabilities, skills, and development objectives can be used to identify employees who might potentially be moved into roles with greater impact and responsibility within the company.
Companies are increasingly leveraging advanced analytical techniques that use performance management data to predict attrition and proactively address retention risks.
Evaluating staffing effectiveness
Performance data can be used to assess the quality of candidates hired into the organization from different recruiting sources or based on different selection criteria. This can be used to improve the value of staffing methods.
The more companies use performance management data, the more the quality of the data will improve. And the more the data quality improves, the more people in the company will want to use it. But a company needs to start using the data to create this positive cycle. This means accepting that the initial data is likely to have some serious issues. When people in the organization complain about the accuracy of performance management data, remind them that much of the data came from these people themselves.
If leaders, managers, and employees want the company to use better quality performance data to make workforce management decisions, then these same leaders, managers, and employees must provide better quality data about performance.