Risks and opportunities in performance management post-COVID-19 Q&A with Lori Holsinger, Ph.D.

building a better employee experience

Question: How are companies conducting performance reviews in light of COVID-19?

Answer: Many companies are communicating to employees that they are valued and important to the business, while also making rapid adjustments to goal setting, ratings and rewards.

Mercer’s 2019 Global Performance Management study showed that 85% of companies link performance and pay. In other words, rewards decisions are commonly governed by performance ratings. In light of COVID-19, some companies may be considering extensive adjustments to performance ratings to trigger bonus payouts or other pay changes.

A few companies are intentionally separating rating and pay decisions during COVID-19. They point to the mixed messages an employee receives when getting a rating that does not align with their performance. This misalignment leaves companies more exposed to potential litigation if they later sever employees due to performance.

 

Question: Are performance goals and metrics the same now as they were pre-COVID-19? If not, how have they changed?

Answer: For roles like sales and manufacturing, which have defined goals and targets, companies are currently reviewing adjustments to account for increased or decreased demand due to COVID-19. However, they are struggling to decide what adjustments to make given the uncertainty of the current situation.

Regardless of role, some companies are now incorporating the “compassion factor” in how they communicate performance expectations, such as goals, priorities and metrics. They may take into consideration individual remote-working circumstances. Being physically present in the office during the workweek is very different to working from home, potentially with both spouses working together and multiple children under foot. Because of factors outside the employee’s control, the home-working environment is simply not the same as the workplace. Two employees in the same job, with one working from home and one from the office, will perform differently. Therefore, they should have different performance goals and metrics.

 

Question: What changes are companies making to performance reviews in a remote-working world?

Answer: Managers and employees can simply shift from closed-door, in-office conversations to remote, technology-based discussions. But this comes with its own opportunities and limitations.

One key opportunity is the ability for managers to forge better connections with each of their direct reports. Now is a chance for the manager to ask how things are going, acknowledge the challenges of this new working arrangement and express their empathy. Understanding the employee’s unique working situation can allow the manager to recognize the employee’s specific challenges. The manager can confirm current priorities for the employee’s job and explore their concerns.

On the other hand, companies need to heed the technology risk. With the influx of technology reliance in this new work structure, the likelihood of listening or recording ─ knowingly or unknowingly ─ is high. Discussions risk being overheard. Recordings made by employees could create repercussions for the company later.

What is a company to do? Proactive companies have issued guidelines on how to stay connected to employees while taking steps to be thoughtful about risk. One consumer goods company has advised managers to use conference calls instead of video platforms to hold performance review and talent planning conversations. Although the regular phone may seem antiquated, it provides the highest security against this real risk. This risk also exists for company board meetings, where sensitive business strategy and financial discussions take place. A good rule of thumb is: If you are sharing sensitive information, such as ratings, compensation or low-performance feedback, hold these discussions by phone.

 

Question: How has employee feedback changed? What does Mercer advise for companies wanting to turn remote working into an opportunity for manager-employee feedback?

Answer: Mercer’s 2019 Global Performance Management study revealed that 8 in 10 managers lack skills in providing feedback and coaching to employees. Research also shows that managers tend not to be at their best in times of stress and pressure. So feedback is likely worse today than it was in a pre-COVID-19 environment.

Managers that are already skilled at coaching employees will not suddenly stop providing helpful guidance because of a different environment. However, for less-skilled managers, the work-from-home forum presents a valuable chance to hit the “reset button” and connect with their employees one on one.

Our study also showed that effective coaching requires empathetic and action-oriented managers. The new working environment, created by the COVID-19 pandemic, is a good opportunity for managers to practice being empathetic.

 

Question: What would you say to companies with managers that need a jump-start to begin talking with their employees and building greater trust?

Answer: As a practical action plan, managers can schedule 20 or 30 minutes to check in with each employee. Use this time to engage in dialogue that shows empathy. Give managers words to get them started:

“Working from home is a change for all of us. Our unique home environments, such as children or family members in the high-risk category for COVID-19, affect each of us in a different way. So I wanted to check in with you one on one. How is it going? What is working smoothly for you? What is more challenging? Is there anything I can do to help you?”

Managers should be open to sharing the same information with their employees, acknowledging both the challenges and the opportunities, and building trust in the process. This foundation building will not only help the employee thrive in their contributions at work, but will also support them during this pandemic and beyond.

When asked, most managers would like to have a greater impact on their direct reports by helping them contribute to the business and reach their full potential. The COVID-19 remote working arrangements allow them to take the first step.

 

Question: Does Mercer see performance reviews changing for good after the health crisis passes? Why?

Answer: There is a great opportunity to change performance management for the better post-COVID-19.  All depends on how companies act now. Mercer’s Global Performance Management studies from both 2013 and 2019 showed that only 2% of companies believe that their performance management approach delivers exceptional value.

Six months from now, companies are more likely to find themselves in a positive place if they promote manager-employee connections during this crisis and champion one-on-one discussions that carry empathy and compassion.

Lori Holsinger, Ph.D.
Lori Holsinger, Ph.D.

Senior Principal, Mercer