As the size of the team grows and the team dynamics changes, managers should use an effective performance management system to meet the strategic objectives of the team.
A good performance management system is essential for a Professional Services firm. Why? Because people are the most valuable resources for any project-based business. At the end of the day, what you are selling to clients is your capability and expertise. The performance of your team, therefore, must be at the core of your plans for the business.
Most businesses measure performance based on the stated outcomes such as project delivery time, budget, sales, etc. These measures are looked at, at the end of the year and play a role in determining remuneration and rewards. What this approach fails to consider is the complex nature of work, especially in the Professional Services industry, that requires constant readjustments and course correction throughout the year. It also becomes difficult to capture elements like innovative ways of working and fostering collaboration among team members.
The old ways of performance management no longer work. What businesses need today is a more comprehensive system.
Performance management: Move beyond year end reviews
Performance management is not the same as performance review. The latter is a part of a larger canvas that helps build capable employees.
Year-end reviews as a way of measuring performance don’t work for Professional Services firms. When consultants are assigned to different projects, work with different teams, and report to different managers or partners in a year, it becomes difficult for one manager to sit across the table at the end of the year to make any meaningful assessment of the quality of the work delivered.
What business leaders need to do is to start aligning individuals to the larger business goals, match performance to those goals, measure the activities against those goals to identify gaps, and build skills of employees to better prepare to achieve those goals.
Performance management therefore is a continual process that managers need to think about throughout the year and not leave it to the year-end review process where you simply judge the performance.
Employees also appreciate the regular mentoring and feedback loop created as a system to fuel their development. The year-end review, on the other hand, leaves a lot to be desired, while the time for course correction is already lost.
Performance management system components
An effective performance management system should be seen as a cycle that starts with setting goals, tracking the progress of work against the goals, managing career paths, and performance review.
Set SMART goals
It is easy for consultants to immerse themselves in delivering the best quality of work for individual projects that they are a part of. This is a tactical approach that may not help your team from aligning to the larger goals and purpose of the business.
What consultants need is clarity on the purpose and vision of the business. What they need are SMART goals for individual projects that are seamlessly aligned to the vision of the company.
SMART goals stand for goals that are Specific Measurable Achievable Realistic and Timely. While the organizational goals can be future-oriented, when you break that down to individual goals, they must be based on the SMART framework.
Setting of individual goals has to be a collaborative process, where both the manager and the team member have to agree. When the team members’ opinions are sought, they take ownership of their goals and put in the needed efforts to reach them.
Track goals progress and recognize good work
Progress of goals needs to be tracked on a continual basis throughout the year. The managers or leaders need to step in when required, to offer guidance to get employees back on track in case there are any deviations.
The crucial element of this process is to recognize good work wherever you find it. By repeatedly identifying the good work done by the employee, you encourage more of this behavior.
From the employee’s point of view, they feel appreciated and valued. This is a strong motivator to improve performance.
This is not to say that the bad work needs to be ignored. It is easier for managers to spend more time on the shortcomings, which is why there is a conscious need to seek a balance and have honest, transparent conversations.
Developing career pathways
Measuring employees against goals and offering monetary rewards is not enough. Promoting promising talent and offering them more responsibility is also not enough. Ambitious people want to develop skills that can help them deliver more value today and achieve more in the long run. That is why Professional Services firms spend so much on the skill development of consultants.
When you invest in your employees’ skills, you get the advantage of having more productive and innovative teams who ensure client satisfaction. The employees, on the other hand, take pride in being on the top of their game.
With skills as the foundation, you can start charting the career paths of different employees. This way you keep employees engaged, deliver more value to clients, and ensure employee retention.
Performance review (and reward)
Performance review is the last part of the cycle. If you get all the other parts of the cycle right, this will become easy. Since most businesses don’t get the other parts right, the review process and meetings become difficult conversations for both managers and team members.
A good review should encompass key achievements in the assessment period, the strengths and weaknesses of the employee, and have a forward-looking approach of what to expect in the next month, quarter, or year.
How to create a better performance management solution for your professional services firm?
Having the right process of performance review, is only one part of the equation. You also need the right tools to help you ensure that the process is frictionless and efficient. Manual processes lead to gaps and inefficiencies, which is why you need software solutions like Microsoft Dynamics 365 Human Resources.
Microsoft Dynamics 365 Human Resources helps your team be more engaged and enables them to proactively take charge of their career. Some of the benefits of choosing the Dynamics 365 performance management include:
- Self-service HR tools to help employees get the tools they need
- Monitor the performance of HR programs to ensure higher employee engagement
- Performance journals for managers and team members to create and document different activities and send feedback when needed
- Performance goals that can be created by both managers and team members
- Create competencies of team members and rate them, giving employees the transparency they need to build on existing skills or add new ones
- Offer continual feedback, development plans, and support to team members with a performance review
Want to know more about how Microsoft performance management system ‘Dynamics 365 Human Resources’ can help create a more thriving environment for your employees? Schedule a no-obligation call with our consultants.