Experts may disagree on what will happen in 2023 and how deep or long a recession might be. But no one is predicting a bumper year ahead. Businesses will face stiff challenges, so what can they do to mitigate the effect of a stagnant or shrinking economy?
I discussed this topic with our CEO and founder Roly during our recent webinar. Both of us have worked through previous recessions (lucky us!), but we’re very aware this is new territory for some others (lucky them!). We learned valuable lessons about the importance of acting decisively and adjusting swiftly to changing circumstances. To make life better for businesses and employees alike it’s vital to get on the front foot and be proactive. Battening down the hatches and hoping to weather the storm is a mistake. It’s much better to face the challenge head on and be honest about what lies ahead.
The old rules have changed
In previous recessions, it has been an employer’s market with plenty of talented employees available who have been made redundant. Now, even with many organisations like Google and Salesforce laying off significant numbers of employees, that talent pool simply isn’t there. More than half a million people have left the UK workforce since the Covid pandemic and the UK is the only economy in the developed world where employment is below pre-pandemic levels at the start of 2023.
The pressure is also on employers to retain their top talent. It will be very difficult for most to do this through pay rises, so how else can you keep your best people?
Performance management is your most potent tool
Of all the processes used within a business, performance management is the only one used by every single manager and employee. To mangle the old Heineken slogan, performance management “reaches the parts that other business processes can’t reach”. So if you are looking to adapt your strategy to take account of the wider economic environment, optimising the effectiveness of your performance management process enables you to do this quickly.
Performance management expectations should be consistent across an organisation, with everyone setting objectives, tracking their progress and being reviewed on their achievements. If your performance management process is effective at aligning individual objectives to changing company strategy that’s massively helpful. Big tick! If it’s also an engaging and developmental tool which motivates each employee to give their very best even in turbulent times, even bigger tick!
In a downturn, budgets inevitably get squeezed. This leads to new projects being put on hold and the “nice to haves” being dropped. These are often the things that motivate employees, that get them excited. Without them, how do you maintain motivation and lift the gloom?
Reassessing the relevance of your employees’ objectives and setting shorter term goals can make a huge difference. Setting bite-sized, meaningful, yet challenging targets which are achievable in a couple of months (rather than over 6 or 12 months) provides fresh focus. By shortening your review cycles, you can create a sense of dynamism, pushing employees to keep aiming high.
People enjoy success, so meeting objectives provides a sense of satisfaction. It gives the kind of endorphin rush people get from achieving something. Think about how you can enhance this feeling by celebrating when targets are met. A heartfelt thank you, a bit of public acknowledgement, giving people a few hours off or holding some sort of social event can all help extend that warm glow.
Employees have changed, have you kept up?
There is a new breed of employee in the workplace today. The pandemic changed both workplaces and workers. Employees now expect to have a say in how and where they work and to create a work/life balance that suits their lifestyle. They want greater autonomy and expect to be treated as equal partners with a vested interest in their own career development. They want clarity about what they need to deliver and to know what difference their contribution makes. They want to know they have the capability and freedom to deliver without being watched and monitored continuously.
Do your HR processes match their requirements? Are you giving your employees the voice and freedom they desire? Do they feel valued for their efforts? If this isn’t happening, you may struggle to keep them.
When it comes to performance management this has practical implications. It means making sure managers and employees create objectives in partnership rather than by decree from above. It means employees having the facility to request an additional check-in when they feel they need more support from their manager or would appreciate a personal development conversation. It means a more open feedback culture where employees can see the feedback they receive at a time when they can do something about it, not months later at some ‘big reveal’ moment when it’s out of date and irrelevant.
It's time to ensure your performance management system fully aligns with changing times and changing expectations. If it’s are clunky and unwieldy it will frustrate employees and managers alike, reducing engagement and performance at the very time when you need them to be optimal. If it’s rigid and inflexible it’s time to update it to bring it in line with modern times and modern workers.
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But employees don’t leave in a recession, so why bother with performance management?
Good employees are always in demand and this is even more true in 2023 with the current skills shortage. Performance management is about making the most of the resources you have and now, more than ever, the emphasis should be on building skills from within and supporting employees to realise their full potential.
While it may not be possible to enrol employees on expensive training courses, there is plenty that you can do that costs little or no money. Arranging for junior employees to shadow more senior colleagues to gain experience and learn new skills is a great way to develop talent. Likewise creating mentoring programmes or peer support groups, where employees have the chance to share ideas and learn from each other, builds team spirit and breaks down silos in the business.
Performance management can at its best also be a great communication tool. Regular check-ins between managers and employees ensures there’s a constant dialogue. This allows managers to keep employees informed about what’s happening in the business and overall performance. It also allows employees to ask for help if they are struggling, meaning they are not left floundering with nowhere to turn for support. It’s a motivational record of achievement and personal growth.
Practical tools
To help your managers have better conversations with their employees about their objectives and then draft effective goals, we have created two easy to use guides. Getting these basics right is vital for underpinning an effective performance management process.
We invited webinar viewers to submit questions. Here’s what they asked, along with our answers.
Want to know more?
Click here watch the full webinar, where Roly and I discuss this subject in more detail, exploring further ways to make your performance management process fit for purpose this year.
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