Seyfarth Synopsis: This post continues our blog series on the Future of Work, and discusses how, in California as elsewhere, performance management strategies continue to develop in response to the changing workplace. Access our prior Future of Work posts (on independent contractors in California and the effects of job automation) here and here.

Innovation in employee management has been a global phenomenon for the past several years. In San Diego the week of September 14th, a global knowledge-exchange network known as Talent Management Alliance put on a three day Talent Performance Management Summit. Speakers and attendees talked about the radical changes in performance management that have sprung up in recent years in answer to evolving demands of increased competition, the way companies operate, and employee expectations. A number of innovators are based in California (e.g., Gap, Adobe, Cisco). Not surprisingly, a sizeable chunk of the speakers at the San Diego TMA Summit are also from companies based in the Golden State.

Annual Performance Reviews Going the Way of the Dodo

As we all know, the traditional annual performance evaluation is used to rate employees, retrospectively, on how they did during the previous year in a number of areas (such as teamwork, amount and quality of work, quality of client service) and to justify salary increases or decreases. A required annual process has some obvious advantages, including (ideally) consistency, and use of objective criteria. The evaluation can be especially important in the event of litigation, as a contemporaneous record of supervisory impressions and corroborator of employer actions.

However, for leading edge employers in California and elsewhere, this model is outmoded. Progressives predict that the use of annual reviews will continue to decline and that more frequent, goals-oriented communications (often utilizing technology), employee training, attention to personal development, and coaching (rather than managing) will increase.

A New Performance Management Paradigm

These changes reflect updated thinking about what works to drive improvement in an employer’s bottom line. There is new emphasis on maintaining a nimble, employee oriented, data-driven corporate culture, as well as recognizing the roles of science and psychology in motivating employees. Research has shown that Millennials (aka “Gen Y”), who by 2020 will comprise almost half of the U.S. workforce, value receiving more frequent feedback, work-life balance, satisfaction in their work (as opposed to “just having a job”), and more independence and learning opportunities.

Not surprisingly, the new performance management approaches speak in these terms, using concepts like “expectations, goal-setting and feedback.” They ask how employees are measuring up against their goals/expectations, and how management can help. And they do so frequently (i.e., quarterly, if not monthly, or “continuously”). In addition to keeping their employees engaged and productive, these approaches can help employers can gain more current information to reward good work and identify emerging leaders.

Management Training (including How to Coach for Performance) is Essential

However, even with the help of workplace consultants and new generations of management and feedback software, the new performance management paradigms place intense demands on managers and supervisors to implement the changes effectively. Supervisors and managers in California already typically carry a heavy burden of overseeing non-exempt compliance with numerous wage and hour laws. No performance management model, standing alone, can ensure 100% compliance with a company’s employee management objectives, including consistent compliance with anti-discrimination laws and diversity goals. Training thus becomes more important than ever.

Workplace solution. Employers in all industries and service sectors are developing their own approaches to managing their employees, including some using hybrid approaches that combine frequent feedback with more formal ratings. Even if you are not ready to join the talent management revolution, you should be familiar with what the discussion is about, and able to evaluate whether your organization’s processes are fulfilling your needs.