Here’s a sobering statistic: Only 2% of chief human resource officers from Fortune 500 companies think their performance management system works, according to a 2024 Gallup survey. While managing employees’ performance has never been easy, the transition to hybrid work has created an entirely new set of challenges for leaders.
For example, how do you ensure a remote employee is doing their job when you rarely or never see them? How do you know if a junior employee is receiving the mentoring they need? And how do you uphold accountability while preserving empathy and psychological safety — two workplace values that rose to the forefront during the pandemic?
In addition to hybrid work, the rapid pace of change in today’s world — whether it’s AI transformation or economic volatility — makes the old ways of managing performance feel obsolete. That’s why, in a recent article in Fast Company, we proposed three new rules of performance management.
1. Create a culture of feedback
The traditional quarterly or annual performance review doesn’t cut it in today’s workplace. Employees and managers both need constant feedback within the flow of their daily work, which allows them to course-correct rapidly. With hybrid work, creating a culture of asking for feedback is more important than ever because feedback conversations don’t tend to happen organically.
But merely hearing the word “feedback” from a manager sends many employees into a threat response — that anxious feeling that shuts down our brains and makes it less likely we’ll act upon the feedback. And as most managers have experienced, giving unsolicited feedback can be just as stressful as receiving it.
How can we reduce the anxiety of feedback conversations for both parties? Several years ago, the NeuroLeadership Institute conducted research that found asking for feedback reduces the stress response by 50% for both the giver and receiver. Managers can help create a feedback culture in their organizations by frequently asking direct reports, colleagues, and their own managers for feedback on specific topics. To get the most honest and helpful input, it’s important to be specific: Instead of asking, “How do you think my presentation went?” try, “How well do you think I connected with the audience?” or “How could I improve my slides?”
In addition to being less stressful, asking for feedback increases the chances that the feedback will be effective. Instead of diverting our cognitive resources to a threat response, we can practice mental contrasting — that is, comparing what we’re doing now with how we could do things differently in the future. Mental contrasting helps us process negative feedback and transform it into beneficial plans for the future.
2. Focus on outcomes instead of surveillance
As companies transitioned to remote work during the pandemic, some used monitoring software to ensure their employees were actually working. In response, sales of countermeasures, such as mouse jigglers, skyrocketed. And now, companies have found ways to detect these devices and discipline or fire those using them.
Instead of engaging in this vicious cycle of surveillance, employers are wise to recognize employees’ need for autonomy, or sense of control over events in their lives. Research has shown that when employees feel they have autonomy, their mood improves and their individual and group productivity increases. By focusing on outcomes instead of surveillance, managers can provide the autonomy employees need to do their best work.
3. Build flexible systems
Change agility — at the individual, team, and organizational levels — is vital for adapting to transformations affecting the world of work, from rapidly evolving technology to increased globalization. By having an ongoing dialogue, employees and managers can rapidly assess whether and how priorities and processes need to change.
In addition, performance management systems must have built-in flexibility. Instead of asking employees to make goals and then waiting until the end of the quarter or year to evaluate how they did, managers should regularly check in on progress — and also on whether the goals are still relevant and beneficial to the employee’s work and the organization’s mission.
To remain agile, employees and managers should frequently align on shared goals and how to reach them. An added benefit of flexible goal adjustment: It increases an employee’s psychological well-being compared with stubbornly clinging to outdated objectives.
Over the past several years, hybrid work has changed the workplace dramatically, and performance management must change with it. The new rules we’re proposing are grounded in enduring principles — minimizing threat, enhancing autonomy, and embracing change — that are now more crucial than ever.
A version of this article appears in Fast Company. To read the full article, click here.
