How To Modernize Your Performance System For Generation Y & Z?


Time Read | 3 min

Organizations these days are taking a more modern approach to HR and its’ functions. Human Resources departments are increasingly using technology to improve engagement and performances of employees. HR software vendors market is rapidly growing to help to modernize HR for a new generation of workers.

HR used to be viewed primarily as a cost center. But it now involves many more strategic pursuits. These are; recruitment of new talent, retainment of existing talent, establishment of company culture, engaging the talent and increasing performance of the employees.

The world of work has changed forever and as a result, HR’s role changed too. CEOs main expectation from HR is to contribute to challenges with employee productivity and performance.

One of the main practices standing in the way of progress is the “annual performance review”. Traditional performance management systems do not support better performance, which needs to be the number one purpose of a performance system. They lack in engaging employees. To succeed today, companies cannot rely on the most important conversations between managers and employees happening only once or twice a year.

With increasing penetration of millennial generation in the workforce and changing social habits, HR managers are looking for new generation performance management solutions that foster frequent & timely communication between employees & managers, enhances engagement and provides performance increase. As younger people join the workforce, they are looking for more consumer-like, properly designed, gamified and simple to use experiences when dealing with performance evaluation.

Researches show that employees who receive frequent and actionable feedback from their managers and companies that have trust & recognition culture are demonstrating better performances. Therefore, providing a modern performance system which is designed to increase performance becomes the top priority for HR managers.

What are the 5 key points of a Modern Performance Review System?

  1. Alignment with Company Strategy: In most of the cases, employees complain about lack of alignment between individual targets and company’s targets. So the modern performance system should define individual targets properly and align better with the mission, purpose, and strategy of the business.
  2. Goal Setting: Goals are key to performance. they help employees know where they’re going and, in the end, whether they’ve gotten there. To kick performance up to the highest levels, individual, team, and organizational goals need to all be in alignment.
  3. Continuous Feedback: Feedback expectations of new generations are changing at a lightning pace. HR professionals are currently looking at the emergence of 360-degree feedback and how technology is enabling continuous feedback that can be integrated into the flow of work.
  4. Performance Coaching: One of the core ways we can enable better performance is by supporting employees at all levels. Coaching is a crucial piece of the support. It gives employees the insight and confidence they need to succeed—and helps coaches too.
  5. Rewards, Recognition and Trust Culture: Performance Management is about creating a healthy, thriving culture that drives your business forward. Employees trust to company, rewards and recognition culture are a crucial piece of that performance management-to-culture journey.

Bottom Line:

The future of work is being shaped by expectations of new generation employees, changes in technology, globalization and liberalization of information. Generation Y and Z workers are asking for something different. They want a meaning at work, to be recognized at workplace, a coach, not a boss. Besides that, they also want clear expectations, accountability, a purpose, and especially ongoing feedback and coaching. As a result, HRs need to be adaptive to below new expectations of the new talent:

  1. Annual review-based performance management process does not provide actionable feedback and is counter-productive to fostering timely collaboration and productivity.
  2. Millennials want more frequent feedback from their colleagues and managers and seek more opportunity to give and receive constructive feedback.
  3. Look at your performance management process and have frequent conversations about employee growth and development. When managers coach their employees to grow and succeed, they will be more engaged and effective in their roles.
  4. Technology advancements are playing a key part in HR’s agenda. HR must evolve to make sure they’re providing employees with modern, easy-to-use HR tools.