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CHAPTER 16
PERFORMANCE MANAGEMENT OF THE FUTURE

Nancy T. Tippins and Susan H. Coverdale

Successful performance management programs in the workplace of the future will depend on a number of components. Minimally, the characteristics of jobs, the contextual demands of the organization, and the attributes of the people who fill the jobs will define what performance management processes are required and which are effective. However, many factors shape jobs, people, and the workplace. For example, global competition, natural resources, historical precedents, labor supplies, and economic forces determine what jobs exist in what locations. Education, family, and the culture in which workers live can influence their values and shape their job choices.

The purpose of this chapter is to review the current trends that are likely to affect performance management programs of the future. We begin by first reviewing these general trends from a broad perspective. We will then discuss the effects these trends may have on performance management programs and the ways performance management programs will need to be adapted to remain effective. In Table 16.1, we have summarized the notable changes in worker attitudes and workplace requirements, the main effects these changes have on the performance of work, and the primary implications they have for performance management systems.

Table 16.1 Impetus for Changes to Performance Management Systems.

Some would rightly say the future is unknowable. Certainly, we are unable to anticipate cataclysmic events and predict how these events will affect the way work is performed or how workers’ attitudes toward work might be changed. However, one could also argue that the future is predictable in broad terms based on what we know today. Many of the trends that are emerging and apparent in the workplace today are likely to continue and have an even stronger effect tomorrow.

A study of all the factors that might influence the nature of work performed in the future and the workers who perform it is beyond the scope of this chapter. However, we have provided a brief review of major workplace changes that are evident today and are likely to strengthen in the future. In the interest of space, we have not documented all of the sources that have allowed us to identify these as legitimate trends. These trends come from a broad review of popular periodicals and business literature. The interested reader is directed to summary books such as one produced by the Rand Corporation for the U.S. Department of Labor, The 21st Century at Work (Karoly & Panis, 2004), and the American Management Association’s The New Workforce (Hankin, 2005), as well as newspapers and other periodicals. The website for the Society for Human Resource Management (www.shrm.org) contains a great deal of information on workplace trends as well. The U.S. Department of Labor (www.bls.gov) is an excellent source of information regarding workforce statistics for the United States.

Rather than convince the reader that changes in the workforce are taking place or that all these changes will soon be embedded into every employee’s work life, we hope, instead, to stimulate the reader to consider how these changes may affect performance management programs. It is also important to note that these changes do not reflect all workplace conditions or the attributes of all workers in the workforce; rather, we have selected these trends because they seem to be affecting significant numbers of employers and employees and appear likely to continue shaping the requirements of performance management programs in the foreseeable future

Worker and Workplace Trends

Changes in the Workplace

Work teams. Organizations are increasingly turning to the use of teams for task accomplishment and emphasizing team performance. These often autonomous employees work together toward a common goal for which they are jointly held responsible and plan and organize their own work in the absence of supervisory oversight. Shared responsibilities among team members present challenges as the supervisor is charged with evaluating an employee’s contribution to the team effort as well as the overall success of the team’s performance without having been directly involved him-or herself.

Geographically dispersed teams. Increasingly, work teams are composed of members who work in geographically different locations. Team members may work in different buildings on the same campus, different cities, and even different countries. Sometimes, team members live in different time zones and vastly different cultures. Because of the physical or temporal distances between supervisor and employee, direct methods of supervision no longer work. Often corporations construct these teams composed of employees from different locations due to the need for a particular expertise or because of the high cost, both in terms of dollars and employee satisfaction, of moving employees. In many global businesses, members representing all geographic areas are required to ensure the universal applicability of decisions made. These teams can be highly cohesive groups of people who interact extensively or a number of individuals who are assigned tasks that are part of a greater whole and work independently. Supervisors and team members may need to build relationships with people of diverse backgrounds without face-to-face contact or the benefit of informal opportunities for socializing. In some cases, team members will be vitally aware of each other’s performance; in others, team members will have no idea.

Flexible definition of a job. In the past, jobs were clearly defined as a set of related tasks that were performed to achieve a particular goal. Recent trends suggest that jobs are becoming broader in the scope of tasks to be performed and that workers are being asked to shift tasks more frequently. Whether or not the concept of a job has changed or the belief that jobs as they once were performed simply do not exist anymore is arguable. What remains apparent, though, is that more workers are being asked to develop broad skill sets and bring high levels of adaptability to meet changing work requirements.

Outsourcing. Many organizations are focusing on their core capabilities and outsourcing work that is not part of their main mission. Ongoing outsourcing can add another dimension to geographical dispersion within teams. Not only can team members be geographically dispersed, but they can literally work for another company. Concern regarding co-employment laws often results in strict limitations on who supervises whom, preventing supervisors of one company from managing performance of employees in the outsourced firm. Yet, in many cases, these are the very employees who are vital to the success of the team.

Remote work arrangements (such as hotelling and telecommuting). Another growing trend is the use of alternate work arrangements that allow some workers to work away from their “office” location some, if not all, of their work time. In “hotelling” arrangements, workers who travel extensively may not have a fixed office; instead, their company provides temporary offices from which they work when they have a need to be in a company location. “Telecommuting” arrangements allow workers to perform their jobs some place other than a company office, typically from their homes. These alternate work arrangements have multiple purposes, ranging from reducing expenditures for office space to enhancing the worker’s quality of life. All result in profound alterations to how and when employees and supervisors interact with one another.

Flexible work schedules. Another alternate work arrangements is flexible work schedules that may include undefined work schedules, schedules that require attendance only during core hours, and flex-time in terms of specific working days and/or starting and ending times. Similar to remote work arrangements, flexible schedules are often intended primarily to enhance the worker’s quality of life. The benefits to the employer may be less clear but probably include the ability to attract and retain capable workers. Regardless of the benefits, flexible work schedules can decrease the amount of time supervisor and direct report (as well as team members) spend with each other, changing how performance is managed and evaluated.

Job sharing. Job sharing allows two or more people to hold the same job. Typically, one person is available during normal work hours for part of the week and the other for the remaining time. For example, one person may work mornings and the other afternoons. Often, each person’s schedule allows some overlap time to share information and transfer responsibilities. Although a worker may be physically present, the supervisor has new challenges in evaluating each individual’s performance of the job. The amount of observation time for each individual may be cut in half, and there may be some lack of clarity as to which employee is responsible for what work outcome. In addition, the organization may need to redefine commitment to the job and reassess the importance of full-time work for career progression.

Flat organizational structure. A growing trend in many American corporations is the removal of layers of management, which usually results in increased numbers of direct reports for the remaining supervisors. The rationale behind the flattening of the organization varies. One reason is to move upper-level managers closer to their customers by eliminating middle managers. Another is that, by eliminating superfluous layers of management, the latter hierarchy results in significant cost savings and efficiencies. Implementing performance management processes can be challenging when a manager supervises large numbers of people who perform diverse functions. In addition, flatter organizations may provide fewer promotional opportunities. Those who are promoted may find that the reduction in the layers of management results in a substantial increase in the scope of the job and the commensurate skill requirements.

Matrix management. Matrix management, in which individual workers have multiple reporting relationships, has been used by organizations for many years. However, recent focus on cost efficiencies in many businesses may have increased the number of such relationships. One person often has multiple responsibilities and reports to multiple supervisors, each of whom must evaluate the individual on a subset of all the work performed. Therefore, no one supervisor has a complete picture of an individual’s performance. Often, there is no one supervisor totally responsible for helping the individual with all the aspects of performance management and career development. The diffused responsibility can lead to conflicting developmental advice or no direction whatsoever. From the supervisor ‘s perspective, matrix management can often confuse the responsibilities of performance management and lead to inconsistent messages being communicated to the employee.

Multi-media communication modes. Many of the alternative work arrangements discussed above are successful because communications are facilitated by different kinds of technologically enhanced media. Although some of these modes of communication (such as telephone service) have high fidelity, the face-to-face aspect is lost completely. Other modes (such as videoconferencing) are almost as good as being physically present but may involve technical problems that inhibit clear communications. Supervisors who communicate through these tools have to consider carefully the effect of the communication mode on the quality of the performance management discussions and decide whether anything is an acceptable substitute for a face-to-face performance discussion.

Global business. Another significant trend of recent years is the growth of international business in which an organization conducts its business around the globe and has employees from many different countries and cultures working together. Although cultural differences may be more difficult to recognize than language differences, the cultural differences may significantly shape what is considered acceptable performance and what is not. Supervisors and employees must attend to the effect cultural differences have on how work is accomplished and the implications for how individuals interact with one another. In addition, job requirements must be carefully differentiated from local customs that are followed despite actual job needs. For example, developing a relationship with a customer may be a requirement of the job; taking the customer to lunch may be a cultural expectation.

Technology. It is difficult to write anything concerning business in the 21st century without acknowledging the role of technology. Technology has significantly changed how many jobs are performed. Workers entering the workforce since the mid-1980s when the Internet became widely available have grown up with technology and are comfortable using it not only to perform their work but also to communicate with their colleagues, supervisors, and customers.

Change. Similarly, the workforce today has experienced radical changes in the workplace. These changes include what work is performed, how it is performed, and who (or what) performs it. Although employees may not be entirely comfortable with the nature and pace of change, most have adapted to it. In many cases, these workers have come to expect change in their work as a natural course of events.

The likelihood of change in the worker’s career is also very high. It seems rare today for someone to retire from a company with forty years of service. Although workers today may not expect to make a great many personal career changes, the reality is that many will have large numbers of jobs and several careers in their lifetimes. In some cases, these changes will be forced upon them; in others, they may be seeking different kinds of work and rewards or attempting to develop new skills.

Changes in Worker Characteristics

Much has been made of the career expectations and attitudes toward work of recent generations of workers entering the workforce. Some groups are described as being self-centered and focused on the financial benefits of work; others are portrayed as more altruistic, seeking a sense of purpose in life. Characterizing an entire age cohort by a single set of values is foolhardy, as significant individual differences within virtually any group exist. It is also important to note that the characteristics of these populations minimally refer to those who possess basic skills including speaking English. In many cases, these groups are limited to those with high school education or more. Nevertheless, notable trends in worker attitudes are emerging. In many cases, these changes in worker attitudes and expectations are not limited to a particular age group. In other cases, the trends are associated with the particular experiences a group has had (or has not had).

Number of qualified workers. In the United States, there has long been a concern that the number of qualified workers is shrinking and that there will be an insufficient number of employees to fill critical positions in the future. Documents such as Workforce 2000 (Johnston & Packer, 1987) predicted dire shortages of educated workers capable of meeting the needs of business and industry and a plethora of the undereducated, as well as recent immigrants who lacked facility in the English language. Although many of the predictions failed to materialize, a significant number of American workers remain unskilled or undereducated, and immigration patterns suggest the stream of workers who lack basic literacy and numeracy skills will continue. If these predictions are true, competition for qualified workers will be fierce. Moreover, employers will be forced to modify the way they manage low-skill employees as traditional ways of communicating information about current and future jobs may no longer be successful.

If the number of qualified candidates for positions does shrink, the competition for those who are qualified will be inversely proportional to their availability. To attract and keep these scarce resources, employers will be forced to conform to the needs and expectations of these workers. Thus, performance management programs will need to be modified in many ways.

Not all countries are contemplating a shortage of qualified workers. Many countries, particularly those in Eastern Europe and Asia, have expanding economies and large numbers of educated workers. For example, a white paper from the Society for Human Resource Management (SHRM) (Gross & Minot, 2008) reports a large population of educated workers in India, which has over ten thousand colleges and universities that produce 2.5 million graduates per year. Shrinking pools of capable labor in the United States and growing pools in other countries, coupled with differential labor costs, may well harbinger continuing shifts where work is performed.

Employee expectations of the job. Current evaluations of workforce trends suggest that employees, particularly the qualified ones, have expectations about what a job should provide. A significant segment of the workforce expects opportunities for personal growth and development and is apt to seek other employment if these opportunities are not forthcoming. Closely related to personal development is the opportunity for rapid career progression, which may be all the more difficult in a flattening organization in which promotions will be fewer for most employees. Many workers today also anticipate rewards and recognition commensurate with their efforts and the company’s performance and expect reward systems to take into account their own values. Another common expectation of today’s workforce is work-family balance. Although the concept has many different meanings, across virtually all, the term connotes the employer’s acknowledgement of the importance of personal pursuits as well as the importance of work.

Loyalty of employer and employees. A notable change in the American workforce in the last twenty years is the loyalty that employers show toward employees and that employees show to employers. Often, employers regard workers’ value as temporary or replaceable. An employee is valued only as long as his or her skills are current or cannot be replaced more economically through outsourcing. At the same time, employees are likely to perceive an employer as beneficial to them only as long as the job is interesting, promising for the future in terms of skill-building, accommodating to their personal situations, and/or well-paying. Many changes in employment trends are at least part of the cause of this changing relationship between employee and employer. For example, global competition has forced many employers to cut extraneous expenses, including excess payroll and those expenses devoted to employee development or re-training. Changes in employee pension plans, either terminations or switches to defined contribution plans, have lessened the financial sting of frequent job changes for employees. For many reasons, some employers cannot expect employees to remain with them long term. A future challenge for many businesses will be determining whom to keep and how to keep them.

Changing supervisory relationships. The physical distance of many employees from their supervisors has resulted in new styles of “hands off” supervision. Often employees must act independently and direct their own work because there is no supervisor physically present, or the supervisor who is close by supervises too many employees to assist in making work decisions for all of his or her direct reports. In addition, in place of traditional command-and-control supervisory styles, more collegial styles are emerging. Many employees in today’s workplace expect to participate in important decisions regarding their work.

Keeping Performance Management Effective in the 21st Century

Those of us who are responsible for designing and implementing performance management systems should attend to the changes in the workplace and the worker population discussed above, along with other changes that alter work and the context in which it is performed. In some cases, we should continue and expand the use of current best practices; in others, we must develop new processes that will help ensure effective job performance. In many cases, the goal of the performance management system remains constant. What is new is the way in which that goal should be accomplished. Importantly, those of us who design performance management systems must remember that all members of the workforce are not equally skilled or may not possess the same values and interests. What is best practice for one group of employees may not be effective for another. The next section of this chapter highlights the impact that many workplace and worker changes will have on performance management systems and recommends possible approaches that can be taken to deal with them in an effective manner.

Performance management programs must guide the behavior of employees. Since the inception of formal performance management programs, a fundamental criterion of effective systems has been an explanation of what good performance looks like. Unless the employer can communicate expectations clearly, workers are unlikely to achieve the goals set for them. Although such programs are currently in place in many organizations, these programs may need to be adapted in the future to ensure these expectations continue to be effectively communicated to the target worker.

The workforce trends mentioned above have numerous implications for how employee behavior is directed. For example, programs that explain work requirements and standards of performance using written English may need to be adapted for the non-English-speaking worker or even the worker who is illiterate. Technology may be a more efficient way to communicate the requirements of jobs that are constantly changing. Programs that once concentrated solely on how work is performed may need to be expanded to include information concerning when work is to be performed and what the boundaries of appropriate behavior are. Some capable employees who lack strong role models will also need assistance understanding what acceptable work behaviors are. Some workers with differing values must learn that their employer has a different set of values that require different forms of work behavior. Similarly, feedback mechanisms must be designed to convey information back to employees in a manner that employees understand.

In teams composed of widely dispersed members, the team manager may be challenged to find a medium and a time to communicate with each employee. Time for interactive discussion of work issues among all team members may be even more difficult to find. Face-to-face meetings may be difficult if not impossible. Technologically enhanced communications such as conference calls and web-based presentations may lack key features for team building, such as time for informal interactions that allow team members to get know one another. Although there are no easy solutions, employers might consider combining several of these options. For example, a team might have a face-to-face meeting once a year that is supplemented by monthly conference calls at the most reasonable time and weekly emails.

The employer must also take into consideration the motivating effects of such communications, particularly when work is not the primary focus of the employee or when the labor market is competitive and employees can easily find other employment. Obviously, the employer must avoid offending employees. At the same time, there must be a motivating component to these communications that encourages employees to stay with the job and to improve and develop skills. For example, an employer might describe what the employee is expected to do and what the rewards for competent performance are. In addition, the employer might describe what career paths are available and what the benefits to those jobs are.

Performance management processes must motivate employees to set and achieve work goals that are beneficial to the company and may not be congruent with the employee’s values. Performance management programs have long been used to shape employee behavior; however, in the past, employer and employee often shared similar values and goals. Employers assumed that many of their workers aspired to jobs of greater responsibility and were motivated by the compensation that career progress brought, and the remainder were committed to performing well consistently. Today, many workers place a great deal of value on things other than their jobs and financial remuneration. Placing a high value on family or personal time may inhibit employees from committing the time required to develop the complex knowledge and skills that are requisite for higher-level jobs. In some cases, achieving competence in an area may not be valued as much as personal time or pursuit of other outside interests. When jobs are plentiful, the allure of another, less demanding job may be strong. When the traditional bonds to a company such as pensions and public expectations of loyalty fray, the desire to stay put can become particularly tenuous. At times, some organizations will choose whether they deal with the problems of motivating their workforce, adapting their work to the values of their employees, or the problems of constantly dealing with turnover and replacing the workforce. One approach, when workers are marginally invested in their jobs and the supply of competent workers is low, is to incorporate both educational and motivational components in the performance management system to explain the costs and benefits of different jobs and career paths. Employers may also explain how various aspects of performance further the pursuit of personal interests. For example, an employer might stress how good work on an employee’s part leads to high levels of corporate performance, which in turn assures job security. Job security presumably is a benefit to those whose primary interest is providing for their families.

As always, the supervisor who provides performance feedback will need the skills to accurately assess his or her employees’ current abilities as well as provide accurate information about the possibilities for the future. In addition, the manager must understand the requirements of other jobs so that his or her coaching directs the employee in appropriate ways. The process of developing the skill sets of a worker who is doubtful about the rewards of doing so will not be a simple one or one guaranteed to succeed. Another significant component of the manager’s responsibilities will be to assist the individual employee in setting goals related to skill development and continuously pursuing them.

Tools within the performance management system to motivate employees can take many forms. Perhaps the most fundamental is to train managers extensively in the requirements of an array of jobs, the evaluation of competencies, provision of constructive feedback, effective means of developing competency, and so forth. Because of the increasing demands on supervisors, relying solely on supervisors to inform and motivate subordinates may not be sufficient, and the coaching relationship will need to be supplemented with other tools such as web-based career planning sites that contain information about job requirements and development opportunities.

Some employers find that their motivational efforts are not sufficient to counteract the effects of differing value systems. Consequently, they try to align work requirements with employee needs. For example, they lower their expectations regarding how many hours should be devoted to work and when and where those hours should be worked.

Performance management processes need to incorporate the technological tools with which workers and supervisors are comfortable. Technology is the most notable recent workplace change. It has changed the nature of how work is performed as well as what work is performed. At this point, an entire generation has been raised using sophisticated technological tools and the Internet. More recent entrants into the workforce are comfortable with an array of digital devices and expect the immediacy of communications they offer. Many aspects of performance management systems have already incorporated technology; however, to remain effective and to foster user buy-in, performance management processes will need to incorporate technology and its many tools.

In many organizations, performance evaluations are administered electronically, which eases the administrative burden and allows for tracking of objective performance data. Communications about the way in which the work should be performed, the criteria against which performance will be evaluated, and the actual performance results can be accessed by the employee electronically and on demand. Goal-setting and follow-up activities can be electronically recorded, and tracking documentation can be easily accessed and maintained. Record-keeping for administrative performance assessments and evaluations of those data, such as adverse impact analyses, between-person evaluations, and identification of organizational strengths and weaknesses can be aided through technology. To be effective, performance management must continue to use technology to enhance the performance management processes. Moreover, performance management programs must adapt to the continual stream of new technology available. For example, text messaging and podcasts might be used to instruct employees or remind managers of their supervisory responsibilities.

The potential of using technology in performance management systems has not been fully explored, and the ways in which technology can aid both the employee and the supervisor in fostering development and sustaining high levels of performance is not completely defined. However, it seems reasonable to speculate that technology can facilitate more than simple data storage and reporting. One promising area is accurate evaluations. For example, future performance evaluation processes might be “computer adaptive.” A supervisor might rate employees on a series of behavioral descriptors representing each dimension until an accurate evaluation of ability is established.

Despite the vast potential of technology for improving performance management systems, it is important to remember that a segment of the American workforce remains functionally or technologically illiterate. Some lack the basic skills to use technology-enhanced tools effectively; others lack the familiarity with technology or the access to use such tools effectively. Consequently, organizations that use components of their performance management system based on technology must take into account that such tools may be inaccessible to a portion of the workforce and seek more appropriate alternatives.

While technology appears to be a panacea for many of the problems created by new work arrangements, it is also important to note that technology is not always a cost-effective option for all organizations. Smaller organizations may not be able to afford the initial investment. Larger organizations may not be able to afford the continual updates and maintenance of the system. Good systems will not be effective if they are not populated with information relevant to the organization and its jobs.

Performance management processes must respond to workers ‘ expectations of timely performance feedback. Many workers are used to timely access to web-based, job-related information such as training modules, job aids, and performance data (for example, production figures, sales volumes). Consequently, many expect continuous capturing and reporting of performance information and timely performance feedback. The days of a once-a-year review of an employee’s performance based on the supervisor’s memory of events that happened months prior to the feedback session may be gone. Employees can legitimately expect that supervisors document performance via technology regularly and provide feedback at frequent intervals.

Timely performance feedback is closely tied to the use of technology. Examples of technology-enabled feedback might include electronic capturing of production data that is continuously updated and accessible to the employee and the supervisor or automatic reporting that provides performance data regularly. Technology may also enable regular discussion sessions between supervisor and employee as well as with remote team members. Some organizations use weekly telephone calls to provide feedback and direction for the future.

The availability of almost continuous performance feedback may have a downside, particularly for employees with low skills or low levels of commitment. Instead of providing information that serves to guide future performance, frequent performance data may be perceived as overly intrusive—”Big Brother” monitoring every action an employee takes. Others may be overwhelmed by the amount of information available and lack the ability to process all of it and identify the important trends.

Performance management processes must take into account the difficulties posed by the lack of opportunity to observe performance. Because many employees will not work in the same place as their supervisors or on the same schedule, direct observation of performance will become more difficult. This lack of contact is more problematic in service work than in production work. Although products can be inspected after they are produced, services are harder to evaluate unless directly observed. When the supervisor cannot monitor work directly, collection of different forms of performance data than have been used in the past (for example, customer surveys or self-report data) may be useful in evaluating and managing performance. In some cases, the monitoring process itself may be outsourced to firms that provide “secret shoppers” or professional monitors who can listen to customer interactions on the telephone and rate the employee.

Multi-rater feedback may supplement a single supervisor’s evaluation because it can solicit information from those who have actually interacted with the employee. Because there are still open questions about the use of multi-rater feedback for performance evaluation, research needs to focus on how to gather accurate performance information from peers and direct reports.

Performance management processes must communicate work standards and performance feedback to employees who are widely dispersed. Another challenge to face in the design of performance management systems in the future is the effective communication of performance-related information to employees who work in different locations from their supervisors or who work on different schedules. Therefore, in addition to retooling the design of performance management systems themselves, the designers of performance management programs must also determine the medium for effective communication to support those systems.

To date, little research has explored the effects of alternatives to face-to-face feedback on performance. Although technology-based forms of communication have the important feature of immediacy, many alternatives have their drawbacks. Telephone communications lack the visual cues that face-to-face conversations have. Video teleconferencing does not always produce high-quality images, can lack privacy, and is subject to technological glitches that affect the continuity of the discussion. Emails often cannot convey the tone implied. Feedback-givers have to examine the pros and cons of using alternatives to face-to-face communication.

Distributing information on work standards and expectations via technology also has pros and cons. On the positive side, such information is readily available and can be easily updated. Less positively, many workers are not comfortable accessing and searching informational databases. The lack of opportunity to discuss performance issues interactively is often a negative feature. Many sites allow the user to pose questions, but answers may take some time and may be a particular drawback for those who lack the time to return to a site repeatedly. The information on most sites lacks the depth and richness of information that might come from a supervisor’s personal experiences.

Workers in different time zones often have no time during “normal business hours” when they can discuss work plans together in “real time.” Alternatives to rotating the time of meetings to minimize the effect on some employees’ personal time include a sequence of meetings on the same topic or taping the original meeting so that it can be shown at more convenient times.

Performance management processes need to take into account varying standards of performance across locations. Employers, particularly global employers, may find that performance standards for jobs of similar or identical titles differ by work location. In some cases, this is because the job requirements are actually different. In other cases, cultural norms may affect performance standards. Regardless of the cause of varying standards, effective performance management requires a clear statement of job requirements and the standards against which performance will be measured.

Therefore, as employers expand operations, whether within a country or around the globe, they must define the fundamental requirements of the job—regardless of where the job is performed. A supplemental task is to identify any differences in job requirements based on a particular work location. For example, a regional office in the United States may require its salespeople only to sell, while another regional office in the United States expects them to participate in customer training as well as sell. A regional office outside the United States may require its sales force to participate in the installation of the equipment they sell. Another regional office may expect a salesperson to visit each client every month to ensure the equipment is properly functioning. In the United States, sales representatives may be expected to entertain clients. In Eastern Europe, meals and entertainment may be ethically unacceptable. Sales, training, installation of equipment, and even client visits and entertainment are all requirements of a sales job, but not of all sales jobs in all locations. Thus, performance management systems may need to be malleable enough to incorporate the common elements of a job as well as the elements that are specific to a particular area or location.

Performance management processes need to take into account varying standards of performance across types of work arrangements for employees. In addition to the more traditional full-time or part-time worker, an employee may also work for an organization under a number of other arrangements, ranging from a “permalancer” (a long-term, contract employee) to “temp-to-perm” (a worker who is hired as a temporary worker in anticipation of a permanent, full-time position becoming available) to a consultant or contractor (a worker who performs a defined set of tasks and who is usually an employee of another firm or self-employed). Successful organizations will make clear their expectations for performance for each type of employee. Contracts will often specify performance expectations and deadlines, but feedback, development, and coaching are rarely provided. It merits noting that setting standards for workers performing under some types of work arrangements raises significant co-employment issues and legal liability. Nevertheless, the organization hiring the subcontracting firm must carefully set standards and clearly communicate them.

Performance management programs must incorporate employee preferences and be sensitive to cultural differences among employees. Another outcome of global expansion is the increase in differing expectations employees may have concerning performance management. Although cultural differences in this respect are not as great as once thought, differences in preferences for how goals are set, comfort in planning and organizing work, and styles for giving feedback and setting expectations about receiving it do exist. For example, in some cultures giving direct critical feedback may not be commonly acceptable. In others, giving feedback to supervisors or peers may not be considered acceptable.

As companies develop an international workforce, future performance management systems must be flexible enough to adapt to cultural differences while maintaining some common features and standards across the corporation. Cross-cultural research on performance management programs that could be used to guide these changes is not plentiful, so the developers must consider local customs and emphasize cultural sensitivity to the managers who provide performance feedback. Similarly, the performance management system may need to place special emphasis on aspects of the system that are unfamiliar or uncommon in the cultures in which it is being implemented. To eliminate bias and unfair treatment, training in cross-cultural expectations will be necessary in many settings, and evaluation of managers on their cultural sensitivity may be warranted.

Performance management programs must allow for the provision of critical or negative feedback in a positive, motivating way to retain and develop employees. The difficulty of finding and training good employees in the future heightens the importance that must be placed on retaining them. Employees who feel devalued by performance feedback have always been at risk to leave to find an employer who demonstrates a higher level of respect for the individual. When the labor supply was plentiful, many of these employees were replaceable. As the labor supply tightens, retaining skilled employees becomes more important.

As in the past, performance management programs of the future must be sensitive to the needs of employees and clear in communicating their value to the organization. We are not advocating avoiding negative feedback; rather we suggest that it be provided in a way that will be understood and accepted by the employee and used constructively. The ultimate goal is to motivate the employee to do a better job. In addition to ensuring the performance management program emphasizes employee value, supervisors may need special training to provide feedback effectively.

Performance management programs must be aligned with the ways in which jobs are defined. Many workers today are expected to have broad skill sets and perform an array of tasks in one job that may once have been associated with several different jobs. Thus, these workers must possess a high degree of flexibility and quickly shift from one task to another. Consequently, performance management systems must also adapt to the changing ways in which jobs are constituted and the characteristics of the workers who must perform them.

Performance management systems might be adjusted in multiple ways to deal with broadly defined, shifting jobs. One obvious way to do this is to ensure that the content of measured performance dimensions accurately reflects the array of responsibilities inherent in the position. Other important components of successful performance to evaluate include the ability to acquire new skills and learn various tasks quickly and the ways in which employees adjusts to new assignments. This will require performance evaluation at intervals consistent with the changes in the job. For example, rather than waiting twelve months, evaluation and feedback would be provided as the employee completes a significant work assignment and moves to another.

Performance management programs must be aligned with corporate goals and strategies. Ideally, an individual’s goals support those of the individual’s group, which in turn support the goals of broader groups—and ultimately those of the entire organization. Measurement tools such as balanced scorecards and dashboards may be used to show the extent to which the individual has met his or her own goals and contributed to those of the broader organization. Such tools may also motivate employees by showing the results of their individual contributions.

Performance management programs need to address the performance of individuals and teams of individuals who share jobs or work cooperatively to achieve their goals. As more organizations incorporate teamwork, they must find ways to evaluate each employee’s individual work accomplishments and contribution to the team as well as assess overall team performance.

In the past, performance management systems have tended to address the performance of the individual. Some systems have tried to evaluate the individual’s contribution to the team, but often this involved only the supervisor’s perspective rather than that of other team members. Multi-rater feedback can also be used to evaluate an individual’s contribution to a team. As noted above, however, there are important concerns about collecting performance information about an individual from his or her peers, and more research is required to define the conditions under which such data are best collected and used.

It is common to assess the productivity of a team; however, evaluation of how the team functioned in producing results is more rare. For example, a team is more likely to be evaluated on how much it produced or how many customer inquiries it handled than on the extent to which team members shared information or helped those who had an excessive workload. As teams become a more integral unit of the organizational structure, performance management systems must address how to evaluate an employee’s contribution as an individual and as a team member.

A special case of teamwork is the job-sharing arrangement described above. Performance management systems must be sensitive enough to determine who is responsible for what; adapted to evaluate the job sharers and their respective contributions; and broad enough to develop both people in the job-sharing arrangement.

Performance management plans must recognize employee contributions with rewards that are valued by the employee. All workers expect to be rewarded and recognized for their efforts. But, compared with their counterparts today, designers of performance management systems of yesterday were more likely to share the same value systems as employees being evaluated. As today’s workforce diversifies, the values individuals place on traditional rewards such as money and promotions are likely to vary considerably. The rewards must conform to the employees’ values. Unfortunately, this is not simply a matter of determining what the new value system is. Each employee has a different set of values, and these may change over time. How this difference could be accommodated is not clear. One possibility is a cafeteria-style reward plan similar to those that are offered in many benefits packages. An employee might choose a monetary bonus or time off as a reward. Those employees who value their status as subject-matter experts may have the option of choosing management or expert tracks for career progression.

Performance management programs must continue to emphasize the importance of corporate values and ethical behavior. Many organizations now see benefits in emphasizing corporate values to focus employees on the mission of the organization and define what is acceptable behavior and what is not. Ethical behavior in U.S. corporations has received more scrutiny in the aftermath of a number of corporate scandals and subsequent litigation (for example, Enron and WorldCom) as well as passage of the Sarbanes-Oxley Act. Difficult to observe, the requirement for ethical behavior must be regularly communicated and the results evaluated.

For corporate values and ethical behavior to be meaningful to each employee, performance management programs must define how they have been incorporated into the workplace and what the implications are in terms of the employees’ work behavior. It will not be enough to say what the values are; supervisors must help to interpret how corporate values are displayed in the context of employees’ work and, certainly, must serve as role models themselves.

Performance management programs must incorporate non-task expectations and develop standards of success for them. Many jobs have responsibilities and expectations that go beyond actual job requirements. In recent years, the value of contextual performance or organizational citizenship behaviors (OCBs) to overall organizational functioning has been highlighted. In addition, some organizations have expectations about employee behavior outside of work, and performance management systems must serve to communicate what they are and set standards of success so that such behavior can be evaluated.

Although, by definition, OCBs are not always required, they add significantly to the functioning and harmony of a work group. Often performance evaluation focuses only on job requirements and ignores the OCBs. But if an organization wants employees to display them, they must communicate them to the employees, evaluate them, and reinforce them. Similarly, some organizations require employees to engage in community service or continuous learning. Again, if the organization wants employees to engage in this kind of behavior, the performance management systems must emphasize and, as appropriate, reward it.

Conclusion

In summary, three clear trends that affect performance management systems have emerged. First, individual values and needs are diverse and changing, and the heterogeneity of the workforce is increasing. Second, technology is embedded into almost every aspect of work, including performance management. Third, global expansion is increasing the diversity of employees and the cultural contexts in which they work. For performance management systems to be aligned with organizational goals and individual needs, they must consider all three trends.

Table 16.1 provides a summary of prevalent changes in worker attitudes and workplace requirements, the effects these changes have on how work is performed, and the implications they have for performance management systems. It is important to note the contradictions. For example, we are saying that employers will work to retain qualified employees and will, at the same time, be quick to release employees who are no longer needed. Both are true some of the time for some employers. The professionals who design performance management systems can no longer assume that employees are willing to follow the employer’s rules and must assume that performance management programs will be tailored to the particular approach that employers take for managing their human resources.

Performance management programs must be adaptable to meet the changing requirements of the workplace and the characteristics of the employees who work there. In many cases, this means continuing best practices in performance management or extending them. In other cases, changes in the workforce and workplace require more radical changes in performance management programs. The professionals responsible for developing these programs must stay abreast of the changes in workplace trends and the attitudes and skills of the workforce. In addition, they must incorporate psychological research such as that described in this book. Perhaps most importantly, industrial and organizational psychologists who work in this area must recognize that continuing change is a given and that the pace of work-related changes will continue to escalate.