As we dive into 2023, there’s something in the air very different than last year at this time. While the economy was booming then, we are now facing an economic slowdown and all the uncertainty surrounding it. You might wonder why a company that provides modern performance management software to HR leaders is writing about this subject. It’s the need for maximizing productivity, simply put.
Productivity was a bumpy road in 2022. According to the Bureau of Labor Statistics, productivity decreased by 1.3% overall in 2022, the largest annual decline since 1974. While productivity increased in Q4 of 2022, it’s still on the minds of leaders, and for a good reason. As the economy slows, so will hiring. As uncertainty mounts, employees often feel unsafe about their future. And if the unfortunate need to restructure arises, maximizing productivity with the people you have is of central importance.
HR leadership is critical to addressing the C-suite’s need to boost or, at a minimum, maintain productivity at a time when the company may have to veer right or left. Business resilience and agility are what the CEO needs to navigate through challenges. And your people, being engaged, connected, and aligned, are the recipe for navigating uncertainty.
While re-architecting your performance processes may not have been top of mind a few months back, it’s now time to lean in and consider making changes that will help the company navigate today’s bumps and build the foundation to thrive tomorrow.
The link between productivity and performance management
Maintaining productivity ties into many facets of the employee experience. Feelings of achievement, fairness, belonging, inclusion, and engagement all lend themselves to a happier and more satisfied workforce that is ready to charge ahead. The right performance management solution serves as a performance enabler. It cultivates these sentiments by tying together agile goal setting, alignment with strategic business objectives, frequent and meaningful conversations between employees and managers, peer feedback, recognition, and career development and advancement into a framework that enables employees to maximize their effectiveness and feel good about their work.
Modern performance management — what we call performance enablement — flips the script on the way things have been done for more than half a century. Rather than looking at performance in the rear-view mirror through annual or semi-annual reviews, performance enablement focuses on the present and the future with continuous alignment, improvement, and achievement, all of which lead to high productivity and a better employee experience.
Resilient companies focus on their people
While organizations cannot control the macroeconomic factors at play, they can maximize productivity to benefit both their companies and their employees. In its recent report, 3 Mega Trends Facing HR Right Now, UKG calls for optimizing organizational plasticity as a way out of the stress and sense of being overwhelmed that many people feel. It’s the idea that companies can come out ahead by learning how to “adopt a growth mindset and seize opportunities during times of great change challenge, taking calculated risks and learning fast.” This involves strengthening people and culture, focusing on DEI&B, and practicing strategic workforce management with “investments in workforce management and planning tools to set up sustainable and flexible operational processes that can adapt and grow with employers quickly.”
We believe organizations can take five key actions to maximize productivity and the employee experience simultaneously — to accomplish more during leaner times.
Drive greater productivity through agile goal-setting
Strategic goal-setting, alignment, and achievement are necessary for any business to succeed, and it’s even more crucial to properly determine and hit those goals when the stakes are higher during an economic slowdown.
When everyone is rowing in the same direction — from the CEO down to the individual contributor — the goals that matter most are prioritized and activities synchronized. Employees focus their efforts on the highest priority tasks. Higher goal achievement means higher output, which is a productivity gain. And when employees see that their work directly contributes to better business outcomes, they feel pride and achievement in their performance and are more likely to be engaged. The result can be a virtuous cycle that continues to drive productivity.
In fact, Betterworks 2022 Performance Enablement survey found that companies using our dedicated performance management tools reported a 44% increase in employee discretionary effort — meaning employees went above and beyond in their work.
Do employees understand company business goals?
Surprisingly, employees often work without clearly understanding the business’s priorities, which translates into wasted productivity. Various studies have found that employee understanding of their organization’s strategy — and by extension, the goals tied to them— is generally low. A survey by Right Management revealed that up to two-thirds of employees don’t know or don’t understand their company’s strategy. It’s impossible to aim for the right target, let alone hit it, if you don’t know what the bullseye is.
When employees understand their organization’s strategy and goals, they can better create their own goals to align the work they do to the goals of their team, department, and company. This convergence of topline strategy with functional knowledge of how to best achieve those strategies minimizes wasted effort and yields higher productivity.
“Employees should be able to draw connections between the steps they’re taking and the effects on the business,” says Betterworks CEO Doug Dennerline in the upcoming book, Make Work Better, that he co-authored.
Goals must be agile, not fragile
Goals are essential guideposts for aligning teams to a shared vision, and an important tool in helping employees understand how their efforts contribute to the business’s success. As such, goals will only retain value if they reflect the business’s current needs. In a rapidly evolving business environment, such as an economic slowdown, the needs of a company can change quickly — and goals sometimes need to be modified, set aside, or completely overhauled to reflect new priorities.
Yet, in the Betterworks 2022 State of Performance Enablement report, we found that 21% of employees reported that their goals are set annually and never looked at again, and 16% of employees said they do not set goals at all. Nearly half of employees said they felt trapped by out-of-date or irrelevant goals by the end of the quarter or year.
Like a flock of birds that instantaneously changes direction in flight, the key to maximizing productivity during a time of rapid economic change or uncertainty rests on an organization’s ability to alter its direction quickly. When goal-setting and adjustment are baked into the way employees work, they can stay nimble and laser-focused on the highest priorities. When they can work on the most important things, they will also have better experiences and are more likely to be engaged.
Clearly communicate strategy for higher productivity
Communicating strategy clearly is vital at all times — but takes on greater weight during turbulent periods. Researchers from the MIT Sloan School of Management and CultureX found that organizations that distinguished themselves in the first six months of the pandemic through leadership communication, transparent information sharing, and strategic clarity were among the most agile. They suggest that as the economy enters a possible recession, leaders commit to a “handful of strategic priorities that provide clear guidance for navigating through the storm” and make sure “those priorities are understood and used to guide choices throughout the organization.”
They also found that the factors that mattered most in helping managers and employees understand business strategy were clear and consistent communications from top leaders and that leaders at every level “explicitly linked their team’s objectives to overall strategy.”
This is what a performance enablement approach enables: the development of goals and associated metrics that align with the needs of the business and a focus on continuous communications and feedback, both vertically (through different levels of the organization) and horizontally (across teams, departments, and individual employees).
Conversations and feedback help everyone stay on track and bolster motivation
Continual communication between employees and managers helps employees maintain maximum productivity. By providing the support and resources to managers to help employees thrive, organizations can make sure everyone remains in sync and feels heard. Especially in a hybrid and remote work environment, frequent and lightweight check-ins enable managers and employees to collaborate, problem-solve, and eliminate bottlenecks.
Coaching from managers and timely feedback from colleagues and recognition helps employees avoid repeating mistakes, receive reinforcement about actions that were done well and should be replicated, and develop a habit of continual improvement that leads to greater efficiency and productivity. The positive vibes and sense of accomplishment that come from being valued and recognized for a job well done foster both personal well-being and a positive culture where people strive to do their best work.
How talk, trust, and happiness go together
Ongoing and purpose-driven conversations and coaching also open lines of communication that are essential for building trust and understanding.
“We’ve found that when managers and employees are unable to have honest conversations with each other, the result is unhappy employees,” says Jamie Aitken, Betterworks VP of HR Transformation in the soon-to-be-released Make Work Better book she co-authored. “In a performance-enabled organization, however, conversations and feedback are embedded into the way work gets done. Frequent, lightweight conversations that don’t require exhaustive preparation from either managers or employees, and that focus on personal and career development goals as well as work product, ensure that employees are engaged and feel supported.”
Connections that create positive experiences — and many studies show that managers directly impact employee satisfaction — boost energy, creativity, morale, and motivation. In short, contented employees are a productivity hack. A 2019 University of Oxford study found that happy workers are 13% more productive.
Organizational transparency and accountability enhance productivity
Transparency and accountability go hand in hand with clear communication. Hybrid and remote work environments and changes in organizational hierarchies, combined with a changing economic climate, make for complex work situations. Employees or teams can easily fall into the trap of working in silos. Organizations also often operate with highly matrixed teams.
For these reasons, employees and teams require visibility into what other parts of the organization are doing to avoid working at cross-purposes, which can dampen productivity. Transparency allows employees to see and harness potential opportunities, leverage colleagues’ work, provide suggestions and insights that can help others in their company, and avoid going off in the wrong direction.
The same MIT Sloan study mentioned earlier found that companies with transparent goals and progress across the company are 1.31 times more likely to be agile. Goals should be measurable so that employees can gauge their progress, while transparency across the organization promotes accountability. The intent is not to be punitive if goals aren’t met, but rather to encourage ownership, evaluate progress, re-adjust if necessary, and continually learn and improve performance. Cross-company goal alignment, transparency, and accountability increase output— that is, productivity — by increasing the likelihood that employees will accomplish the work associated with strategic priorities.
Leaders need visibility into productivity
When Alphabet’s CEO last year voiced concerns about declining productivity, part of this may have been driven by the inability to clearly see what is happening across a very complex and distributed enterprise — and why.
Keeping track of this web of interactions in a rapidly changing environment can feel nearly impossible. Leaders require real-time visibility into what their teams are doing and how they’re progressing to remain nimble: to make decisions such as adding or subtracting resources, ending unprofitable endeavors, quickly pivoting teams to new business requirements, or better understanding factors like burnout and disengagement that harm people and productivity.
Visibility into department or team goals and progress, along with consistent and current data about progress and roadblocks, can provide leaders with a picture of overall productivity and with snapshots of departmental productivity. Visibility benefits employees, too, by enabling their employer to respond quickly to employee needs when there is a dip in engagement or frustration with a recent change, for example. The C-Suite can leverage these findings to improve communication, evolve strategy, and fix what’s broken.
People agility through upskilling improves productivity
We’re all aware of the dire need for upskilling and reskilling. The World Economic Forum has stated that half of all workers globally will require reskilling by 2025. As the economy slows amidst an ongoing talent shortage, the most economical way to create new capacity that boosts productivity is often to build it internally.
Democratizing opportunities for growth strengthens loyalty and retention by giving employees agency over their professional development and demonstrates that a company cares about and values its people. Employees see paths to further their careers internally rather than find advancement by taking a role at another company. And, when they can put new skills into play immediately, their interest and engagement increase.
Initiatives that enable goal-centered skill-building help employees and companies maintain the agility needed to innovate and compete effectively. The Betterworks platform, for example, integrates with online learning systems like LinkedIn Learning and Udemy. When organizations can link learning and upskilling to tangible objectives and measurable results within a performance management system, they boost the likelihood that employees will complete courses and put their new skills into practice to benefit the business and their careers. Studies have shown that e-learning courses have a completion rate between 5%-30%, depending upon the study. Since the Betterworks Udemy LMS integration launch, customers actively using the integration (linking courses to their goals) have shown an average course completion rate of over 44%.
Modern performance management promotes productivity
Doing more with less requires rethinking your approach to managing your workforce. Employees today require tools that are lightweight and allow them to accomplish more in the flow of work — in the applications they use every day. When employees can easily set and adjust goals in alignment with the business, maximize their understanding and efficiency through frequent conversations with managers, hone their work through feedback, and build skills that both add capacity to the business and enable them to advance their careers, they will be able to fire on all cylinders and maximize productivity.
Interested in discovering more? Learn about the impact of goal setting on employee performance.