Few corporate processes are as fraught with suspicion and fear as performance appraisal and compensation. But in much the same way as digital technology can streamline learning, recruitment and career management, it can also renew the way that banks recognize and reward performance.

Once a source of stress and conflict, appraisal can instead be become a transparent, meritocratic process that improves employee engagement and lifts retention of key talent. There are four key factors driving a shift towards a new way to measure and manage performance:

  • People empowerment—people have visibility into the data that influences decisions about how they are rewarded and get clear feedback on where they are outperforming and on areas where they can improve.

  • Business analytics—decisions are linked to business results that are measured using advanced analytics tools. Employees’ behaviors are measured and considered.

  • Simplicity—workers can view performance data on engaging IT tools.

  • Efficiency—automation reduces much of the administrative effort HR used to invested in performance appraisals so that it can focus on activities that add value to the business.

We’re already seeing some of the world’s largest financial services organizations embrace new approaches to performance management, enabled by the immediacy of digital technology. Goldman Sachs, for instance, has ditched the practice of giving employees a numerical rank from one to nine in favor of performance reviews in which workers can continuously give and receive feedback.

Another great example of digital performance management is the way Work.com from salesforce.com uses gamification mechanisms to provide timely feedback to employees and to recognize high performers. Employees can recognize colleagues with customized badges that reflect their company’s culture and values.

Work.com is integrated with salesforce.com’s CRM solution, so a salesperson looking at accounts in the CRM system could send performance feedback to a customer service representative without having to change applications—thereby enabling managers and managers to fluidly interact with the tool where they do work every day.

And ContestBuilder, by LevelEleven enables sales managers to gamify any aspect of the sales metrics tracked in salesforce.com’s customer relationship management (CRM) system. Managers can design contests to incentivize creating, responding to or converting leads or closing deals. The contests motivate salespeople to achieve, thus boosting their productivity.

My final post in this series will look at how HR organizations can apply the principles of customer relationship management to employee engagement.

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