“We now live in the experience economy where people have shifted from passive consumption to active participation.”  

-Joseph Pine and James Gilmore  

We live in the experience economy, which requires a dramatic change in the performance management system to win the war for talents. In traditional management methods, most companies treat engagement as a program or a project that needs a lot of paperwork. Still, many companies have not moved away from the pen and paper approach. They are stuck in the past decades and will need to implement many changes in their organization to compete in today’s digitized business world. Engagement is not a program or a survey but an experience of an employee that makes him stay committed to the work and company.   

Why Combining Employee Engagement and Performance Management is Mandatory?  

Economic growth has slowed down since the 2008 recession. The major key to accelerating growth is to increase productivity. But the productivity has lowered because of the availability of many technological products in the market, overwork during weekends leading to lower productivity, traffic, and no friendly systems in place. When there are these many causes that impact productivity negatively, the HR team should take up the responsibility of reinventing the performance management system to engage the employees. Performance and engagement are two sides of a coin. Research proves that engagement drives performance and performance fuel engagement. Another study reveals that around 75% accept that engaged employees are high performers and 69% reckon that performance cannot be increased without improving employee engagement.  

Increased employee engagement can address the following concerns of CEOs and CHROs  

1. Employee retention and attracting the high performers in the industry  
2. Identifying future leaders  
3. Reducing costs  
4. Innovation  
5. Aging workforce.
6. Low number of employees in the top economies.  
7. Preparing for any future of work to ensure business and economic continuity to drive growth  

Companies that connect performance with engagement have engaged high performers, and they always perform better than their competitors. 

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What is the Role of Management to Succeed?  

Driving performance, goal-setting, leave policy, etc., are not enough to engage employees. Employee engagement is offering a fulfilling job where they can see progress. For example, if your performance plan sounds like, close the deal with the customer, collaborate with them, and share resources, the employees will not be satisfied or happy. To engage your employees, provide a learning opportunity, listen to their concerns, and guide them along the way. This kind of engagement makes your employees increase their productivity qualitatively and quantitatively. Eliminating the barriers from the way of your employees makes them stay loyal. A study asserts that the nature of work forms 25% of the overall factors that engage employees, and the right job is four times more important than money and culture.  

The management philosophies evolved in different ways since the 1950s in the following order.  

1. Annual reviews  
2. Performance management system leveraging technology  
3. The importance given to the rating declined. Regular check-ins came into play  
4. Continuous and agile performance management system with goals alignment and autonomy  
5. Engagement focused productivity. Data-driven performance management system  

 What kind of work environment engages employees today?  

1. Transparent and open culture  
2. Free flow of knowledge and resources  
3. Continuous feedback  
4. Rewards and recognition based on abilities  
5. Development plans  

Introduction of AI Engages the Digital-Savvy Employees 

CEOs and CHROs believe that AI in training and service sectors will increase dramatically in the next two years. The automation and implementations of AI in the everyday workflow are already happening. The digitally transforming workplaces engage employees and also the new job candidates during the AI-assisted onboarding process.  

Redefined Leadership to Coach Employees and Deliver Feedback  

In earlier days, leadership was equivalent to a nagging boss, but not anymore. True leadership, today, is mentoring, coaching, and guiding the employees in improving themselves and innovatively handling projects. Companies like Patagonia and Cisco prove that employees who have a lot of meaningful dialogue with their managers tend to be high performers. Redefined leadership traits include the following.  

1. Inclusion   
2. Team building   
3. Growth mindset  
4. Building a learning culture within the team  
5. Open communication  
6. Result-driven   

The managers with the above-mentioned traits are engaged, who in turn, engage their team members and build trust in leadership among the employees. Managers should be evaluated based on how engaged their team is.   

Performance and engagement are interconnected, and we must adapt to the changing world to thrive. What are your thoughts?