Building the future from within: 2024 trends in performance management

As the pace of change in our world of work accelerates, staying ahead of the curve in performance management is critical. Effective performance management is not just a process — it's a strategic tool for driving continued employee development, internal mobility, succession planning, and ultimately the health and stability of a successful organization. It offers a systematic framework so organizations can more efficiently assess skill and performance gaps across their workforce, understand the efficacy of training by tracking employee performance after learning, and when paired with succession planning, is a key part of not just developing employees, but of identifying and retaining high potential talent.

Understanding the latest trends in performance management is an important part of navigating the evolving expectations employees have of their employers and ensuring performance management is driving both employee and organizational growth. The 2024 Trends in Performance Management – From Compliance to Agility whitepaper digs into the results of a global customer survey launched earlier this year, and the data showed the connection between higher review compliance and achieving greater insights, increased mobility, and higher productivity.

Let's examine the whitepaper’s key takeaways and consider how these insights can help you achieve your performance management goals.

Key findings: Elevating performance management to foster growth

Compared to previous methods, organizations using Cornerstone’s performance solutions save time, reduce stress and avoid headaches. These applications drive improved compliance and efficiency, addressing common performance management challenges. Automation streamlines review tasks, boosts employee and manager engagement, and ensures compliance. These improvements result in more accurate data, support compliance audits, and enhance decision-making with senior leaders.

Organizations leveraging Cornerstone Performance gain a clearer understanding of both individual and organizational strengths and gaps. This means better data collection on current employees beyond just new hires. The data includes performance scores, capabilities (skills and competencies), and readiness for internal growth, which helps organizations make more informed decisions about development and talent management.

By capturing better data on high-potential employees, organizations are leveraging Cornerstone Performance to enhance internal mobility and execute succession planning. Internal mobility focuses on increasing visibility for employees seeking new career opportunities within the organization, making it an employer-enabled but employee-driven process. In contrast, succession planning is an employer-driven activity that uses a top-down approach to evaluate and plan for critical positions, such as executive roles. While both strategies overlap, they rely on valuable insights into employees’ capabilities, performance and ambition to be effective.

Organizations are seeing improved productivity with Cornerstone Performance by setting better milestones and achieving greater goal attainment. This improved performance management process is executed in two ways: first, it leverages technologies for greater efficiency and second, it enables more precise goal formation, agility, and alignment. While the technology creates more time for productive work, refined goal-setting drives better results.

So what? How performance management fosters mobility and prevents turnover

Performance management goes beyond evaluating past achievements to justify compensation; it's a strategic tool for proactively closing capability gaps, increasing employee engagement, and ultimately supporting internal mobility and succession planning. Here's how it can make a difference:

Effective performance management aligns employee goals with organizational objectives. This alignment creates clear, measurable pathways for success that ensure employees play an active part in driving business outcomes. In fact, the survey found that organizations having more regular performance discussions, specifically setting quarterly goals, see a 50% higher compliance rate (performance review participation and completion).

Continuous performance management provides ongoing assessments and feedback, offering valuable insights into employees' strengths and areas for improvement. This approach enables managers (and organizations) to create targeted development plans with AI-recommended learning tied to competency assessments. These plans both equip employees for current roles and prepare them for future roles, ensuring qualified internal candidates are ready to step in when key positions open up.

Regular feedback and development discussions are crucial for keeping employees engaged and motivated. When employees see their progress monitored and opportunities for advancement within the company, they are more likely to stay and contribute to the organization's success. This engagement is key to building a robust internal talent pool for succession planning. In fact, according to a Forbes study, 41% of employees cited the lack of growth opportunities as a key factor in their decision to leave an organization.

Continuous performance management identifies employees who excel in their current roles and show potential for greater responsibilities. Regular evaluations enable managers to spot talent early, making cultivating future leaders from within the organization easier.

Well-structured performance management ensures that promotions and internal movements are based on merit and documented criteria. This transparency supports fair and objective decision-making about who should move into new roles or leadership positions, reducing bias and ensuring the most qualified candidates for succession. The study found that survey respondents using Cornerstone Performance for internal mobility are twice as likely to achieve an internal promotion rate of 20% or higher. In fact, nearly 80% of respondents reported an internal promotion rate exceeding 6% in 2023, a success we proudly celebrate with our customers.

Performance management encourages employees to grow and embrace new challenges by emphasizing continuous feedback, coaching, and development. This culture is vital for internal mobility, as it empowers employees to pursue career advancement within the organization, knowing they will be supported and developed along the way.

Take Virginia Commonwealth University (VCU), for example. With 6,800 employees, VCU needed a new performance management process that also enhanced its focus on career development. After partnering with Cornerstone, VCU’s new talent management structure focused on individual competencies rather than duties and responsibilities, meaning employees progressed through an established career path based on their knowledge, skills and contributions.

The system brings learning, growth, skills, and capabilities together for equitable, concrete advancement. According to VCU Project Manager for Decision Support Robert Houghtaling, “This provides an opportunity for VCU staff, like faculty, to be recognized and rewarded for high performance and career development and promoted internally as a VCU employee. This career pathing work is a strong retention strategy and provides the clear structure for advancement, which is what VCU employees were asking for throughout campus.”

Linking learning and performance creates a powerful cycle that automatically prompts employees to complete their development plans during reviews. This proactive approach not only drives personal growth but also significantly impacts retention. As gleaned from the survey, organizations prioritizing internal promotions see a 27% increase in employees staying for six or more years when promotion rates reach 15% or higher.

In today's fast-evolving workplace, aligning your performance management practices with the latest trends is crucial. It's about more than just meeting current demands — it's about laying the groundwork for your organization's future. Integrating data-driven practices, continuous feedback, and targeted capability development into your strategy allows you to cultivate a robust talent pipeline ready to take on business-critical and leadership roles, ensuring you secure long-term success.

Ready to elevate your performance strategy and build your future from within?

Download the 2024 Trends in Performance Management whitepaper and schedule a demo to learn how Cornerstone Performance nurtures continued development via a unified talent management system.