An overwhelming number of companies use annual or semi-annual performance appraisals that focus on ratings and employee weaknesses, without commensurate tools to engage or develop their employees. Furthermore, too many managers believe that compensation is all that matters, and if the pay and benefits are good, people should be motivated. Numerous studies, however, show that once a certain level of compensation is attained, feelings of empowerment, purpose and achievement are what really matter. Employees need to know they are valued, valuable and trusted with the organization’s customers and assets. All too often, however, performance management systems, which are usually tied to compensation, send the opposite signal. 

Engagement and employee development are especially crucial with today’s multi-generational, technology savvy workforce. When organizations worry less about rating, ranking and tracking employees, and focus more on inspiring employees to stretch their skills and expand their leadership capacity, they are better prepared to meet today’s challenging new business situations. Leaders must appreciate that the technological revolution means employees can create value in ways that were never contemplated by traditional performance-management systems. Today, they interact with customers and each other in new, innovative and creative ways to produce economic benefit. 

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Stuart Levine


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