Performance management becoming ever more important

HENRY’s (Finnish Association for Human Resource Management) Reward Network’s December agenda consisted of the ever-timely performance management. The meeting included discussions on e.g. target setting, follow-up and feedback, performance evaluations and rewarding. Visiting speakers included the Amer Sports HRM Director Miika Temisevä and Outotec’s HR VP Pekka Hukkanen. How do these leading companies set targets, measure and steer performance? What is the future of performance management?

Miika Temisevä emphasized in the beginning of his presentation that all action needs to have a purpose and meaning. The significance of work is highly emphasized especially among the younger generations’ attitudes. Performance management also needs to have a clear meaning – why and how performance is managed, how it is rewarded and what all this aims to achieve?

In the global company of Amer Sports consisting of several different brands and dozens of countries change is always present. Changes take place rapidly and continuously, which necessitates agility and timeliness from performance management also. In this kind of environment, it is essential to remember that the same models and practices won’t fit everyone, Miika reminds. Different kinds of brands, countries and cultures require different kind of performance management and remuneration. Profit sharing, which supports joint actions, is best suited in one area – elsewhere other models supporting individual performance are the right solutions. Similarly, communications need to be tailored according to different brands’ and countries’ needs.

Pekka Hukkanen in his presentation described Outotec’s journey towards common global performance management and rewarding practices. Unlike Amer Sports, Outotec has globally only a single brand and its operations are developed based on ”one company” – principle. Outotec, which operates in dozens of countries, does not forget about cultural or regional differences, however. Global frameworks provide room for local adaptations, if business or market needs so require.

Outotec has for years developed managers’ know-how in performance management and remuneration around the world. Models and processes have been developed towards even simpler features and managers and encouraged to use healthy common sense. All details are not instructed in detail and responsibility of performance management is shifted increasingly to each individual and manager. In addition to simplicity Pekka underlined the importance of conversation. The operating models “force” managers and employees to discuss performance and competencies, which is more important than “performance rating” in itself.

In our view according to the conversation and other experiences we have, it is clear that the significance of performance management will be increasingly highlighted in the future. In any work ever-better management of performance and results is needed and simple tracking of working hours in not enough. More agile, simpler and transparent models are surely needed, but performance management will remain one of the most important and challenging sections of overall management in the future. However, performance management will not remain a privilege of managers only. The role of leaders as enablers of making results will be central in the future also, but simultaneously individual responsibility over one’s own performance and competencies will be shifted to her/himself.

Samuli