Bots v bosses in the performance management battle

Few workplace processes are as dreaded and lamented as performance management. Despite widespread frustration among employees, managers and leaders, the stakes remain high, writes Jonathan Tabah.

Gartner research shows that 71 per cent of CHROs believe managers are falling short in their performance management responsibilities. At the same time, employees aren’t receiving the feedback needed to excel.

These gaps not only impact individual performance, but also broader organisational success. A Gartner survey from May 2024 found that only 52 per cent believe performance management helps their organisation achieve business goals – a figure that has seen little improvement since then. It’s time HR leaders rethink the status quo.

Perceptions of bias or unfairness in performance management can prevent employees from realising the benefits. Increasingly, employees are viewing AI as less biased than humans in performance decisions. Many believe algorithms could deliver fairer feedback than managers, particularly regarding compensation.

While employees are open to the idea that AI can enhance workplace fairness, scepticism remains. Our research found that only 34 per cent of employees agree that algorithm-driven feedback would be fairer than feedback from their manager.

HR leaders are responsible for improving the effectiveness and fairness of performance management within their organisations. To do so, they must thoughtfully integrate GenAI into their strategies.

Evaluate GenAI benefits against pain points

To leverage GenAI effectively, HR leaders must first identify the key pain points of both managers and employees and then determine how the technology can address them.

The most common performance management complaints tend to revolve around the process being overly complex and time-consuming; not relevant to daily work or business needs; or disengaging and unmotivating.

Collaboration with managers and employees is essential to understanding these challenges. They can then assess whether GenAI is the right tool to address them. For example, if fairness is a concern, GenAI can help evaluate feedback for bias. If technology and time are barriers, GenAI can summarise data and generate insights from multiple feedback providers and HR systems.

A new survey found the top use case for GenAI in performance management is using it to summarise feedback, with 38.3 per cent of talent management leaders currently doing so and a further 28.7 per cent with plans to. Continuous assessment of GenAI capabilities will also be critical as the technology evolves.

Assess GenAI readiness

Some workplaces are more open to GenAI capabilities than others. Surveys and focus groups can be great tools for assessing workforce readiness and ensuring GenAI enhances performance.

HR leaders should combine quantitative survey data with qualitative feedback by equipping managers with tools to get a broader view of workforce readiness. Standardised GenAI statements reflecting desired performance state should be shared with managers, such as using GenAI to level bias in performance management, increase efficiency and employee satisfaction.

In addition, question guides can support managers in gathering candid employee input, such as whether employees are comfortable with GenAI drafting goals or suggesting performance ratings (with human oversight). Feedback should also be collected to understand GenAI’s limitations in performance management and inform ongoing improvements.

Employee trust boosts adoption and satisfaction

Trust is a top barrier to AI adoption. Building trust is essential when integrating GenAI into performance management, which can be driven by increasing transparency into decision making and involving employees in determining how AI can be leveraged within the performance management process.

Start by equipping managers and employees with the rationale for how and why GenAI should be introduced in performance management. They need to understand how decisions will directly impact them to enable them to move forward in good faith.

Then, engage employees and managers directly in the discovery and experimentation process for applying AI in performance management. They’ll trust the output of that process so much more if they know that “some of their own” were included in it.

Better organisational performance

Improving performance management boosts employee engagement and business outcomes. Gartner research indicates that when HR aligns performance management with employee and business needs, organisations experience higher perceptions of fairness and accuracy, increases in employee performance, greater engagement and improved overall workforce performance.

By increasing the utility of performance management, organisations drive better outcomes for everyone. As employees begin to recognise the potential of GenAI, now may be the ideal time to integrate this technology into performance management.

Jonathan Tabah is a director of advisory in the Gartner HR practice.