Managing new generation performance: a great challenge that McKinsey explains well in its article.
Companies that follow with purpose are more likely to create significant long-term value generation, which can lead to better financial performance, higher employee engagement, and greater customer trust.

Focus on the purpose of the organization

What is the core purpose of your company and where can you make a unique and positive impact on the market? Now more than ever, you need answers to these questions: Purpose is not a choice but a necessity.

Managers and HR managers (personnel directors or whatever)  can articulate and shape desired individual mindsets and behaviors related to purpose by identifying “moments that matter” in company culture and translating purpose into a set of leadership and employee norms and behaviors.

For example, commercial vehicle manufacturer Scania organizes an annual “Climate Day”, during which the company stops operations for an hour to hold sustainability training courses, in line with its aim to “drive the transition to a sustainable transport system”.

Managers and HR managers (personnel directors or whatever)  can also ensure that clear changes are made to recruitment and skills development processes by determining the characteristics of a “purpose-driven” employee and incorporating these attributes into recruitment, development and succession planning.

Managers and HR managers (personnel directors or whatever)  can also incorporate purpose-driven metrics into compensation and performance decisions. Companies across all industries have been undertaking these metrics lately. For example, Seventh Generation, a maker of cleaning and personal care products, recently included sustainability goals for the company’s entire workforce in its incentive system, in service of its goal of being a zero-waste company by 2025. Shell plans to set short-term carbon emissions targets and link executive compensation to performance against them.

Think deeply about talent

Organizations that can reallocate talent in step with their strategic plans are more than twice as likely to outperform their competitors. Managing next generation performance is useful for connecting talent to value top talent should be moved into critical roles that drive value. This means moving away from a traditional approach, where critical roles and talent are interchangeable and based on hierarchy.

Bringing the best people into the most important roles requires a disciplined look at where the organization truly creates value and how top talent contributes. Consider Tesla’s effort to create a culture of fast-moving innovation or Apple’s obsessive focus on user experience. These cultural priorities are at the heart of these companies’ value agendas. The roles needed to transform these priorities into value are often linked to research and development and filled by creative and talented people.

To enable this change, managers and HR managers (personnel directors or whatever)  should rigorously manage talent by creating an analytics capability to mine data to hire, develop and retain the best employees.

Create the right motivation for employees

Companies know that better work experience of employees means better profitability. Successful organizations work together with their people to create personalized, authentic, and motivating experiences that tap into the purpose of strengthening individual, team, and organizational performance.

Managers and human resources managers (personnel directors or whoever) play a crucial role in shaping the employee experience. Organizations where HR facilitates a positive experience for employees are 1.3 times more likely to report organizational outperformance, one has shown McKinsey research . This has become even more important during the pandemic, as organizations work to build team morale and a positive mindset.

Managers and human resources managers (personnel directors or whoever) should facilitate and coordinate the employee experience. Organizations can support this by helping HR evolve, strengthening the capabilities of the function so that it becomes the architect of the employee experience. Airbnb, for example, has renamed the CHRO role as global head of employee experience. PayPal has focused on HR capabilities and processes to create a better employee experience, including coaching HR professionals on measuring and understanding that experience and using technology more effectively.

Introduce next-generation performance management

Managing next-generation performance for companies that are experimenting with a wide variety of approaches to improve the way they manage performance is certainly not easy but essential. According to a global McKinsey survey , half of those interviewed said that the performance management did not have a positive effect on employee performance or the organization. Two-thirds reported implementing at least one significant change to their systems performance management.

We identified three practices – manager coaching, linking employee goals to company priorities, and differentiated compensation – that increase the likelihood that a system of performance management positively influences employee performance. HR plays an important role in incorporating these practices into performance management by supporting the goal-setting process, decoupling compensation and development discussions, investing in manager capacity building, and incorporating technology and analytics to streamline the performance management process.

To strengthen an organization’s agility, HR should ask the following questions:

• We can enable more effective decision making by pushing decisions to the edges of the organization, creating psychological safety that empowers people and builds capacity?
• How can we accelerate the shift to a more diverse and deeply motivated talent base, supported by a human-centered culture that enables superior performance and superior experience?
• Which organizational areas or end-to-end value creation streams would benefit most from shifting to new ways of working and organizing?