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Performance Management

Why Are We Still Separating Learning and Performance Management Systems?


It’s safe to say pretty much all organisations deal with performance management and learning and development initiatives in their lifetimes. But whether those initiatives are being conducted in the most efficient way is another question entirely.

For too long the issues of performance management and learning and development have been separated, and that’s extended to learning and performance management software and systems. The problem is, we just don’t think keeping the two systems separate from each other is an effective way to address performance management meaningfully.

We’ll dive into what a performance management system is and how organisations are enhanced by capability-driven performance management over the traditional performance review process.

What is a performance management system?

A performance management system is a structured process designed to help organisations monitor, evaluate, and improve employee performance. It’s a platform that encompasses a range of performance initiatives, including aligning team goals with organisational objectives, providing feedback and coaching, and recognising and rewarding achievements.

Why learning and performance management shouldn’t be separate

Traditionally, performance management and learning management have been separate initiatives. But we don’t think we should keep doing something simply because that’s just how it’s always done—to us, that just sounds like doing something because it’s easy, and not because it’s meaningful.

Just ask anyone about performance management as it stands and they’ll tell you that it’s broken, it doesn’t work, and it has no impact.

This is why it’s so crucial to link learning and performance management. When learning and performance management are siloed, you get a plethora of problems that actively hinder performance improvement and business success.

First, a learning management system will store its own data just as a performance management system does, but that means you get stuck with duplicate data entries (because learning and performance data has a significant overlap), disjointed processes, and a complete lack of synergy between the two. This is a waste of everyone’s time and resources. It also means you miss development opportunities that will actually impact performance.

It’s also hard to align individual goals with learning opportunities when performance reviews don’t identify any actionable development opportunities (a problem that arises when the review cycle focuses on past performance more than future development). Then any learning that’s done won’t actually have any tangible impact on the business.

If employees don’t receive targeted training that improves their performance, then they aren’t improving their capabilities or closing the business’s capability gaps. Not only will this increase employee turnover as employee engagement will drop (and they want their employers to invest in their development), but it will also lead to an overall stagnation of the workforce.

The case for capability and competency-driven performance management

The important thing to keep in mind is this: Mastering capabilities = achieving business goals.

Capabilities are the skills, knowledge, behaviours, processes, and tools that combine to deliver organisational outcomes. They’re the fundamental building blocks that make an organisation able to meet its strategic priorities, so it should come as no surprise that they’re the key to improving performance.

That’s why capability-driven performance management is so essential for actually improving business success. Not only do they outline the business and role-specific capabilities that your organisation and employees need to succeed, but they also come with ready-made competencies that make measuring and developing performance so much easier.

What are competencies, you ask? They’re the levelled scale of proficiency that capabilities are measured with. The number of competency levels capabilities have will vary from organisation to organisation, but as long as you have a way to mark beginner (i.e. needs development), intermediate (where expectations are met), and advanced (performance expectations are exceeded), then you should be all set.

Just don’t include too many levels—you might think it’s adding an extra layer of nuance to performance evaluations, but you could just be muddying the waters.

How to implement capability-based performance management

Actually implementing capability-based performance management is where it can get tricky, simply because overhauling what we’re used to (in this case, traditional performance management processes) is so difficult.

We’ve found four key strategies for implementing capability-driven employee performance management that make the process easier.

  1. Evaluate current systems and processes
  2. Select a capability-based technology solution
  3. Align goals and capabilities
  4. Provide training and support.

Evaluate current systems and processes

Switching from your traditional performance review process to a new performance management method can be daunting, we know. After all, you’re used to the way things were, and everything is set up to make sure the employee review process happens that way. Not only that, it’s often about convincing other stakeholders in the process to make the switch. But all you need to do to get started is find which areas in your current performance management process can be integrated with capability-driven performance.

Finding opportunities for integration in your current performance management and learning systems is a simple process of:

  1. Assessing the current performance management system
  2. Analysing current processes
  3. Identifying process gaps.

Assess the current performance management system

Assess your current performance management system and frameworks to understand how they evaluate employee performance. Does it provide capability assessments or is it primarily focused on output and results? If it’s the latter, then this is a good place to integrate capabilities as part of performance management. It’s a good opportunity to design capability frameworks with which to track employee performance.

Analyse current processes

Analyse current processes including goal setting, performance reviews, feedback mechanisms, and development planning. Where are the bottlenecks or redundancies where processes fail to add value? This will help determine how effective and efficient these processes are and identify touchpoints where capability assessments could be integrated. This means deriving goals from capabilities so that employee goals progress capability improvement, using capabilities and their assigned competencies to guide performance appraisals, and introducing feedback mechanisms that focus on developing key capabilities (such as training managers to provide fair capability-based coaching and support).

Identify process gaps

Identifying process gaps where current processes fail to support the assessment and development of key capabilities, or where performance data is incomplete or misaligned with capability development goals. This might also highlight where manual tracking and managing of performance may be inefficient, and where businesses may be better served managing performance management and capabilities with HR software.

Select a capability-based technology solution

Choose the best performance management software for your organisational needs. The easiest solution here is to choose performance management software that can not only automate the whole performance management process for you, but also has a focus on capabilities as a basis.

But here’s the thing: Traditional PMSs aren’t capability-based systems. They approach employee performance evaluations in the traditional sense, in that they approach the evaluation process as a way to track past performance, rather than to give constructive feedback or assign and provide employee development. They’re more like employee performance review software than performance development software.

This is why we believe in using a performance learning management system (PLMS) when it comes to software solutions. They have the basic features of PMSs (such as employee performance tracking and performance evaluations) while also focusing on the learning and development aspect that is necessary for improving performance. But that’s not all.

PLMSs in particular focus on capabilities (and the competencies that measure them) as part of performance development. They can identify which capabilities need to be developed to improve employee performance and drive business strategy—and then help assign relevant and targeted training to develop those capabilities. It might seem like a small thing, but it takes a lot of the guesswork (and manual labour) out of performance and learning management, and that frees up time for HR to focus on more complex tasks.

You can also use workflow automation technology like Momentum to help you here as well. It takes a lot of the manual guesswork and labour out of the performance appraisal process by automating and centralising goal setting and review management, as well as allowing users to define the associated performance milestones. It keeps your learning and performance data in one central location to enable data sharing and real-time insights.

Align goals and capabilities

When it comes to aligning employee goals and capabilities with performance goals and development plans, the first step is kind of a no-brainer: You need to understand your core capabilities. These are the capabilities that are crucial for your business to achieve its goals. If you know your core capabilities, then you can start goal setting. And if you can start goal setting, then you can assign relevant development programs.

When defining key capabilities, you also need to define:

  1. The business’s long-term strategy, mission, and values, and how the capability slots into that landscape. (Capabilities are derived from strategy, so if you don’t have this first step down-pat then you’re in trouble.)
  2. The purpose of the capability in the market, and in terms of current capabilities in the organisation.
  3. The outcome you want to see from the capability in the name, so employees, managers, and leaders know what the capability is about from a glance.

Set SMART goals (that is, goals that are specific, measurable, achievable, relevant, and time-bound) to guide your performance development initiatives. These will help you track employee progress. For example, the specific aspect of a SMART goal is the clear “outcome” that employees recognise, and the measurable aspect is what your actual metrics will be (i.e. how you will track progress).

Remember: Just because you have all these capabilities doesn’t mean all of them need to be developed as part of your learning and performance management program (at least not immediately). Some capabilities just won’t be a high priority to develop straight away, and that’s fine. Organising capabilities into a business capability heat map can identify which capabilities are most crucial to develop now, based on their impact on business strategy versus availability in the workforce.

Provide targeted training and support

This is perhaps the most obvious method of integrating capability-based performance management. Capabilities and performance can’t be developed or improved if they have no dedicated training to actually improve them. Not only that, but training is useless if there is no support provided to ensure that employees retain the knowledge learned throughout training.

Start with a training needs analysis to identify, well, your training needs. It’s a process of assessing current capabilities, identifying future capabilities, and assessing the capability gaps between the two. From there you can determine the best method of training, whether it’s a hands-on workshop, a formal course delivered by an instructor, or continuous coaching and mentorship.

Simply providing training isn’t enough to ensure that performance improves. You need to build a strong learning culture within your business if you want meaningful change. LinkedIn’s 2024 Workplace Learning Report found that a strong learning culture improves employee retention by 57% and internal mobility by 23%.

The best way to build that strong learning culture is by providing continuous feedback, whether that’s through coaching, regular check-ins, or one-on-ones between employees and managers. The idea is that continuous feedback should support and reinforce incremental changes in employee behaviour and actions that result in performance and organisational improvement.

What if you don’t integrate your learning and performance management system?

So, what happens if you keep your learning and performance management systems separate? In our opinion, it’s a sure-fire way to create confusion and handicap an organisation’s ability to be truly strategic about its performance and development initiatives.

Misalignment of goals and development

It’s pretty self-explanatory: You’ll have performance goals stored in one location, and learning initiatives stored in another. With no overlap, employees won’t get that connection between the two that helps align employee goals with training.

Instead, you’ll see employees developing skills and capabilities that don’t directly contribute to their performance targets or the wider organisation’s strategic objectives, all because learning programs won’t be designed to address specific performance gaps. This is just a waste of time, money, and resources (not to mention employee engagement drops if they lack a sense of purpose).

Inefficient processes

When learning and performance are kept apart, your learning and performance data is separated too. That means redundant data entry and fragmented reporting that can’t provide any meaningful insights about employees’ performance or development programs. Reporting tools need to be in conversation with each other if you want to get value from learning and performance reviews–integrated systems provide richer data analytics and insights into how learning activities impact performance.

Without integration, organisations miss out on these valuable insights, with managers inputting the same information about employee performance in into both performance and learning management systems. Then when it actually comes to reporting, data needs to be pulled from multiple sources, decreasing their accuracy.

Poor employee satisfaction

53% of Gen Z workers believe that they can develop their careers through learning. So who are we really helping if we keep learning and performance management programs separate, especially when Gen Z are the next big generation in the workforce? Employees are more likely to stay with a company that actually invests in employee development, and given siloing the issues of performance and development is detrimental to that, it’s no wonder that employee engagement (and, by extension, productivity) could drop.

Strategic disadvantages

Siloed learning and performance management make training your current workforce hard enough, to say nothing of talent acquisition and workforce management. It’s one thing not to know your current capability gaps and be able to assign relevant development there, but if you have no idea what you have, what you need, and what you need to do to get what you need, then you can’t develop talent.

Integrated learning and performance really help with job scorecards, because the capabilities (and competencies) outlined by learning and performance management form the basis of job scorecards. This means makes it easier to coach employees and hire new ones—so without it, you’ll continue to hire talent that actively contributes to capability gaps that you’re just not equipped to address. You’ll also overlook your high-potential employees, which means you’ll be shooting yourself in the foot when it comes to succession planning down the line.

Key takeaways

We really can’t express how important it is that learning and performance data is kept together in one place. It might seem minor, but it saves a lot of time in the long run by pulling all your data from one single pool. It means better, faster, and more accurate analysis of performance and learning trends, and that makes it easier to assign targeted development to drive business transformation.

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