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A BUSINESS RESEARCH QUARTERLY Essay CEDE Business Research Quarterly Talent management challenges during 2021, Vol. 24(3) 233-240 The Author(s) 2021 Article reuse guidelines: COVID-19 and beyond: Performance sagepub.com/journals-permissions DOI: 10. 1 177/2340944421 1009528 management to the rescue journals.sagepub.com/home/brq SAGE Herman Aguinis'D and Jing Burgi-Tian Abstract The COVID-19 pandemic has resulted in significant talent management challenges including (a) hiring freezes and layoffs; (b) salary freezes, canceled bonuses, and pay reductions; (c) how work is done (i.e., teleworking); and (d) increased employee stress and burnout. Also, COVID-19 has made it evident that many organizations do not implement state- of-the-science performance management systems and, instead, have just performance appraisal systems that typically involve a once-a-year evaluation and review, little effort to provide feedback and coaching on an ongoing basis, little alignment between employee performance and the organization's strategic goals, a focus on past performance only, and ownership by the human resources function instead of those rating and being rated. Thus, the lack of value contributed by the usual performance evaluation and review process is the reason why so many organizations are postponing or even completely discontinuing performance evaluations. We argue that when implemented using evidence-based recommendations, performance management (rather than appraisal) serves important administrative, strategic and communication, developmental, organizational maintenance, and documentation purposes and therefore can be particularly useful in addressing contemporary talent management challenges. We offer five recommendations on how to adapt and improve performance management that will help organizations navigate crises like COVID-19 and, just as importantly, allow them to thrive after the crisis is over: (1) measure results in addition to behaviors, (2) measure adaptive performance, (3) conduct stay interviews to retain top performers, (4) implement a multisource performance management system, and (5) collect and use performance promoter scores. JEL CLASSIFICATION: J5 Labor-Management Relations, Trade Unions, and Collective Bargaining; MI Business Administration; M5 Personnel Economics Keywords COVID-19, talent management, employee development, leadership, performance management, performance measurement Introduction The global economy has contracted significantly due to the 'Department of Management, School of Business, The George COVID-19 pandemic. During the second quarter of 2020, Washington University, Washington, DC, USA the U.S. economy dropped 35% compared to the same Department of Management, School of Business and Center for period of time last year (Reinicke, 2020), and the Eurozone Excellence in Public Leadership, The George Washington University, Washington, DC, USA economy decreased by 12.1% on average compared to the first quarter of the year. Spain experienced the largest drop Corresponding author: at 18.5% (Amaro, 2020). Herman Aguinis, Department of Management, School of Business, The George Washington University, 2201 G St NW, Washington, DC These financial hardships are affecting talent manage- 20052, USA. ment in significant ways. First, many companies have Email: haguinis@gwu.edu Cc 1 3 Creative Commons Non Commercial CC BY-NC: This article is distributed under the terms of the Creative Commons Attribution-NonCommercial 4.0 License (https://creativecommons.org/licenses/by-nc/4.0/) which permits non-commercial use, reproduction and distribution of the work without further permission provided the original work is attributed as specified on the SAGE and Open Access page (https://uk.sagepub.com/aboutus/openaccess.htm).234 Business Research Quarterly 24(3) implemented hiring freezes and layoffs. For example, as of the end of March 2020, 42% of companies in the United States and Canada froze or reduced hiring, while another 28% were considering doing so (Willis Towers Watson, 2020). In the United States, the leisure and hospitality industry lost 7.7 million jobs alone in April 2020, which represents 47% of total positions (Franck, 2020). Similarly, about 397,000 people across the European Union lost their jobs in April (Davies, 2020). Even industries traditionally perceived as secure such as high tech experienced unprec edented layoffs. In fact, tech companies in Silicon Valley have cut more than 40,000 jobs between March and May, 2020 (McBride & Cannon, 2020). In the United Kingdom and Europe, about 38% of tech companies have frozen most of their recruitment (Wauters, 2020). As a second set of talent management challenges, many workers who are able to keep their jobs face pay freezes, canceled bonuses, and pay reductions. Globally, 29% of employers have implemented salary cuts, 42% a salary freeze, and 37% a bonus reduction (Korn Ferry, 2020). Across the world and in all industries, 67% of executives, 56% of middle managers, and 49% of professionals and supervisors experienced cuts in pay (Korn Perry, 2020). Athird signicant talent management challenge directly attributed to the pandemic is how work is done. Teleworking has become a norm for many employees, and as of May 2020, 76% of companies require that all or most employ- ees work from home (McKinsey, 2020). Before the pan demic, only 5.4% of the workforce in the EU-27 countries regularly worked from home, and only 15% of the work force had ever teleworked (European Commission, 2020). During the pandemic, it is estimated that about 25% of employment took place in sectors that were \"teleworka ble\" (Fana et al., 2020). At a time when at least 62% ofthe workforce was working remotely (Brenan, 2020), employ ees did not have access to physical resources and equip- ment in the office as they used to. In addition, under teleworking, spontaneous interpersonal communication is reduced to a minimum; organizations need to rely on infor mal communication networks to disseminate knowledge, facilitate innovation, and increase productivity (Nonaka, 1994; Rogers, 1983). Finally, the pandemic has exacerbated employee stress and burnout. In the United States, 45% of employees reported that they were burned out in May 2020. COVID 19 has contributed to this unusually high level of stress because of increased workloads (45%); the need to juggle personal and professional life (35%); lack of communica- tion, feedback, and support (32%); increased time pres- sures (30%); and unclear and changing performance expectations (26%) (Eagle Hill Consulting, 2020). In addi- tion, contrary to a commonly held belief, working from home can contribute to stress, which has a negative impact on employees' wellbeing and performance (Al-Badarneh et al., 2019; Demerouti et al., 2014) and consequently, the performance of the organization. The reason is that the reduced commute time and exible hours are often canceled out by the expectation that more should be done with less. For example, before the pandemic, 66% of remote tech professionals believed they were bLnned out, compared to 64% of employees who went into an office daily (Swanner, 2019). In summary, as organizations of all sizes and across industry types experienced significant revenue reductions and budget shortfalls, they faced monumental talent man agement challenges including hiring freezes and layoffs; salary freezes, canceled bonuses, and pay reductions; how work is done (i.e., teleworking); and increased employee stress and burnout. These are challenges that, to some extent, had already existed. But, they have been amplied as a result of the pandemic. Performance management is a poorly understood and therefore often underutilized talent management function that can help organizations navigate crises such as the COVID19 pandemic. Moreover, implementing evidence based performance management practices can not only help address pandemicrelated talent management chal- lenges but also allow organizations to thrive after the pan demic is over. We address these issues in detail in the following. Performance management: a poorly understood and often underutilized talent management function Performance management is \"a continuous process of identifying, measuring, and developing the performance of individuals and workgroups and aligning performance with the strategic goals of the organization\" (Aguinis, 2019b, p. 8). Therefore, performance management is criti- cal for talent management because it helps employees become more competent, committed, and motivated; facil itates organizational change; claries organizational goals; differentiates good from bad performers; and helps organi- zations make fairer and more appropriate administrative actions, which in turn protects organizations from lawsuits (Aguinis et al., 2011). Without a good performance man- agement system, organizations are unable to makc fair per- sonnel decisions (e.g., layoffs, bonuses, pay raises, and promotions), effectively motivate and engage their employees, retain top talent, collect information to allocate resources appropriately, and address human resource dis ruptions (Aguinis, 2019a; Claus, 2019). Due to its critical role, there is a vast scholarly literature on performance managementimostly originating in organizational behavior and human resource management, but also in other domains including psychology, account- ing, information systems, public administration, market ing, health and hmnan services, and adult learning (e.g., Aguinis, 2019a; DeNisi & Murphy, 2017; Farndale et al., Aguinis and Burgi-Tian 235 2019; Schleicher et al., 2018). But, performance manage- ment is often equated incorrectly with performance appraisal and performance reviews (Aguinis et al., 2011). Performance appraisal is the measurement and description of an employee's strengths and weaknesses (Aguinis, 2019a), and it is just one component of performance management. Several characteristics differentiate performance man- agement from performance appraisal. First, performance management is an ongoing and continuous process, whereas performance appraisal involves typically just a once-ayear evaluation and review and little effort to pro- vide feedback and coaching for improvement on an ongo ing basis. So, although performance management is ongoing, it is the opposite of \"policing\" employees in a way that creates more stress and demands; rather, it is an ongoing conversation about performance and how super- visors and the organization can provide additional support when needed. In fact, we see performance management as a tool for ethical, humane, and responsible leadership because ongoing conversations about performance are also important for supervisors to learn whether employees may be overburdened, help them maintain a healthy worklife balance even when working from home, and become aware of personal circumstances that may be impeding performance. Second, performance management includes an alignment between employees' activities and outputs and the organization's strategic goals and, consequently, makes the employee's contribution to the organization explicit. Thus, performance management, in contrast to performance appraisal, is consistent with calls to embed talent management practices in its broader context (Thunnissen & Gallardo-Gallardo, 2019) and consider the interplay between macro and micro levels of talent sys tems (King & Vaiman, 2019). Third, performance manage- ment focuses on both performance in the past (performance appraisal) as well as performance in the future, using per- sonal development plans in addition to incentives that align individual, unit, and organizational goals (Aguinis et al., 2013; GomezMejia et al., 2015). Note that develop ment plans are not just about the upcoming year. Rather, they address four related but different questions: (1) How can I continually learn and grow in the next year? (2) How can I do better in the future? (3) How can I avoid perfor mance problems faced in the past? (4) Where am I now and where would I like to be in terms of my career path? (Orlando & Bank, 2016). Finally, the ownership of perfor mance management lies within all participants of the pro- cess, including both raters (supervisors, peers) and ratees (employees), whereas performance appraisal is a function mostly owned by the human resource department (Aguinis et al., 2011). Unfortunately, many organizations implement only per formance appraisal instead of performance management. Although 83% of companies globally require employees to set performance goals, more than half of the individual goals are set in a vacuum and without creating specic and concrete connections with the mission and vision of the employee's unit and the organization in general, which limits employees' understanding of how they contribute to the business (Mercer, 2019). Furthermore, the employees of only 2% of companies believe that their company has a culture that inspires frequent, detailed, and highquality feedback. As a result, managers and employees see little value in the performance evaluation process. For example, among Fortune 1,000 companies, 95% of managers are not satised with their organizations' performance evaluation processes and 90% of HR professionals don't believe their companies' performance reviews provide accurate infor- mation (Meinert, 2015). Moreover, 66% of employees say performance reviews actually interfere with, instead of enhance, their productivity (Meinert, 2015). These beliefs are not entirely unfounded because it is difcult to meas- ure performance reliably, validly, and fairly (Murphy, 2020). Also, even when performance is measured well, feedback is often not specic and useful in terms of improving performance in the rture (Murphy, 2020). Consequently, it is understandable that so many organi- zations see performance evaluations as a burden and that supervisors see them as \"a box to check\" so they can appease HR and move on to their \"real jobs.\" The value of performance cvaluation is especially questioned during a time of crisis such as COVID19. As employees at all lev- els are pulled in different directions and tasked with doing more with less, time becomes one of the most valuable resources. Under normal circumstances, completing per formance appraisal tasks takes a substantial amount of time, which is often considered to be an additional layer of burden to employees and managers on top of their many existing obligations (Aguinis & Burgi-Tian, 2021). During a crisis, when time is at a premium, many companies have decided to downgrade, delay, or even abandon perfor mance evaluation all together. For example, Marygrove Awning Co. in Livonia, Michigan discarded most of the components of its performance reviews because as its CEO Mike Falahee put it: \"After all, how can we review someone who can't do their job the way they're accus- tomed to doing it?\" (O'Connell, 2020). Others have decided to simplify the performance evaluation system. Facebook, for example, has announced that all of its 45,000 full-time employees would receive the same \"exceeding exception\" in their rstquarter performance review in 2020 (Seetharaman, 2020). Why performance management is ideally suited for addressing talent management challenges during crises and beyond COVIDl9 has made it evident that many organizations do not implement state-of-thescience performance manage- ment systems and, instead, have only performance appraisal 236 Business Research Quarterly 24(3) systems. The fact that so many organizations are choosing Second, at a time when telework is becoming the norm, to demote, postpone, or discontinue performance evalua employee engagement is crucially important to maintain tions clearly shows that those systems had very little value, productivity. An engaged employee is dedicated, enthusi were not playing a strategic role, and were not performance astic, and empowered, which leads to innovation and management systems but, rather, were mostly an adminis- engagement (Kremer et al., 2019). An effective perfor- trative and burdensome requirement. mance management system enhances employee engage- One reason for the underutilization of performance ment because employees have a clear idea about management is that its multiple purposes are often over- performance expectations (Kakkar et al., 2020), which looked (Aguinis, 2019a). Specifically, in addition to the subsequently leads to increased job satisfaction and typical and known administrative purposes (e.g., promo- reduced turnover intentions (Kuvaas, 2006). tion, salary, and other personnel decisions), performance Third, a performance management system protects the management also serves other critical organizational organization from exposure to legal risks. When organiza- goals. These are as follows: (1) communicating and rein- tions are forced to lay off some employees as a result of forcing strategic priorities (1.e., strategic and communi- economic difficulties, performance is one of the major fac- cation purpose), (2) supporting employee development tors to decide which employees will be let go. Without (i.e., developmental purpose), (3) planning and maintain- appropriate and accurate documentation on performance, ing a high-quality workforce (i.e., organizational mainte- including whether declines in performance may be due to nance purpose), and (4) collecting information to support physical or mental illness or other factors outside of an decision making (i.e., documentation purpose). So, if employee's control, decisions may lack transparency and implemented following evidence-based practices, perfor- be unfair. Companies might face lawsuits when former mance management is ideally suited to help organiza- employees question termination decisions (Starner, 2020). tions address many of the talent management challenges Fourth, an evidence-based performance management posed by a crisis like COVID-19. In fact, performance system enhances ambidextrous organizational learning management can not only help organizations address tal- (Diaz-Fernandez et al., 2017). Ambidextrous organizations ent management challenges during the crisis but, perhaps simultaneously look forward to the future to explore new just as importantly, help them thrive after the crisis is opportunities, while working diligently to exploit existing over. capabilities (O'Reilly & Tushman, 2004). Therefore, organ- izational ambidexterity leads to improved firm performance Performance management contributions (Pertusa-Ortega & Molina-Azorin, 2018). In short, effective performance management facilitates the accumulation of Aguinis (2019a) summarized 19 contributions that per- human capital, thus positively impacting firm performance formance management makes to organizational effective- and profitability (Diaz-Fernandez et al., 2017). ness. In times of crisis, the following contributions are Finally, performance management helps organizations particularly relevant. First, performance management clarify goals and strategic directions and, consequently, enhances extra-role behavior, also known as organiza- clarifies definitions and responsibilities of each job. As a tional citizenship behavior (OCB). OCB is discretionary result of COVID-19, many organizations were forced to behavior that contributes to the organization's overall change course by readjusting priorities, product lines, and effectiveness. Examples of OCB include volunteering to services, and employees' job descriptions also shifted carry out activities that are not formally part of the job accordingly. Performance management systems provide a (e.g., suggesting organizational improvements, making unique channel for companies to clearly communicate the constructive suggestions); helping and cooperating with strategic directions of the organization to employees and others (e.g., assisting and helping coworkers and custom- help employees understand why and how job roles need to ers); and endorsing, supporting, and defending organiza- be adjusted. tional objectives (e.g., organizational loyalty, representing the organization favorably to outsiders; Organ, 2018). Adapting performance management During a time of crisis, OCB is especially important because employees are asked to contribute ideas to help to maximize positive outcomes the organization survive, and employees need to go out of during a crisis their ways to use their talent, skills, networks, and inno- During a crisis like the COVID-19 pandemic, performance vativeness to do so. An evidence-based performance management theory and principles still apply, but certain management system identifies and emphasizes these research-based adaptations are recommended to accom- types of behaviors in addition to the formal tasks required modate these particular circumstances and challenges. by the employees' job descriptions, and actively meas- Next, we provide a description of research-based recom- ures, develops, and rewards these discretionary yet criti- mendations for organizations to consider, which we sum- cal behaviors. marize in Table 1.Aguinis and Burgi-Tian 237 Table I. Recommendations for Adapting Performance Management to Maximize Positive Outcomes During COVlD-I9, Other Crises, and Beyond. Recommendations Implementation Guidelines Measure results in addition to behaviors because behaviors are no longer easily observable or accessible and there is usually more than one right way to do the job Measure adaptive performance because employees' ability to learn quickly and innovate are critical for the survival of the organization Conduct stay interviews to learn how to retain top performers because, to survive a crisis and gain and maintain a competitive advantage, it is important to retain top performers who make substantially more impactful contributions Implement a multisource performance management system because it facilitates communication and feedback, and employees are less likely to become defensive when feedback originates from multiple sources Collect and use Performance Promoter Scores (PPS) given the need for measures that are simple, concise, relevant, informative, comprehensive, and clear Establish achievable, realistic, flexible, and fully communicated performance objectives Measure eight adaptive performance dimensions: (I) handling emergencies and crisis situations, (2) handling work stress, (3) solving problems creatively, (4) dealing with uncertain and unpredictable work situations, (5) learning work tasks, technologies, and procedures, (6) demonstrating interpersonal adaptability, (7) demonstrating cultural adaptability, and (8) demonstrating physically oriented adaptability Use performance review meetings to ask the following questions: \"Why do you decide to stay here?" \"What are you learning here and what do you want to learn?" \"How can I best support you?" and \"What do you look forward to each day?" Collect performance data from peers, direct reports, partners, vendors, and customers, in addition to supervisors and employees themselves Collect performance data on individuals and collectives (e.g., functional units, departments) by asking the following questions: \"How likely is it that you would recommend working with [name of individual, workgroup, or unit] to a friend or a colleague?" \"Why did you provide the rating that you provided?" and \"What would it take to raise the score just by one point?\" Measure results in addition to behaviors There are two major approaches to measuring perfor- mance: results (i.e., outcome of employees' work activi ties) and behaviors (i.e., how employees conduct their work; Aguinis, 2019a). Many organizations use a combi nation of behaviors and results. There are several reasons to use behaviors to evaluate performance. For example, the link between behaviors and results might not be obvious, work outcomes might occur in the distant future, or results might be beyond the employees' control (Aguinis, 2019a). However, during a crisis such as COVIDl9 that has exacerbated telework and lack of spontaneous interactions between employees, organizations need to rely more on the results approach because behaviors are no longer easily observable or accessible, and there is usually more than one right way to do the job. As managers and employees discuss performance objectives, it is useful to consider the following issues. First, performance objectives should be achievable, taking full consideration of the challenging external environment as well as barriers that employees face when working from home. In other words, perfor- mance objectives should be realistic and under the control of the employees. In addition, objectives should be exible and reviewed and updated more regularly than during nor mal times, and they should be adjusted as the organization changes course and strategic priorities. Third, objectives should be communicated clearly and fully. This is particu- larly important because people are working from different places and do not interact with each other on a regular basis (Aguinis, 2019a). Measure adaptive performance Performance is a multidimensional construct and includes the following four types: (1) task performance (i.e., formal work activities usually included in job descriptions), (2) OCB (i.e., discretionary behaviors as described earlier), (3) counterproductive performance (i.e., behaviors that threaten the well-being of the organization and its employ- ees), and (4) adaptive performance. Adaptive performance is particularly relevant during periods of crisis and rapid change because employees' ability to learn quickly and innovate are critical for the survival of the organization. Adaptive performance includes the following eight dimensions: (1) handling emergencies and crisis situa- tions, (2) handling work stress, (3) solving problems crea- tively, (4) dealing with uncertain and unpredictable work situations, (5) learning work tasks, technologies, and pro- cedures, (6) demonstrating interpersonal adaptability, (7) demonstrating cultural adaptability, and (8) demonstrating physically oriented adaptability (Pulakos et a1., 2000). When measuring task, OCB, and counterproductive per- formance becomes difcult, both during and after a crisis 238 Business Research Quarterly 24(3) such as COVID l 9, adaptability becomes a critical skill that should be evaluated to determine the performance lev- els of the employees. Conduct stay interviews to retain top performers Employee performance usually follows a highly skewed distribution in which a small number of highly effective performers contribute signicantly more than the majority of employees (Aguinis, 2014; Aguinis & Bradley, 2015; Murphy, 2020). To gain and maintain a competitive advan tage to be able to survive the crisis, it is important to retain these top performers who make substantially more impact- ful contributions (Aguinis et al., 2012). To do so, the per- formance management system should include a stay interview. Stay interviews focus on discovering what makes star performers decide to stay in the organization and provide information that managers can use to imple ment actions that will retain them (Aguinis, 2019a). Questions during stay interviews include, \"Why do you decide to stay here?\" \"What are you learning here and what do you want to learn?\" \"How can I best support you?\" and \"What do you look forward to each day?\" (Finnegan, 2018). The stay interview is an important mechanism to create a positive and trusting relationship with top performers, to demonstrate that organizations care about their learning and growth, and for managers to develop personalized rewards and incentives that will motivate star performers to stay and remain motivated. Implement a multisource performance management system In most organizations, performance evaluations are com pleted only by managers and employees themselves (Mercer, 2019). In fact, fewer than 20% of employees are also evaluated by their teammates (Vozza, 2020). However, a multisource performance management system, also referred to as a 360 degree system, has multiple benets to organizations during a crisis. A multisource feedback sys- tem includes performance data from peers, direct reports, partners, vendors, and customers, in addition to supervi sors and employees themselves. It is most useful for devel- opmental purposes (i.e., employee development rather than evaluation). When people are working remotely, a multisource performance feedback system helps employ ees communicate with each other and enhance their emo- tional attachment to the team and organizationiincluding a sense of belongingness. In addition, when performance is not easily observable, input from more performance touch points is needed to provide indepth perspectives on the employees' strengths and weaknesses. Moreover, there are usually \"undiscussables\" or uncomfortable information that supervisors need to communicate with the employee. At a time when meeting in person is not possible, virtual performance meetings become even more sensitive and difcult. A multisource system facilitates communication and feedback, because employees are less likely to become defensive when the feedback comes from multiple sources. The pandemic offered a unique opportunity to initiate a multisource feedback system to provide additional care and support for employees. It is likely that the implemen tation of such a system may uncover workplace disagree- ments and conflict resulting from the pandemic. But, the multisource feedback system would be simply the mes sen ger. The alternatives of not even knowing what these disa- greements may be are likely to cause even more damage in the long run. Collect and use Performance Promoter Scores Firms' strategic directions are changing rapidly, time is constrained, situations are frequently out of control, and employee behaviors are difcult to observe due to remote working conditions. So, organizations need to adapt perfor- mance management and use measures that are simple, con- cise, relevant, informative, comprehensive, and clear. Expanding upon the well-established Net Promoter Score (NPS) measure in marketing, Aguinis and BurgiTian (2021) introduced the Performance Promoter Score (PPS), which is particularly useful to measure performance during crises. PPS consists of asking only a few simple but power- ful questions: \"How likely is it that you would recommend working with [name of individual, workgroup, or unit] to a friend or a colleague?\" \"Why did you provide the rating that you provided?,\" and \"What would it take to raise the score just by one point?\" PPS can be used to measure indi viduals (employees and managers alike), work groups, functional units, and organizations. Organizations should collect performance data from multiple sources, use PPS to support both administrative and developmental functions, and to provide more frequent performance checkins than usual. Also, an advantage of PPS is that it can be used to measure the performance of individuals, but also the per- formance of groups and collectives of various sizes (e.g., functional units, departments). Accordingly, PPS can be used as a tool to also reward collectives in addition to indi- viduals (Gomez-Mejia et al., 2015). Conclusion The revenue reductions and budget shortfalls caused by the COVID-l9 crisis have resulted in signicant talent man- agement challenges. Under these difcult circumstances, many organizations have opted to downgrade and even completely abandon performance evaluations and reviews. 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