The future of Performance Management - AI influence - Blog 05

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Introduction

Performance management is a main function in Human Resource Management (HRM), but traditional methods like annual reviews, manual tracking, and subjective evaluations are now outdated. with the rise of Artificial intelligence (AI), HR professionals are more into data-driven insights and real-time feedback to enhance and evaluate employee performance.


The Limitations of Traditional Performance Management

  • Infrequent feedback

HR department is doing annual or monthly reviews on employee performance based on their output to the organization which doesn't capture the real-time progress. This approach may create a gloomy working environment for those real performers.

  • Bias and Subjectivity

The performance evaluation can be impacted with personal insights apart from the key metrics it measures based on the manager who takes the evaluation. This can happen intentionally or unintentionally. 

  • The Lack of actionable insights

The typical view of performance management involves monetary increments or productivity increases in the organizational base but not the personal growth of each individual in the organization. 

Therefore, AI is involved in performance management to overcome these challenges. 




How AI Reshaping Performance Management


Real-time feedback & Continuous Evaluation

AI-powered tools like Microsoft Viva, 15 Five, and Lattice enable continuous feedback through, sentiment analysis, chatbot check-ins, and peer recognition platforms. 

1. sentiment Analysis 

Unlike traditional systems that rely on manual feedback submission, AI will actively listen to workplace conversations using Natural Language Processing (NLP) tools to analyze emails, chats, and meeting transcripts to detect employee performance and commitment. Accordingly, managers can get early warnings on employee frustration issues. But managers have to decide which problem to address at their level and which issues to solve at their own levels.

2. Chatbot Check-ins

Rather than waiting for performance review AI is driven chat bots like 15 Five send faster automated check-ins. ex:- sending questions like "What slowing you down this week?" can spot managers the trends and solve the impactful problems.

3. Peer recognition platforms

AI tools like Lattice make sure that recognition is not only top-down but from peer to peer identifying hidden talents and commitments.  


The Future AI based Performance Management

1. Predictive analytics for workforce Planning

AI can analyze vast amounts of HR data to predict employee skill gaps and turnover and recommend career development opportunities. Ex:- Workday Peakon Employee Voice utilizes predictive analytics to help HR teams make proactive decisions. 

2. Ethical AI and Privacy Considerations

While AI improves performance management ethical concerns regarding privacy and data security must be addressed. organizations must ensure that transparent policies are there to balance AI-driven insights and employee rights and confidentiality.



Conclusion

AI is revolutionizing performance management tools by providing real-time insights, minimizing bias, and fostering a more engaged work culture. But AI is not a silver button it should be used appropriately and wisely for the exact situation. Companies adopting AI-driven performance management tools will bring advantages from a more dynamic, responsive and personalized approach to employee development.


 

References

  1. Harvard Business Review (2022) How AI is Changing Performance Reviews. Available at: https://hbr.org/2022/05/how-ai-is-changing-performance-reviews (Accessed: 26 June 2024).
  2. McKinsey & Company (2023) AI in HR: The Future of Employee Growth [Podcast]. Available at: https://www.mckinsey.com/podcasts/the-mckinsey-podcast (Accessed: 26 June 2024).
  3. MIT Sloan Review (2021) Ethical AI in HR: Balancing Innovation and Privacy. Available at: https://sloanreview.mit.edu/article/ethical-ai-in-hr (Accessed: 26 June 2024).
  4. Unilever (2023) AI-Driven Performance Management: A Case Study. Available at: https://www.unilever.com/news/ai-in-hr (Accessed: 26 June 2024).
  5. Lee, K-F. (2018) AI Superpowers: China, Silicon Valley, and the New World Order. Boston: Houghton Mifflin Harcourt.
  6. Workday (2024) Peakon Employee Voice: AI for Engagement. Available at: https://www.workday.com/en-us/products/peakon.html (Accessed: 26 June 2024).
  7. TED Talks (2023) How AI is Reinventing HR [Video]. Available at: https://www.ted.com/talks (Accessed: 26 June 2024).
  8. Gartner (2022) Predictive Analytics in HR: Trends and Tools. Available at: https://www.gartner.com/en/human-resources (Accessed: 26 June 2024)

Comments

  1. Shemini DharmaratneMarch 30, 2025 at 7:41 AM

    As AI continues to evolve, its influence on performance management will be transformative. By leveraging data analytics and machine learning, AI can provide real-time insights, personalized feedback, and more accurate performance assessments. This shift will foster a more dynamic, efficient, and objective approach to managing talent. Wishing you success in navigating these exciting changes in the workplace.

    ReplyDelete
  2. Chalani ThilakaratneMarch 30, 2025 at 8:13 AM

    In my opinion the drawbacks of traditional PM can be used as the guidelines to form the perfect AI platform for an organization. Care should be given to implement unbiased and ethical system that is in line with the strategic goals of the organization.

    ReplyDelete
  3. WijayaMarch 30, 2025 at 3:19 PM

    AI influence in performance management is crucial as it creates the effectiveness of PM.

    ReplyDelete
  4. Malsha PereraMarch 30, 2025 at 9:07 PM

    AI is transforming performance management from a periodic, manual process into a dynamic, continuous, and data-driven approach. It allows for more personalized, fair, and effective evaluations while fostering a culture of continuous feedback and growth. That are enhancing both the employee experience and organizational success.

    ReplyDelete
  5. Athula Weerasinghe March 30, 2025 at 9:54 PM

    AI transformation to performance management useful methods.
    Grateful article

    ReplyDelete
  6. Shankanee IllangarathnaMarch 31, 2025 at 5:11 PM

    AI is transforming performance management by offering real-time insights and reducing bias, leading to more personalized and efficient employee development. However, it’s important to use AI wisely and in the right context, as it’s not a one-size-fits-all solution. When applied appropriately, AI can help companies create a more responsive and engaging work culture, enhancing overall performance.

    ReplyDelete
  7. Udara DananjayaApril 5, 2025 at 6:26 PM

    Great article. AI empowers HR professionals to assess performance in real time, improving accuracy and employee development.

    ReplyDelete

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