New Year, New Styles for Annual Reviews

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Improving Performance Management

Does it even make sense?

What evokes dread in bosses and employees alike? The annual performance review.

What does “meets expectations” or “3” on a five-point scale really mean? And does such a label inspire an employee to perform at a higher level?

It’s 2018, and the workplace is complex. Job descriptions evolve, and so do employees’ skill sets. It’s a fast-paced, technology-driven world. So why are most companies still using an antiquated system of employee evaluation which generates mounds of paperwork and serves no purpose in giving real-time feedback of performance?

More organizations are joining the “performance management revolution” each year, choosing to forgo traditional annual evaluations in favor of more frequent — and more specific — feedback. Tech companies like Adobe, Dell, Microsoft and IBM have led the way, along with many other recognizable brands like Gap and even General Electric — a historic advocate of the traditional forced-ranking system for performance appraisals.

HISTORY OF PERFORMANCE MANAGEMENT

The pendulum has swung many times throughout the history of employee evaluations, demonstrating a constant tension between accountability and development, as illustrated in a Harvard Business Review timeline of Talent Management. Annual appraisals are rooted in the U.S. military’s merit rating system, created to identify poor performers for dismissal or reassignment during World War I. By the 1960s, about 90 percent of U.S. companies were using appraisals to document employee performance and reward top performers — and the percentage remains about the same today.

However, more companies are realizing their systems of performance management are broken and in need of major refurbishing.

According to CEB, a corporate research and “insights” advisory firm (a subsidiary of Gartner), more than 80 percent of organizations are now considering making major changes to performance management — or already have. The focus is shifting to consistent feedback on performance behaviors every day.

THE DOWNSIDES TO ANNUAL PERFORMANCE REVIEWS ARE MANY:

  • Employees hate the appraisal process. Neuroscience research indicates performance-ratings systems do not motivate workers and may even spark the fight-or-flight response.
  • Managers hate the annual review process, too. Multiple surveys indicate they see it as ineffective and time consuming.
  • Even HR managers dislike the process. A survey by international consulting firm Deloitte showed 58 percent of human resources executives considered annual reviews an ineffective use of a supervisor’s time. (Deloitte itself stopped doing annual appraisals in 2015).
  • It’s losing relevance. As jobs become more complex and an organization’s needs evolve, it becomes more difficult to set meaningful annual goals that will still be relevant 12 months later.
  • The process needs an update. A recent survey of 1,500 U.S. office workers conducted by Adobe found that more than 60 percent of both employees and bosses believe that performance reviews are an outdated way of managing performance.

WHAT WORKS BETTER?

Candid feedback works.
Candid feedback works.

Employees deserve candid feedback, but it should happen more than once (or even twice) a year. Organizations should foster a culture of coaching for continuous improvement.

Schedule regular intervals for “check ins” on employee performance. Ideally, conversations between managers and employees should occur directly after a project finishes or milestones are reached.

Check-ins on goals and accomplishments should be less formal than a traditional review. Frequent, informal feedback feels more comfortable and enhances the manager-employee relationship.

Allow workers to participate in their own performance evaluation with candid discussions on achievements and failures — without the fear of it being tied to the size of a raise.

But…managers still need to prepare. Bosses should maintain an organized method of recording goals and tracking achievements with consistency.

Shift the focus away from ratings and onto employee development. Telling an employee he or she is performing “below expectations” will likely prompt a defensive response and hinder growth. Instead, give specific context for improvement and follow through with mentorship to help the employee meet future objectives.

Is it time to reevaluate your organization’s performance management system?

Doing away with the dreaded annual review in favor of a more frequent, and less formal, evaluation process will reap rewards in productivity and employee engagement, helping your organization retain top talent for today’s competitive climate.

If your company or organization needs assistance in developing a review process that is more productive and motivating, contact Brink Results, training and consulting experts for today’s workforce.