Ever-changing business models and the fast pace of work today are having an impact on a significant aspect of work culture – the annual performance review. Performance conversations are important to keep businesses and employees moving in the same direction, but the annual performance review is undergoing a metamorphosis.
Karen Bradbury, assistant vice president of talent strategies at Colonial Life, shares the reason for change in performance management. “It wasn’t that long ago that the performance management process was used to assesses an employee’s past performance and then make compensation decisions (base pay, bonuses) based on that performance. Now, both employees and managers want more of a development-focused and forward-looking conversation, including questions about growing as a company and as an individual employee.”
New research supports the transition. A recent study conducted by the Human Capital Institute (HCI) indicated that only 30 percent of survey respondents thought their performance management process actually improved employee performance. Many HR and business leaders view traditional performance management processes as a high effort, low return, check-box activity.
It raises the question, what can be done to improve the performance review? Here are five new ways organizations are talking about performance.
- Eliminating the performance review. The HCI study found that performance reviews are the second most disliked work activity by managers, after firing employees. So it’s no surprise that DELL completely eliminated performance reviews to align with the changing nature of work. In organizations where the review isn’t viewed favorably, completely ditching it could be seen as a good sign. Of course, it will take some change management classes to get everyone accustomed to a new way of doing things.
- Regular feedback sessions. While Adobe didn’t eliminate the annual review, it did create a regular “check in” system. The check-ins are shorter meetings that revolve around the goals set by the manager and employee. Shorter, more frequent meetings can keep everyone focused on goal achievement. And possibly even create more opportunity for stretch goals. If an employee accomplishes a goal in Q2, instead of waiting until the end of the year to hear about it, another goal can be set. On the flip side, if goals need to be revised, that can be done sooner versus later.
- Shorter reviews. Most employees know what they’ve done in the past, so performance reviews with a past performance component can be viewed as repetitive or boring. Regardless of frequency, a shorter review can make a lot of sense. Deloitte is experimenting with a four question review session, where two of the responses require a simple yes or no. This might not be the entire review session, but it does shorten the amount of time spent on things that have already happened.
- Real-time feedback. Many organizations are looking at real-time feedback both inside and outside of the performance review process. It’s based on the idea that every moment can be a learning opportunity and a powerful motivational tool. GE’s new performance management program includes an “insights” feature where any employee can give or request feedback. Companies considering real-time feedback do need to build in training so every employee knows how to properly give and receive feedback.
- Future focused. In the same HCI study, only 35 percent of survey respondents said they trusted their employee ratings to be an accurate reflection of actual performance. Graphic rating scales have been criticized for their tendency to “label” people versus performance. Microsoft stopped using the graphic rating scale (i.e., 1 to 5 ratings) in their annual reviews as a way to shift the focus of the performance conversation away from past performance to future development.
When thinking about the qualities of good performance reviews such as a focus on coaching and development, iterative goal setting, and ongoing feedback and connection between manager and employee, Bradbury noted that neuroscience points to a few interesting facts. “Neuroscience is still in its infancy, but has already started to shed light on obstacles to employee performance. When an employee feels ‘threatened’, or there is the feeling that their potential or performance is ‘fixed’ (meaning that change and improvement is unlikely) they can: shut down in reaction to the feedback, avoid stretch goals, dodge extra effort, and see the success of others as a threat to their status.”
A couple of things are clear. Organizations are looking for more effective ways to deliver performance reviews. And employees are looking for timely, consistent feedback. There are many methods to achieve both of these goals. Human resources, management, and employees can work together to create a process that works for everyone.