Give your performance evaluations some love

Performance evaluations are getting a hard time lately. Businesses are calling them ‘irrelevant’, ‘dated’ and ‘stressful’ and dumping them altogether. But are these businesses really better off without them?

Last year CEB Global reported that at most companies, employee performance drops by around 10% when ratings are removed because of breakdowns in managers' ability to manage and a fall in employee engagement.

Perhaps it’s time to kiss and make up with performance evaluations?

Our friends over at Betterteam think so. They just published a useful Beginner’s Guide to performance evaluations to help HR and management improve the way they conduct performance evaluations.

Betterteam identified one of the main issues with businesses no longer being attracted to performance reviews is that they don’t address the modern workplace very well. For example:

• An employee usually works with many leaders in the company, so it is doesn’t always make sense to only have one leader assessing their performance.
• Quarterly or annual appraisals don’t deal with issues when they happen. It’s hard for employees to gauge how well they are performing and how they can improve throughout the quarter/year if they aren’t given continual feedback.

How can we modernise evaluations?

For performance reviews to truly deliver value to employees, company leaders and the company itself, it’s not enough to simply switch a few of the evaluation mechanics around, you must consider the big picture.

Performance management is the ‘big picture’ above performance reviews that involves continuously setting goals, reviewing progress and giving ongoing feedback. Nailing performance management will trickle down to help restore the integrity of performance reviews, whatever way you decide to run them.

In the longer term future Betterteam suggests using innovations like artificial intelligence (AI) will help to alleviate some of the human biases that naturally creep into the processes.

Aligning performance and compensation seems like a given, but it is actually more complicated than first meets the eye.

Emphasising personal performance as the only incentive measurement can encourage behaviour that makes the individual look good, but is ultimately detrimental for the company. Another issue with this sort of culture, is if the company doesn’t actually have enough money to give someone a raise or bonus, even if they perform exceptionally.

Betterteam encourages businesses to adopt the more modern approach of associating compensation with company-wide measurements of success. These tactics also tie in with the importance of continual feedback, rather than just quarterly or annually, to help keep employees focused on achieving company goals and aligned with best practice strategies to achieving these.

It is important to understand that you shouldn’t treat performance reviews like a static, unchanging process. As you grow and change as a business, it needs to grow and change along with it, to complement the company structure and culture.

Modern tools are available to help HR teams calculate and track these actions, including Pivot’s Remuneration Ally and Performance Ally.

Does your performance review process need a little lovin’? To help it flourish and positively affect employees and your company, download our eBook, ‘Why the death of performance reviews has been greatly exaggerated’.