Depending on the type of company you belong to, performance reviews can be smashed out every quarter, held annually, scrapped altogether or organically evolved from regular staff-management catch ups. They are the lifeblood of employee development, compensation allocation and promotions. Which understandably makes them rather nerve-racking for employees. They can also be a difficult operation for HR teams and management to nail. With all the subjectivity involved, accurately dissecting an individual’s performance can sometimes feel akin to brain surgery.
Are performance reviews dead?
In past blogs we’ve discussed how some companies are purging numerical performance ratings and transitioning to the more ‘hip’ methodology of informal feedback throughout the year. This doesn’t mean the death of performance reviews. CEB Global reported that after an initial, positive reaction from employees after abolishing formal ratings, employee engagement drops by 6%. Top performers’ satisfaction with pay differentiation decreases by 8% because managers have trouble explaining how pay decisions are made and linked to individual contributions, and manager conversation quality declines by 14%. To us this indicates that data, structure and processes are still important when it comes to evaluating employees’ performance.
Although the shorter, more laid-back evaluations are being praised as less stressful and more relevant by employees, there are ways HR teams and managers can still ensure this doesn’t undermine the effectiveness of their remuneration framework.
So how can we produce and deliver accurate, useful and clear-cut performance reviews that aren’t nail-biting for employees to sit through?
Formal or informal, there is a certain universal order when it comes to bringing a performance review to life, and it involves using both your brain and your heart. The art of performance management comprises goal-setting, measuring progress and providing feedback. These processes need to be data-driven and pragmatic, yet communicated with individuals benevolently and encouragingly.
The brain part: The bones of a great performance review
1. Definition of business as usual activities
Agree on what is “business as usual” activity, which are typically the standards expected in a role, that if not met would be considered grounds for poor performance discussions.
2. Realistic goals connected to business strategy
Document realistic and achievable goals which can show a connection to the business strategy – this removes any element of misunderstanding about what you as a manager and the organisation sees as important.
3. Above and below the line behaviours
Agree on above the line and below the line behaviour – if anything, it helps when you have to have the hard conversations… ”remember we agreed that this wasn’t acceptable…”
4. Recording processes
And of course it makes it much easier if all of this is written down for easy reference at your regular catch-ups. How regular is regular? This depends on the role and it may not be appropriate to ‘legislate’ this across the business, instead coach where appropriate on an increase in regularity where necessary. A role focusing on daily and monthly tasks often needs more regular check-ins than one focusing on longer term goals.
The heart part: The characteristics of a performance review that drives growth
1. Everybody understands the organisational goals
Performance management is a means to implement organisational strategy by letting staff know what is vital in the organisation, setting accountability for behaviour and results, and helping to improve performance.
2. Establishing a culture of open communication backed up by an inspiring management style
This is a stepping stone to conveying the fact that a review process is a constructive activity that benefits the company, but most of all it advances the individual’s career.
3. Rewards align with organisational goals
Ensure that the ways in which employees are recognised and rewarded for high performance are closely aligned with organisational values and objectives.
4. Encouragement (not punishment!) for low-performing staff
If there are staff members that complete the performance review process and discover that their performance is not up to the mark, this shouldn’t be cause for worry. They should know that opportunities for improvement through training and development exist within the organisation and that they’re still valued as contributing members of the larger team.
Once these fundamental requirements for a performance management process are in place, clever use of technology and software can supplement the benefits.
If you would like help with diagnosing issues for your performance review process, here are some handy resources we can prescribe: