The anatomy of a pragmatic (but lovely) Performance Review

May, 2017

PivotDepending 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:

Give your performance evaluations some love

May, 2017

PivotPerformance 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’.

15 Tips to up your performance management game

March, 2017

All our lives we’ve been measured on our performance. Ballet examinations, math tests, soccer team try outs, even eye exams at the optometrist. We’re used to being judged, graded and compared to others… but it seems that we’re sick of it.

15 tipsAkin to a 10-year-old practicing kicking a ball in the backyard every day after school, only to be told she’s not good enough for the A team, workers are over being told once a year about their shortcomings.

Approximately 91% of organisations use an annual performance review process of some kind, but employees aren’t always fans. Some of the limitations are perceived as:

  • Untimely
  • Stressful
  • Biased grading from management

How can Human Resource teams up their game with performance reviews?

The following are areas to consider when developing your performance review process for 2017, specifically how to conduct performance reviews and what to discuss.

1. Transition from providing one big evaluation on a yearly basis to more timely feedback throughout the year.
2. Ensure that managers are providing regular feedback to employees with a recording system (see tools)
3. Have employees self-assess
4. Provide peers the ability to collaborate and provide feedback

Company Culture
5. Shift focus from individual achievements to team participation and achievements

6. Use cloud based HR tools to manage and track reviews, recommendations and progress throughout the year

Evaluation areas to include

Although the push towards a more ‘holistic’ way of conducting performance reviews sounds more relaxed than rigid scoring systems, evaluations still need structure and uniformity across the company. Some areas to include in yearly or more regular performance reviews include:

7. Quality of work produced
8. Billable hours targets met/not met
9. Customer satisfaction/feedback
10. Deadlines met/not met
11. Team participation/collaboration outcome
12. Company values demonstrated

Management Only
13. Team development
14. Work environment created
15. Budget/billable hour expectations met

By moving away from a scoring based system to more real time feedback and opportunities, your employees will be scoring goals in no time. To learn more about Performance Management best practices, take a look at the Pivot infographic, The 10 Peak Practices that Create Meritocracies.

Want to invigorate a lethargic performance management process?

October, 2016

Here are some depressing statistics for you: only 14% of organisations are happy with their performance management system and 30% of performance reviews actually end up in decreased employee performance. (source: TalentManagement360).

Can you relate to these statistics? Are your current employee performance management outcomes getting you down? Perhaps your performance management processes are in need of an endorphin boost.invigorate

Bersin by Deloitte have created a list of miracle cures to transform your listless performance management procedures into strategies to invigorate and motivate employees to succeed. Combine the powers of these factors for a modern, healthy and positive performance management approach. Regardless of the methodology, your performance management procedures should include these features.

Pivot Software published a white paper called “Why the death of performance reviews has been greatly exaggerated” earlier this year, that discusses the ‘must haves’ for a performance review process and how to reinvigorate your performance management.

It will be interesting to see how the ‘depressing’ statistics of performance review satisfaction changes over the next five years as disruptive technology and methodology is adopted by more HR departments.

Are you looking at making changes to your HR processes soon? Do you think PM satisfaction levels are set to rise at your organisation because of it? Share your thoughts in the comments section, or write to me.

You can also download the Pivot white paper here: “Why the death of performance reviews has been greatly exaggerated”.

Discussing the future of work @ HRTechFest 2016

October, 2016

One of the most enriching HR events in Australasia – the HR tech fest is coming to Melbourne this November.

The theme this year is “The talent, technology, ideas and innovations that are literally transforming the future of work”.

The Pivot team is supporting the confluence of ideas at the event and is the official community partner at the HR Tech Fest 2016, and we’re sparking more discussions around the use of Excel spreadsheets for Better HR Tech.

Read on here and get involved!
See you at the event.

The times, they are a changin’ for performance management

September, 2016

In 1964 Bob Dylan could have been singing about the HR industry in 2016 when he released his single ‘The times they are a changin’.

Performance Management infographic-02

Come gather ’round people

Wherever you roam

And admit that the waters

Around you have grown

And accept it that soon

You’ll be drenched to the bone

If your time to you

Is worth savin’

Then you better start swimmin’

Or you’ll sink like a stone

For the times they are a-changin’.

Some HR processes are in danger of sinking, by continuing to only use traditional performance management strategies like top-down annual performance processes.

In 2015 Deloitte conducted a public survey and found that 58% of executives believed that “their current performance management approach drives neither employee engagement nor high performance”. In their University Press article, Deloitte encourages HR departments to “replace ‘rank and yank’ with coaching and development” to achieve better employee performance results. commends Microsoft, Adobe, Cigna and Accenture for scrapping formal rankings and introducing on-going feedback facilities and informal check-in meetings. Fast Company predicts that half of Fortune 500 companies will follow suit and “kill annual rankings and reviews by 2017”.

In the article, Paul Hamerman, Vice President and a principal analyst at Forrester Research has “predicted that a shift to the cloud and increased use of software will be a big part of the future of performance management”.

Although HR practices are continually being reviewed and refined, I believe that it is important to research the approaches adopted by well-respected companies and consider the role that culture has played in defining the performance process.  The performance dialogue and process of an organisation, more than any other process, in my view, needs to reflect the culture of your organisation.

If the process you have designed is too far from your current culture, you run the risk of failure.  Consider incremental change to bring everyone along with you towards your desired approach. What works in one organisation does not necessarily work in another – and no such thing as “Best Practice”, because it continues to evolve towards “Next Practice”.

Choosing and implementing new processes not only needs to work for your company culture, and understood by employees, but also needs to be easily monitored and regularly tweaked to bring about tangible positive changes to your performance outcomes.

Pivot Software published a white paper called Why death of performance reviews has been greatly exaggerated earlier this year. It discusses the changing face of performance management and the ‘must haves’ for a performance review process in 2016.

The Bersin report confirms that the times, they are a changin’ for performance management – it says that the redesign of performance management is the most disruptive area of HR today.

Have you made any changes to performance management at your organisation recently? What changes have you noticed? Share your thoughts in the comments section, or write to me.

You can also download the Pivot white paper here: Why the death of performance reviews has been greatly exaggerated.

Sack the performance process at your peril

May, 2015

Dilbert Performance ReviewsOne of the topics currently doing the rounds in HR circles is performance management—and why it’s time to get rid of performance reviews. But, asks Philippa Youngman, has anyone thought about what this means for determining remuneration levels?


Best Employer Insight from Aon Hewitt

July, 2014

Pivot Software Blog - Aon Hewitt Best Employers insight

AON Hewitt, one of our valued partners in Australia and New Zealand, have again come through with some fascinating insights in their latest “Best Employers” study. The full report is available here.

The study focuses on 120 Australasian organisations with a combined workforce of 70,000.
Consistent with their previous studies, organisations observing best practice in people management (the “Best Employers’) on AON Hewitt’s criteria, out-performed the norm in terms of sales growth and profitability.

One of the interesting points in the report is that not only are leaders at Best Employers more engaged with their organisations than the average company leader, they “held the key to employee engagement” with staff. This is based on getting six key practices right – communication, showing respect, visibility and accessibility, passion for the organisation’s future, clear direction and sound decision making.

Great talent management supports and enhance these practices, something we discuss in our eBook “Does your approach to Performance Management ‘Sing’ or ‘Sting’? How to focus on practices that create meritocracies, and avoid being seduced by the technology.”

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