Annual and bi-annual performance reviews have been considered ineffective at improving employee performance. According to Gallup, “only 14% of employees agree that their performance reviews inspire them to improve” demonstrating that they do more harm than good. Not only do they cost organizations money in lost working hours, but there’s little to show for it. In fact, performance reviews have become something employees dread because it focuses exclusively on past mistakes, behaviors, and results. Not only is this demotivating and disempowering, but it harms an employee’s overall productivity because their past mistakes are still being held against them. In some instances, the performance review is the first time an employee is made aware of mistakes they’ve made.
For this reason, it’s time to shift performance reviews away from an antiquated once-a-year conversation. Instead, companies should focus on having more frequent and quality conversations with continuous feedback. By giving real-time feedback, providing coaching, and helping employees to correct their mistakes, issues can be resolved more quickly and effectively.
Here are three ways companies can reinvent their performance reviews.
Set Clear, Measurable And Attainable Performance Goals
Coaching and goal-setting is a key responsibility for any manager. Setting clear, measurable, and attainable performance goals gives employees a target to work toward. As such, they’re far more engaged and motivated since they know what they’re working toward and what’s expected of them.
To start, managers and employees should work together to set both short-term and long-term goals. Michelle Enjoli, TEDx Speaker and Career Development Coach, said, “when performance goals have been mutually agreed upon by a leader and employee, a routine check-up of these goals should be scheduled at a minimum of once a month to ensure that there’s room for realignment, improvements, or a pivot.”
Managers should create a document that’s shared with the employee to track progress, and ensure they’re aligned with goals and expectations. This easily accessible and shared document will help capture action steps, drive one-on-ones, specify goals, deadlines, metrics, and anything that’s discussed during one-on-one meetings. Additionally, managers can see where an employee needs support, where they’re struggling, what their strengths are, and whether or not they’re meeting their goals. Likewise, this document can be referenced when it comes to determining salary increases, bonuses, proving an employee is qualified for a promotion, and more.
Adopt A Continuous Feedback Approach
Annual performance reviews are a fundamentally broken process. The reality is, most performance review conversations end up being rushed because managers don’t have time to prepare. This leads to a review that’s incomplete, too subjective, or lacks quality feedback all of which is ineffective and doesn’t serve its intended purpose.
Adopting a continuous feedback approach helps alleviate anxiety around performance reviews. In addition, it helps managers to immediately identify barriers, adjust as needed, and provide the support and resources employees need to meet their goals and be successful. Stefan Wissenbach, founder and CEO at Engagement Multiplier, said, a continuous feedback approach provides “a clear snapshot in real-time of where the employee is at in regards to achieving goals and their performance. It also enables managers to coach in the moment, keep work on track, make necessary course corrections, and create better relationships and understanding between the manager and employee.”
Longhouse Media’s founder, Keenan Beavis, shared, “at my company, we integrate a quarterly one-on-one lunch or dinner where we talk about the employee’s life goals, job performance, interests, and more.” He went on, “these changes will give way to a more meaningful employee assessment that’s centered not just on improving the organization but also on the employees as individuals. Another benefit it has is being more focused on areas that really need to be improved and creating more notable development.”
Turn Annual Reviews Into Career Planning Meetings
Developing current talent is vital to the growth and success of the business in more ways than one. The intention isn’t to eliminate the performance review but to evolve how it’s being used to meet the current dynamics of the workplace. Kate Palmer, HR Advice & Consultancy Director at Peninsula, believes performance reviews should be treated as an opportunity to discuss goal setting, learning and development plans, and career aspirations rather than focusing on past performance and failures. She explained, “it’s a valuable opportunity to reinvigorate an employee’s motivation and engagement for the year to come.”
An effective performance management process has a wealth of benefits when used beyond basic evaluations. Some of these benefits are:
- Increases productivity, retention, and engagement
- A more personalized experience that improves the rapport between the manager and employee
- Better overall business performance
- Increases focus on driving results
- A clear understanding of expectations
- Helps to define (non-traditional and traditional) career paths
- Empowers more autonomy
- Improves accountability
Mark Pierce, CEO of Cloud Peak Law Group, explained, “a successful performance management strategy includes a mix of both formal and informal reviews. This gives companies a way to continuously deliver feedback while still having a formal way of measuring progress.” Informal performance management is conducting weekly, bi-weekly or monthly check-ins and providing coaching, support, and feedback. Pierce emphasized, “more frequent reviews mean more accurate performance measurement and management. Formal reviews can happen quarterly or twice per year and can be used for goal setting, reporting on progress, and to determine whether an employee is eligible and ready for a promotion and/or raise. These formal reviews should be held in conjunction with more frequent check-in and goal-setting sessions so that companies are able to truly measure performance.”