SilkRoad explores how employee performance review processes stack up and how to make them better.
No one likes performance reviews. Managers hate to give them and employees hate to hear them. HR professionals across the globe are starting to believe that annual or biannual performance reviews are killing the productivity they are supposed to inspire. Companies such as Microsoft, Adobe, Accenture and GE have gone so far as to abandon the annual performance review entirely. But is this really the best policy?
To take a look into performance management trends in the workplace, SilkRoad conducted a survey in September to find out how organizations are currently conducting performance reviews, how HR professionals feel about their organization’s performance reviews and what plans they have to change them in the future.
In the survey, 90 percent of the organizations reported conducting less than five performance reviews a year, with 62 percent of them only using annual performance reviews. Of those surveyed, 54 percent were dissatisfied with their current organization’s performance management process.
Why are so many organizations dissatisfied?
The most telling findings in the survey were that:
♦ 73 percent of HR professionals reported performance standards across the organization were inconsistent
♦ 58 percent reported that the connection between employee performance and compensation was weak
♦ 45 percent of managers lack the skills to coach and develop employees, and 32 percent do not have the time to assess employee performance throughout the year.
The survey also found that 55 percent of organizations look at performance reviews as a yearly tactical event. However, most of the discrepancy for inconsistent standards and overall dissatisfaction is rooted in the fact that most organizations don’t have a clear reason as to why they conduct performance reviews.
This year has seen companies such as GE, Accenture and Adobe abandon their performance review process entirely. It’s likely more organizations will follow suit. But those organizations aren’t actually abandoning their performance reviews. According to Sharlyn Lauby of HR Bartender, “Companies that are abandoning the performance appraisal and in its place creating ‘formalized touch points’ aren’t really eliminating the performance appraisal. It’s just a shorter discussion, happening more often, using a different name.”
If HR professionals don’t start asking “Why?”, an agile performance review process isn’t likely to change much, especially if managers are already struggling with skill gaps and time management.
So how should organizations manage their employee’s performance?
♦ Define “Why.” HR professionals should define what the performance reviews mean for the company and clearly explain the purpose of the review process and how it will be conducted. This can help build a connection between employee reviews and compensation as well as create a consistent review process to move toward the organizations goals.
♦ Changing terminology. For years, organizations have been using a traditional 1 to 5 rating scale of Outstanding, Exceeds, Meets, Inconsistent and Ineffective. If 3 is accomplishing company goals, and 1 and 2 are not, what is the purpose of these numbers? SilkRoad has tailored their annual review to be more casual as well as informative by simply rating employees as Rockin’ it, On Track and Course Correction. GE has taken a similar approach by simply telling employees to “Continue doing something, or consider changing something.”
♦ Automate part of the process. According to the SilkRoad survey, 37 percent of organizations reported that they will be utilizing technology this year to improve their performance review process. This is relatively low, since strategic automation can save so much time. According to the U.S. Small Business Administration, the average business owner spends approximately 25 percent of their time handling employee-related paperwork. Through automating paperwork and the paperwork associated with performance reviews, HR professionals can save up to 10 hours each week to focus on training managers on things like…
♦ Give effective feedback. One of the biggest issues the survey uncovered was that managers aren’t trained to give constructive feedback. The way criticism and feedback is given in an organization has the largest impact on the effectiveness of performance reviews. A recent neuroscience study shows that employees respond well to constant positive feedback.
What can we expect for next year?
Performance reviews may change in big way for many organizations in the coming year. As HR professionals evaluate their current performance management systems and adopt new technology to create a more effective performance management process, productivity may increase and dissatisfaction with the current performance review process decrease. However, since this issue has been controversial for so long, only time will tell.