If you’re a HR professional or business leader, you would know that more often than not, standard processes like performance reviews can be underestimated as an overly time consuming, reactive, box-ticking exercise that does not add value to an organisation.
Well, you could be mistaken for thinking that, if that’s how your business is treating performance review time. But when organisations structure feedback and performance monitoring and use this as a key support to strategically aligning their team, performance reviews become much more than a pile of unproductive paperwork.
A real performance review strategy has the power to turn a just-surviving business into one that is thriving. After all, the performance of your people is what creates returns in your business, so let’s explore how a better review system can improve this.
9 in 10 Managers are dissatisfied with how their organisations conduct performance reviews.
90% of HR leaders feel traditional performance reviews don’t generate accurate information.
Managers can spend, on average, 17 hours preparing each employee’s review.
Spending 17 hours per direct report preparing an annual performance review is a lot of work only to receive inaccurate and outdated information in return. This 17 hours could surely be better spent looking at where an employee is going, rather than focusing on what they have done in the past. Sentiments like this have been being expressed for a while, so it’s no secret in 2019 that organisations need to rethink the traditional idea of an annual performance review.
So what can be done to combat this? It starts with a redesign of the way in which feedback is captured and performance is monitored, as well as how often this happens, and when it is made available to the employee for reflection. The following figures shed some light on how this can be approached.
60% of employees want feedback on a daily or weekly basis.
45% of workers want feedback from their peers and customers, but less than 30% are actually getting it.
80% of Gen Y employees would prefer to be recognised on-the-spot than in formal reviews.
Today’s workforce wants to do their best work, and they know they need timely feedback to do so. It’s clear that employees prefer more frequent or even on-the-spot feedback, to ensure they are on the right track and can correct missteps before they escalate, an annual performance review cannot realistically deliver this. In addition to maintaining frequent communication with employees in informal channels like chatting over slack or asking them how their day is going, managers can deliver more frequent feedback to their direct reports by having a fortnightly one-on-one catch up. An automated online check-in system can help to inform these one-on-one meetings to ensure both parties get the most value from them.
Employees are also increasingly appreciative of receiving a broader range of feedback sources. Receiving feedback from a manager and submitting a self-review offers some perspective, but facilitating broader feedback mechanisms from peers and even customers expands the perspectives available, providing a more holistic view. This gives the team member more to reflect upon, particularly with regard to broader team performance.
The benefits of this broader view are significant. Imagine an employee who consistently achieves their KPIs in bringing in new sales every month and is the star performer in their team. A manager could not be blamed for seeing them as an integral member of the team. But what if this individual is actually bullying team member’s, bringing down morale at work and causing the team as a whole to underperform. Likewise, an employee who is not hitting their targets may be spending too much time helping their team members, but their peers are exceeding their own goals as a result. This person might be better suited to a leadership role where they can coach others to succeed as a team. These are the kind of bigger picture insights that can be exposed with 360 feedback, but are normally invisible with traditional annual performance reviews.
Monitoring these strengths and weaknesses of employees from all perspectives is proven to increase performance.
Teams perform 8.9% more profitably, and with 12.5% greater productivity when their managers are provided with feedback on their strengths.
Employees who receive feedback on their strengths turn over 14.9% less than those who don’t.
According to this Gallup research, managers who receive feedback on their strengths see a marked increase in their performance, and subsequently, the performance of their team. Not only this, but this positive feedback also serves to reduce turnover, further minimising costs and adding to profitability in a business.
By ensuring employees receive feedback not just on areas for improvement, but also where their strengths lie, they are empowered to maximise their use of these talents. Gathering data on both strengths and weaknesses and assessing them in tandem also allows for roles to be redesigned in-line with making the best of use of each employee’s skills.
This is a far more productive process than simply attempting to fill gaps in the areas where employees are performing poorly. Where possible it may be more effective to distribute tasks differently between staff members to ensure each role is suited to their unique strengths.
This all sounds great in theory, but how can an organisation make this happen? The first step is adjusting the focus of your performance monitoring to be more proactive than reactive. This begins with capturing performance data and feedback earlier, and more frequently, to allow for action to be taken on improvement before it is too late.
The act of disconnecting this from the annual review to a lighter and more regular feedback process should lead to better outcomes. Often annual reviews are also tied to remuneration changes – so the approach and style of feedback can also be impacted upon by these external factors.
In addition to this, when asking for feedback on employees from their peers or managers, it’s important to structure questions in a way that ensures both areas of strengths and weaknesses are being captured. For example, rather than asking a manager which areas of the role an employee is performing most poorly at, ask where they might need help and how the manager thinks they might be able to help them improve or what other solutions are available.
So with all of this research available, it’s no longer a question of whether your organisation needs an updated performance review strategy, but how you’re going to implement this and keep it up to date over time to maintain the highest level of impact.
If you’re in need of some more guidance on how to get started, you can chat to us or call 1300 993 803 (Au) or 0800 631 631 (NZ).