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September 2023: Refreshing Your Performance Reviews


Refreshing Your Performance Reviews– nurture retention & engagement

Written by Tom Prest

Many organizations have significantly transformed performance reviews over the past three years. This change was driven by the recognition that traditional processes were flawed, a realization emphasized by the pandemic when many employees started working virtually. Additionally, our workforce is changing and becoming increasingly complex. These factors have prompted numerous organizations to discard performance reviews or introduce modified versions to proactively create a more relevant process to respond to this evolving dynamic.

To illustrate the positive impact of reevaluating performance reviews, let’s consider my work as a fractional HR Leader with an organization looking to elevate its performance review process. The organization’s President wanted to shift gears and focus on its employees’ strengths, weaknesses, and areas for growth. We worked together to develop a new process that effectively nurtured employee growth and quantified expectations by adding specific goals each department manager needed to achieve in the next 12 months. The response was overwhelmingly positive by both the employee and manager — they equally welcomed this simplified version of evaluating their performance and felt this process was more meaningful, relevant, and valuable.

In addition to the example provided, these statistics exemplify why performance reviews need to be reevaluated:

  • A Gallop Survey reported that 95% of managers are dissatisfied with their organization’s performance review system.[1]
  • Only 25% of organizations feel their performance review process systems are effective. [2]
  • A work human study recently reported that 50% of organizations only give annual or semi-annual meaningful career discussions.[3] Consistent feedback and communication with employees on where they stand within the organization are essential, especially for the younger generations.
  • Workers want more feedback and career development. For Generation Z, the two most important things when considering a job are pay transparency and a clear job description. [4]
  • The ADP Research Institute found that performance reviews are full of bias, mainly of the reviewer.

Perspective on the Evolving Process

Both employees and managers feel dissatisfaction with the current review process, often considering it a waste of time. The common exclamation, “Oh no, is it time for performance reviews again?” highlights why the process needs to change and why employers must make it impactful. A key aspect of achieving this goal involves focusing on the employee, their department, and the organization while striving to eliminate manager bias.

Build an Effective Process

Performance management is most effective when managers have regular discussions with employees rather than having conversations once or twice a year. An effective strategy is setting performance goals and expectations in advance and focusing on these goals. In addition, employees want to know how their work and the work of their department fit into the bigger picture; providing context and meaning keeps employees motivated and engaged. There needs to be a two-way conversation where the employee receives feedback and is encouraged to provide their thoughts. Training managers to provide constructive criticism in a professional and positive manner is also essential. SMART goals help to keep the conversation focused; the SMART acronym stands for:

Specific

Measurable

Achievable

Relevant

Time Bound

Here is an example of a SMART goal for a sales team:

“Increase quarterly revenue by 15% by implementing a targeted marketing campaign, expanding your customer base, and enhancing customer retention strategies over the next six months.”

Specific: The goal clearly states the desired outcome- to increase quarterly revenue by 15%. It is precise and leaves no room for ambiguity.

Measurable: The goal includes a specific metric, a 15% increase in quarterly revenue, which is easy to track and evaluate.

Achievable: While ambitious, the goal is attainable within six months. The organization can implement strategies to achieve the desired revenue increase.

Relevant: Increasing revenue is crucial for any sales team and directly impacts the company’s financial health and growth. It aligns with the overall goals and objectives of the organization.

Time-bound: The goal is set to be achieved within six months, providing a sense of urgency and encouraging the team to work diligently to achieve the target.

When building your SMART goals, have frequent and meaningful conversations with those involved and tailor the process to meet each employee’s needs. The process should allow employees to give open, honest, and safe feedback about their manager, department, and organization.

Separate the performance review from the compensation discussion. Ideally, you should notify the employee that compensation will be discussed a few weeks to a month later. If available, use your HR information system to help manage the process.

Understand the future of Performance Reviews

Leadership is more important than ever– leaders need to be self-aware, inspiring, and relatable. Be aware of diversity, equity, inclusion, and belonging. Creating a culture where employees feel a sense of belonging and pride in their job and organization is critical. The future of performance reviews will involve the following:

  • Continuous feedback
  • Data-driven evaluations
  • Skills development
  • Multiple perspectives
  • Emphasis on employee well-being
  • Technology-enabled processes
  • Customized and flexible review approaches
  • Ratings addressing employee fit with cultural values

Your new approach should also consider your new normal, whether it is a hybrid or remote work environment. When enhancing your review process, openly discuss with each employee where they stand; employees want to know the potential for a promotion and/or increase in pay.

Always measure what matters.

//

Tom Prest works with business leaders to strategically evaluate the best path forward. His work includes strategic direction, in-depth compensation & benefits analysis, organizational structure & planning, as well as performance management. If you have any questions or seek further clarification, please call us at 804.282.9566 or email Stephanie Ford at sford@warrenwhitney.com. We do not charge for the initial call. We want to learn more about your business needs.

Making Potential Happen.

[1] https://www.shrm.org/hr-today/news/hr-magazine/spring-2023/pages/the-problem-with-performance-reviews.aspx

 

 

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