Why HR needs to invest in frequent reviews for perfomance management
There’s no point in denying it: The traditional concept of annual performance reviews doesn’t seem to be working anymore. Neither employees nor managers find it effective and rewarding enough to improve the company’s success.
In fact, 45% of HR leaders do not think annual performance reviews are an accurate appraisal of employee’s work.
And for a reason:
A performance meeting that takes place once a year feels infrequent and distant from timely issues. Plus, this lack of frequency makes organizations deal with issues only retrospectively.
Unfortunately, the annual review doesn’t make companies aware of potential problems, and challenges employees experience during the year. In fact, its formal structure leads to a more defensive approach, focusing on assessing one’s skills rather than pressing issues.
A solution: moving to regular 1-on-1 conversations instead.
Frequent performance reviews help employees receive the ongoing feedback they seek, while for managers they offer an opportunity to deal with potential issues before they escalate. And so, in this post, we’ll discuss why your organization should restructure the way you do performance reviews, and focus on regular conversations with employees.
Challenges with existing performance management
Ask employees and managers, and I’m sure many would admit that they consider annual performance reviews:
- too formal
- time-consuming
- one-sided, and
- most importantly, lacking timely context that aligns with the business goals
And this trend happens across all organizations.
For example, Deloitte conducted a survey in 2014 to analyze their performance management approach.
They discovered that the company consumes a staggering 2 million hours a year in the process of performance management. Hours that weren’t improving the company’s transparency or productivity in any way. As a result, they recognized the need to create an engaged performance review that analyses and fuels high performance among employees. In turn, Deloitte decided to reinvent their existing performance management to focus on the people, their strengths and how to provide them greater clarity over their goals.
And as they admit (quoted via HBR):
“These brief conversations allow leaders to set expectations for the upcoming week, review priorities, comment on recent work, and provide course correction, coaching, or important new information. The conversations provide clarity regarding what is expected of each team member and why, what great work looks like, and how each can do his or her best work in the upcoming days — in other words, exactly the trinity of purpose, expectations, and strengths that characterizes our best teams.”
Although several companies acknowledge the need to keep up with the latest trends, it’s still common among businesses to rely on yearly performance assessments. But as modern organizations move at a fast pace, annual meetings clearly aren’t enough anymore.
And so, performance management should not be limited to a stand-alone annual meeting, but be part of a continuous process to enable people to feel more involved and motivated.
After all, there’s no need to wait for a year to hear how you did after the completion of a project and similarly, managers don’t have to spend more time on paperwork and formal processes if they are able to assess employee performance through the year. And it works. As it turns out, companies that have implemented regular feedback have 14.9% lower turnover rates than those with annual reviews.
Incredible, isn’t it?
How performance management is evolving
It’s hard to believe it, but only 28% of organizations report having “effective” or “very effective” performance management. This clearly suggests the need to improve this percentage by paying closer attention to employees and their individual performance.
The fact that 72% of organizations don’t consider their performance management effective brings out the need for a revised performance management process. A people-centric approach with more frequent performance discussions through the year can increase productivity, providing the employees clear directions on how to improve their performance.
This will allow both sides to be aware of the set expectations, helping everyone achieve the business goals. And the first step to evaluate the existing performance management process is to set clear objectives.
The shift in performance management aims for a strategy that focuses on employees at an individual level. And its goal is to acknowledge and reward their work, while helping them to build on new skills.
An organization can achieve this with:
- frequent 1-on-1 conversations
- personalized feedback that is both positive and constructive
- promoting personal development and collaborating on personal goals for employees
- involving transparency over business goals and how every employee can help towards them
Communication is vital in this process, and it’s important to promote an open dialogue that will encourage feedback from both sides. Employees will feel more involved if they are able to express their thoughts, while managers need to build a system that involves both positive and constructive feedback. The ultimate goal of this change is to maximize the potential of each employee and here’s why regular meetings are the best way to achieve this.
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