Performance reviews are one of the most important tools that managers have to help them identify employee strengths and weaknesses, track employee progress, and ensure that employees are meeting their goals. However, far too often, performance reviews are used as a way to micromanage employees and nitpick their every move.
When performance reviews are used in this way, they become more of a hindrance than a help.
You might have read the Wall Street Journal’s article “Annual Reviews Are a Terrible Way to Evaluate Employees” or come across experts on LinkedIn advising organizations to retire performance reviews / traditional appraisal forms. Performance reviews do serve a purpose - as long as you know what the purpose is.
To encourage employees (and orgs as a whole) to take a collective moment to recap performance / take a snapshot of performance for a review cycle which could be as short as a month or as long as a year.
However, what organizations should truly be looking to do is much bigger than just reviews when it comes to performance. Performance enablement not just performance evaluation.
What are the prime objectives of performance reviews?
Let’s take a look at the recent report by HR.com which analyzed organizations objectives for conducting performance reviews.
Some of the objectives chosen by organizations such as “to help individual employees learn and grow”, “to help the organization improve performance”, “to boost communication” between employees and managers” and “to aid alignment to organizational goals and values” are not issues that can be solely addressed by performance reviews themselves. It needs a more holistic view and approach towards performance enablement.
Let’s take a look at some of the larger goals that a performance review alone cannot address, and what mechanisms are better suited to accomplish them.
If you want your performance reviews to be truly effective, there are a few things you should keep in mind.
Performance reviews are not designed to only focus on the development of employees
The intention behind conducting performance reviews is not solely to focus on the development of employees.
Developmental reviews are a better way to achieve this target. Developmental reviews are a forward-focused tool which helps employees grow and develop. Development-focused conversations prioritize an employee’s long-term success. These reviews differ from performance reviews as they’re employee-led, aspirational, developmental-focused, tailored, not tied to compensations, ensure employees progress on personal objectives and identify skill gaps.
Performance reviews are not designed to provide coaching
Performance reviews are not intended to provide coaching to employees.
Coaching is a larger managerial responsibility that people managers need to own and drive throughout the year/ in natural work rhythms. Through coaching, managers, and employees develop a partnership that helps them understand what needs to be accomplished and how it can be accomplished. Train your managers to act as coaches that help employees grow and develop, compared to utilizing traditional command-and-control tactics with employees.
Coaching differs from performance reviews as they're informal, interactive, involve two-way communication, include goal setting, action planning and are focused on development and improving performance. Take a look at how Patagonia revolutionized their performance management approach. One of their key strategies was the role of their managers changing from judge and jury to guide, coach and advocate with their focus being on thoughtful engagement.
Performance reviews are not designed to boost communication between managers and employees
Performance reviews do not solve for increasing communication between managers and employees.
Holding weekly or bi-weekly check-in’s is a strategy better suited to improve communication. 85% of workers who have weekly check-ins with their manager report higher levels of engagement. Check-in’s are carried out to facilitate ongoing conversations between managers and employees, they involve discussions of progress around goals, well-being, productivity etc. Adobe transformed their performance management strategy by keeping feedback and ongoing conversations at the heart of their plan to support employee’s long-term success and career growth. This has cut voluntary employee turnover by some 30% after introducing a frequent check-in program.
Performance reviews are not designed to improve overall performance
The purpose of performance reviews is not to improve performance, only to help you capture a record of performance.
What truly improves performance is all the magic (and mindful effort) that occurs between one performance review and the next. This is a collective outcome of on the job coaching, real time feedback and praise, and meaningful 1:1s to remove roadblocks and catalyze the right actions when it matters the most (before it is too late).
What Are Performance Reviews Truly Meant To Do?
Performance reviews are meant to capture a snapshot of performance
Performance reviews, when done right, are meant to provide a collective moment to capture a snapshot of performance for a review period.. The focus is on an accurate and actionable evaluation of performance. The goal is to answer questions like, did an individual meet their goals? How were the goals achieved? What values and behaviors did the individual demonstrate?
So what does this look like? See how Spotify does this efficiently with their talent snapshot. In short, performance reviews aren’t about tick boxes, controlling and demanding; rather they are designed to encourage, support and challenge employees with a growth mindset.
Performance reviews are meant to be constructive and motivate employees
The intention is to help employees understand aspects such as what excellence looks like in their role, where they currently stand and how they can improve. Acknowledging successes does not mean ignoring what can be improved, there is also a focus on what specific actions can be taken to improve performance.
Performance reviews are meant to help organizational make talent decisions
The objective of performance reviews is to primarily help an organization make talent decisions on the basis of fair and consistent practices across teams, functions and verticals. However, the idea of waiting up to a year to take the next talent decision / being stuck with the same rating label for a year can seem outdated given today’s dynamic and radically changing environment. Which is why more and more organizations turn to shorter and more lighter review cycles that are attuned to work rhythms, easy to execute and don’t hold employees back but drive their growth.
Whether you keep or ditch annual performance reviews altogether, here are the 5 practices your performance enablement philosophy should also include to be effective:
Transparency, clarity and communication on goals
Research has validated that goals vastly improve performance in the workplace. Set goals and provide transparency throughout the organization on what you’re looking to achieve and then track their progress. Break down goals into specific and measurable OKRs. Public tracking and commitment is demonstrated when goals are shared with the entirety of the organization.
Here are some surveys on companies that prove this:
23andMe utilized OKRs to power its growth
Leaders who talk about strategy results increase confidence in employees by 14%.
Google utilizes an employee goal-setting strategy since the beginning of time.
Create a culture of continuous 360-degree feedback
Data from Gallup showed that employees who received meaningful feedback were four times more likely to be engaged than other employees. Employees should receive real-time and meaningful feedback from one’s organizational network, that is the people an employee interacts and works with most frequently. Feedback should not come from only one’s manager. Constructive feedback and praise should direct the receiver towards enhanced understanding of the right behaviors displayed and role modeled. For example, what to do more / less etc. Check out Cargill, a food distribution company who’s “Everyday performance Management” strategy leads to measurable improvements.
Regular conversations in the workplace with employees about making strengths visible through work and bringing one’s best self at work and driving excellence throughout the year and not just via point in time training. Engagement increases by 13% when leaders meet with their people weekly. Weekly check-in’s and monthly 1:1’s are tools to facilitate an ongoing two-way dialogue between team leaders and members.
Train managers effectively
Effective employee development starts with managers. Invest time in developing great people managers as managerial behavior is the foundation of successful performance enablement. A report by Gallup stated that at least 70% of the variance in team engagement is explained by the quality of the manager or team leader. Train managers on how they can do their best work and support their team members to do the same as well.
Recognition and Appreciation
Recognition and appreciation are two important facets of helping employees feel valued at work. Recognition refers to giving positive feedback based on performance. Appreciation refers to acknowledging a person's inherent value. Managers' expressions of gratitude are directly correlated with employees' performance, according to research. Listening to your employees and telling them what you value about them is an essential part of creating a healthy workplace. According to Glassdoor’s Employee Appreciation Survey, 53% of employees admitted they would stay longer at their company if they felt more appreciated by their boss. The lesson being the more appreciation, the better.
Having said all that, the modern workplace is all set to embrace performance enablement. a new approach to performance management that focuses on helping employees improve their performance through coaching and feedback, rather than relying on traditional methods such as annual reviews. This approach can help organizations ditch traditional review methods and create a more positive and productive work environment, and improve employee retention, engagement and performance from one review to the next.