For many, the end of the calendar year marks the beginning of annual performance reviews. 'Tis the season, so let's get one thing perfectly clear: Most performance reviews flat out stink.
In fact, they're bad enough that almost half of companies don't even bother with them anymore. And according to Deloitte's research, only 10 percent of respondents actually believe that performance management is a good use of time. That's dismal for an approval rating. But don't worry, there's hope. 2015 brought good news in the world of performance management, and things are looking even better in 2016. Before we get to what's changing, however, let's make sure we're on the same page as to why traditional performance reviews have failed for so long:
They are not fulfilling their purpose. Performance reviews are supposed to review performance (go figure). Yet, far too often they are merely used to gauge an employee's qualification for promotions and raises. Even when they actually do review performance, the evaluations don't focus nearly enough on how the employee is performing right now. The result is feedback that would have been much more valuable earlier in the year but is now obsolete.
They take too much time. Before restructuring their process, Deloitte spent 2 million man-hours a year filling out forms, holding meetings, and creating rating systems for their performance reviews. And they aren't the only victims of the time-drain. Retroactively reviewing somebody's performance over the last year--in detail--is a daunting process and a massive, time-consuming headache. Speaking of which...
They don't happen frequently enough. Employees need feedback on a regular basis. Waiting for yearly (or semi-yearly) reviews makes it impossible to give the timely advice people need to grow now. Not to mention the fact that people need to be recognized and rewarded for great work on a regular basis to stay inspired and motivated.
They are subjective. The traditional performance review goes something like this:
"Rate me on 'Marcus is a good listener' and we learn whether I am a better listener than you. [This question is] akin to you rating me on height. Whether you perceive me as short or tall depends on how short or tall you are."--Marcus Buckingham
Mr. Buckingham with the mic drop! Anybody who has ever gone to school knows about subjective grading. We all had that one teacher who gave A's to anybody who tried, and we've all had that one teacher who is never satisfied. The same is true in business, and nobody should have to depend on this subjective roll of the dice.
So what's the good news in the world of performance reviews and why the optimism for 2016? The good news is that you don't have to jump on the bandwagon of abandoning performance reviews. When done well, performance reviews produce 40 percent higher employee engagement, an 18 percent boost in productivity, and 25 percent lower turnover. Here are the solutions that have worked in 2015, and that are providing hope for 2016 and beyond:
Keep it simple. Rather than a long convoluted list of questions and areas to grade, a better performance review gets straight to the point. For example, ask yourself what you would do if one of your employees got offered a job somewhere else. Literally, ask that. Would you jump for joy? Or would it be a huge loss? Simplicity can cut to the heart of the matter, making your performance reviews more accurate and less subjective.
Save time. A better performance review also saves you time. Keeping it simple, cutting to the heart of the problem, means employees and managers spend less time on reviews and answer only the most important questions. Couple that with accurate and relevant reporting and you'll have instant insights into your employees you never had before.
Make them a part of the regular routine. Once or twice a year simply isn't enough. There's tremendous value in doing shorter, simpler performance reviews at least quarterly with less formal one-on-one time in between. Through frequent feedback, employees and managers can make adjustments in real-time, which leads to improved productivity, less turnover, and more engaged employees.
Shift the focus. Focusing specifically on evaluating engagement and productivity can give managers the data they actually need to make important decisions. For example, an employee who is highly productive but disengaged might need more responsibility. Whereas someone who is extremely invested but struggling to be productive may simply need more training.
There's still value in performance reviews, so before you scrap them altogether, consider the alternative solutions available today. Start asking only the most important questions, and frequently, so you can improve all year round. There are tools that will help you turn performance management into an invaluable asset. 2015 may go down as the year performance management changed for the better, but 2016 should be the year that businesses start to reap the benefits of those changes.