One-sided relationships just don't work. They don't work in friendships. They don't work in marriage. And they definitely don't work in business. That's why you should be concerned that employees say performance reviews don't benefit them. If your organization does reviews only to decide who to fire and who deserves a raise, it may not matter to you if employees feel benefited from reviews. But if you, like me, feel the true purpose of performance reviews is to help employees improve their performance, you should be alarmed. To change reviews so they benefit employee performance, address these top employee criticisms:
1. Organizations don't listen.
Imagine an employee standing in front of you holding a silver platter, offering specific ways to help increase his engagement and retention. This is exactly what performance reviews can be but aren't. One big reason they aren't is because organizations are often terrible at listening--76 percent of employees don't feel heard during reviews. Further, more than half of employees say their concerns aren't addressed after reviews.
Why should we care that we're bad at listening and following up? Because employees who feel ignored by their manager are more than two times as likely to be actively disengaged. On the flip side, organizations who give and receive frequent feedback increase retention by 15 percent. The data's obvious; let's be better.
2. Reviews don't lead to career development.
You hire smart employees to drive growth in your company. Those smart people also want to grow in their career--which is great! Unfortunately, 61 percent say their companies don't look for career development opportunities after reviews.
Employers who neglect professional development deprive their organizations of great benefits. You miss out on retention: Employees who are continually developed are twice as likely to spend their career with their company. You miss out on job satisfaction: 58 percent of employees say professional development contributes to job satisfaction. And you miss out on 24 percent higher profit margins. Frankly, neglecting career development is much more costly than investing in employees.
3. Raises aren't given. (But giving more raises isn't the answer!)
When raises are tied to reviews, reviews often feel like an obstacle course of hoops to jump through, hurdles to clear, with a raise as a reward at the end--except 56 percent of employees complain that even if they perform well at work, they aren't rewarded with a raise. So employees play the game. They set objectives they can easily meet. They don't give (or readily accept) critical feedback for fear it'll jeopardize their raise. And organizations end up with a broken system that doesn't measure true performance and employees who are disappointed about their compensation.
Why does this matter? Well, first of all, you can't afford to waste so much time on ineffectively reviewing performance. (Deloitte found they were wasting two million man hours each year on faulty reviews.) But you also can't afford to have a workforce that feels disappointed with its pay: 80 percent of employees who feel underpaid admit to "not working as hard" because of it. Ineffective reviews that contribute to even lower performance? I guess we know why performance reviews are broken.
How do we fix this? By not tying raises directly to performance reviews. Yes, increased pay should come naturally with increased ability and performance. But when cash is on the table at review time, the focus becomes manipulating the review system to ensure a raise, instead of on increased performance. Separate them and make sure the organization reviews compensation often enough to make those increases naturally.
The Common Factor: Poor Communication.
Listen, we all know communication needs improvement, but if you don't have a plan, you don't have anything to communicate. Poor planning around feedback, employee development, and the purpose of reviews leads to poor communication. Create a plan to prioritize and implement suggestions, then communicate with employees about that plan. Have an employee development plan that includes talking with employees about career paths. Plan to make reviews about improving performance--not about deciding if a raise is warranted. The money will come, but the improved performance comes first.
Intentional, frequent communication can go a long way in aligning employees and employers. And, it turns out, many organizations are finding this frequent communication is a better way to conduct reviews anyway: 44 percent agree that replacing annual reviews with ongoing, real-time feedback is a top HR trend this year. By improving communication, employees will feel listened to and understand their career path, and you'll create a performance management program that's about making people better (not just increasing their compensation). Most important, you'll gain the balanced relationships that great companies and company cultures have.