There is one thing that many employees around the world still dread. It is an event where their managers are required to sit down with them once a year in order to have a weird and uncomfortable conversation. This is the annual performance review.
While it may have originally been designed as a means to identify potential among a group of people, performance reviews of today tend to feel forced and awkward, and it usually doesn’t do a lot to help employees get better at their jobs.
According to a study by Gallup, only about 14 percent of employees strongly agree that their performance reviews inspire them to improve. For many organizations, the performance review is simply something that is assumed to be ‘the right thing to do’. It has become normalized and is viewed as how businesses determine pay and establish accountability.
In recent years however, many business leaders have started asking themselves, “Why do we do this in the first place?” Are our performance reviews really helping us get the most out of our people and engage them?
Decades of research on the topic by analysts at Gallup have revealed the following:
Performance reviews in most organizations do more harm than good
Traditional performance reviews and approaches to feedback are often so bad that they make performance worse about one-third of the time. The reasons for this are many, but chief among them is that managers do not give regular feedback to employees. This means that when it comes time for the performance review, the issues are history – they have either been resolved or are in the distant past.
In addition, most managers have not been trained to evaluate performance, give feedback or charter a developmental plan. Another major cause of awkwardness is that most performance reviews are trying to do too many things in a single conversation. One way to improve such hectic conversations is to separate some of the topics that needs to be discussed into different conversations.
Strong evidence about alternatives to performance reviews is lacking, but there are insights to keep in mind
Over the past several years, many well-known companies have experimented with different ways of doing performance evaluations, including eliminating them all together. Some changes have worked, some have not, and for some, it is too early to tell.
Nevertheless, organizational readiness for change has proven itself as a highly important factor. Often, new approaches that prove burdensome and confusing are met with resistance and frustration from employees.
There is also no single ‘fix-all’ solution for improving performance reviews. What works for front-line workers in a manufacturing environment or a call center does not necessarily work for computer programmers and senior leaders. However, there are some key changes that do work for everyone. Simplifying performance reviews and making them more flexible and relevant to the work being done has been popular with both managers and employees, according to Gallup.
Rewarding employees for overtaking colleagues can fuel greed
A good performance management system will reward people who help others and perform well at solo work, while at the same time punishing free riders and backstabbers. Despite that, only 22 percent of employees strongly agree that their pay and incentives motivate them to do what is best for their organization.
Encouraging collaboration and helpfulness needs to be included in performance evaluations to stave off a cutthroat culture. At the same time, leaders should not take things to the extent where it encourages superficiality, diffusion of responsibility and mediocrity.
Performance reviews become less important as managers learn to have regular and constructive conversations with employees
If performance feedback only occurs a few times a year, it’s unlikely to be meaningful. In contrast, when formal progress reviews are accompanied by frequent, honest feedback – and the review is consistent with what you’ve heard all year – they can be affirming, motivating and, at the very least, much less awkward.
Gallup has found that when managers provide weekly feedback, team members are 5.2 times more likely to agree that they receive meaningful feedback, 3.2 times more likely to agree that they are motivated to improve, and 2.7 times more likely to be engaged at work.
Needless to say, the best performance management systems encourage frequent, meaningful manager-employee conversations.