8 minute read
Death of the performance review?
Janice Burns, Chief People Officer at Degreed, questions if performance reviews are suitable for today’s fast-paced world and, if not, what should take their place?
The performance review is something familiar to all workforces. Yet, as our work becomes more fast-paced, and after the many disruptions that the COVID-19 pandemic has brought to our workplaces, many are questioning the future of the performance review. Is it best left in the past?
Research would back up this point of view. Dissatisfaction with performance reviews is widespread internationally – 95 per cent of managers aren’t happy with the process, 90 per cent of HR professionals believe they are inaccurate. Furthermore, 87 per cent of employees find performance reviews ineffective. Even CEOs dislike them, with only 6 per cent stating that performance reviews are useful to their organisation.
Clearly, a lot of room for improvement exists.
The performance review can no longer be the mainstay of HR decision making. Traditional performance management approaches were developed at a different time when agility and responsiveness weren’t on the boardroom agenda.
Punishing poor performance
Performance reviews began life around World War I, as a merit rating system set up by the US military (to identify poor performers for discharge and transfer). Post-war, with the pressure on companies to increase production and boost the global economy, the performance review’s popularity skyrocketed. But within its early roots lies the core issue with performance reviews. The system was designed to, essentially, punish poor performance. It wasn’t intended to inspire, engage and retain a workforce.
Inaccurate insights
Another pitfall of performance reviews is they rely on outdated and inaccurate data. Most of us have trouble remembering what we did last week, let alone 12 months ago.
Plus, doing a review at the end of the year means a whole 11 months (at least) can pass where poor performance isn’t rectified. Moreover, it can cause recency bias. It will rarely reflect the entire year’s efforts and may undervalue or overvalue an employee’s actual contribution.
Expensive and stressful
Additionally, performance reviews cost a lot of money: as much as US$2.4 million to US$35 million a year in lost working hours for an organisation of 10,000 employees. Often, there’s little to show for that investment. One Deloitte manager once referred to the process as “an investment of 1.8 million hours across the firm that didn’t fit our business needs anymore”.
Some schools of thought even believe the ranking system of performance reviews actually activates our flight or fight response. It causes physiological stress, and that won’t lead to the kind of reflecting, insightful conversation needed to improve job performance.
A new process
Therefore, the focus for all HR departments is now on inspiring loyalty and engagement. Particularly during The Great Resignation, where nearly 40 per cent of
New Zealand workers are looking for new roles.
Other ways can be used to motivate employees to perform their best work and remain for longer. Whereas performance reviews focus backwards, the best feedback mechanisms look to the future. They are collaborative, a combined effort between an employee and their manager, with the employee setting the pace and focus. I like to call these performance previews.
Regular feedback needed
Performance previews tend to happen at regular intervals. Feedback sessions may happen at the end of a project, key career milestones (like completing a course, getting a promotion, or a work anniversary), or whenever an employee feels like they need one (when looking for career
direction, for instance, or if they’ve hit a challenge). Around 70 per cent of global companies are shifting towards this model, including IBM, PwC, Deloitte, Accenture and Dell.
Regular check-ins align with the desires of the Generation Z and Millennial workforce. Millennials are now the predominant workforce in New Zealand, with Gen Z becoming more influential. Almost half of Millennials and two-thirds of Gen Z want regular feedback from their managers.
Complementing project based work
Frequent feedback sessions are also helpful when organisations do a lot of project-based work, which will become popular as more organisations strive to be agile, hybrid work increases, and the gig economy booms. It more naturally fits the way work is completed in modern organisations. Feedback occurs at project-end and critical junctures during a project, which empowers people to fix issues before threatening a project’s results. Plus, with project-based work, you can’t predict what tasks an employee will be asked to do in a year’s time. So, you need consistent check-ins to keep them on track.
Ideal performance preview
With this in mind, what would an ideal performance preview consist of? Ideally, the session would look like the following.
• A conversation begins between a people leader and their employee; this is ongoing but has a clear starting point where an employee gets to set out their aspirations for their upcoming work.
• As projects start and finish, milestones are reached, challenges pop up, and aspirations evolve, the sessions act as a way for managers to remain updated with their teams and solve problems and offer relevant opportunities in real time.
• Workers drive their career conversations throughout the year, with managers supporting them in setting short-term goals.
• The key here is to hone in on what workers need to do their jobs well and keep advancing on their individual career journeys. The trajectory of the performance preview is onward, forward, not back.
When to implement a preview
As for timings, a performance preview can be implemented at any point in the year. The best time to start really is now. You’ll need to follow some non-negotiables for the preview to work effectively in your organisation.
• Performance expectations need to be aligned with the employee’s skills and skill needs, and what the business needs to achieve its goals.
• Separate skills from behaviours. Both skills and behaviours are critical to overall performance. However, skills can be easily identified, measured, activated and developed. Behaviours, on the other hand, are tied to preferences, willingness and habits. Time management is a skill; self-motivation is a behaviour.
• Set clear expectations on both sides, you will both come to a session with expectations. Set those out during the session to increase transparency. For instance, a manager will have specific expectations about a team member’s performance. Meanwhile, the employee will have expectations about their manager, their career goals and the business trajectory.
• Separate performance previews from compensation. This should fall under your compensation or total rewards team. Previews focus on performance enablement (getting the best out of each worker and building a fulfilling career during their time with you).
Last tips
In a process change as allencompassing as a performance preview, additional areas feed into its effectiveness.
Understanding skills An essential part of making a performance preview work is
understanding current employee skills: what’s needed to do their job better and what skills will help someone grow their career. These days, a career isn’t solely job based. It’s more of a portfolio of different projects, experiences and skills acquired through this. Performance management must, therefore, reflect this, by tracking and growing skills throughout a career (and across the year).
When HR and people leaders adopt this skill-based approach, then a dynamic process begins. People feel empowered to learn new skills and find further work and learning opportunities within their organisation. Their managers proactively offer assignments and learning opportunities that match their career goals and skill needs.
Equipping managers It can be easy to overlook individual contributions in the shift to performance previews. The change will be undone without the right support in place for everyone involved, especially managers who will be at the forefront of efforts. Managers will be the ones facilitating feedback sessions in a more holistic style compared with annual performance reviews. They will have to coach and mentor their team and offer relevant opportunities for employees to build their skills and achieve better work.
This type of performance management ultimately requires more time and energy from people managers. So, HR teams must lay the groundwork for managers to be able to provide continuous feedback and coaching with confidence and consistency. This may require upskilling across all managerial levels, in coaching skills, for example, as well as the new process itself.
Actions post-preview For a performance preview to have a tangible effect on the business and employee, agreed actions
must be taken after each session. Obviously, these need to be recorded somewhere so managers and employees can check that actions have been completed and to track progress. It also shows individuals that something positive is coming from their feedback sessions.
An example of this might be an employee expressing their wish to learn a new skill. Their manager might be tasked to find suitable learning opportunities to support this, while the employee has to hit certain milestones to show that they’re building the skill. In subsequent check-ins, both parties can reflect on how the upskilling is going and set new goals based on this.
A step forward
For your organisation and workforce to become stronger, you must embrace change. Shifting to a performance preview will be a significant evolution that will take you to the next level. Instead of using the past as your compass, you’ll charge ahead with a clear focus for the future.
Janice Burns joined Degreed as its first chief career experience officer in 2020, becoming its chief people officer in 2021. Before joining Degreed, Mastercard, with her most recent role as its chief learning officer, where she led the design and implementation of employee learning experiences and development programmes globally.
