Performance Reviews – Are they worth it?
Just lately we have noticed a growing trend – in not only small to medium businesses but also major corporates –to reconsider the benefits of the annual review process. Some include Adobe, Accenture, Deloittes and the NAB.
They have run the numbers, researched the staff and decided that a more regular, informal check in is a better way to go.
They have also ditched the forced ranking systems that tend to fall out of the performance review data. Feedback from staff suggests that they are not motivated by rankings and often struggle to understand why they get the result they do.
Over the years we have implemented a range of performance review processes – usually the more formal type. Historically large corporates find it useful to have all review data in around the same time so you can then work out who deserves what level of pay rise. It’s all a rather formal process.
And as we all know the performance review is really only as good as the manager facilitating it.
When employees get to “know” the system and the following can happen:
- Staff record every achievement and go through a long list at the review which takes up valuable communication time and usually these achievements are already known to the manager if they are any good.
- Staff try and “negotiate” a better bonus based on the list of said achievements (which are usually part of the job).
- Staff become experts in the competencies outlined for the job – and will go overboard telling you how fabulous they are.
- Poor performance is hard to pin down if you only meet twice yearly.
- In today’s business world market factors can change quite quickly and KPI’s can get outdated. You can’t work them into a formal system easily, what was relevant 6 months earlier may not be so relevant for the back half of the year.
- The ranking system definitions make it hard to be motivating when a “meets expectation” is given after a stellar year.
- Friends and colleagues are “competing” with each other for the best rank – hard on the culture
In fact the whole process can work against positive morale and create an unproductive working environment.
Those less confident staff will know that when they get a chance to use a formal process, they will get their voice heard.
A structured approach allows executives to see a baseline across managers, teams and business units. This can be useful for succession management or planning structural change.
A more regular “check in” also has positives and negatives:
Positives vs Negatives
- More regular one on ones keeps communication flowing in a more timely manner vs The cost to train Managers to hold an effective review
- Issues may be uncovered and resolved faster vs The time taken to hold the reviews
- Training needs are relevant and can be solved faster vs How to benchmark against other ‘like’ roles
- Non- performance can be worked on earlier vs If too informal the employee doesn’t get the right direction
- More chances to motivate and drive individual and team behaviour vs How to link into succession planning – this may become more fluid ( harder in large corporates)
- More detailed individual targets and plans can be worked on.
- Easier to adapt to changing market conditions
- You may save money on HRIS systems that are not necessary under an unstructured system.
Do you tend to favour a less structured more frequent approach – 6 weekly check ins – maybe a more formal review twice a year if needed.
It really depends on the company – values, culture, strategic direction, performance etc. – they all play a part in how you run your performance process.
You may want to call it something completely different as the word “performance” is usually associated with poor performance.
When it comes to discussion about the annual bonus – you may wish to consider more regular awards – could be based on excellent work or grabbing a big piece of business. The issue of bonuses is really a blog on its own so I will have a look at that next week.
This type of discussion makes for a great leadership team session.
What kind of performance process do you use at your place? Is it working?