Performance Reviews are Damaging your Employee Experience

Yearly performance reviews have traditionally been a stressful employee experience.  For some, it can symbolise a yearly bonus or next year’s increased pay package.  For others, the chopping block.  But many forward-thinking organisations are now recognising annual reviews are an unnecessary requirement, dissatisfied with the ineffectiveness and impartiality of the time-consuming process.

Performance reviews can involve hundreds of hours of management time in preparation are still likely to be poorly received.  More importantly, they’re failing to capture the needs of modern employees.

“Always treat your employees exactly as you want them to treat your best customers.”

Stephen Covey

Views on the traditional approach

The fast-paced nature of modern work, coupled with the high expectations of current workplaces, are leading organisations to move away from traditional performance reviews.  A recent Adobe survey with 1,500 U.S. office workers, found that about two-thirds of employees and managers viewed performance reviews as an outdated practice.

On average, managers spend 17 hours planning for each individual’s performance review.  According to research from the Corporate Executive Board (CEB), the average manager’s responsibilities have almost doubled from four to seven direct reports.  Altogether, this leads to managers spending about 200 hours a year on tasks such as filling out evaluations and meeting individually with employees.

For a company with about 10,000 employees, it is predicted that companies spend roughly $35 million a year to conduct performance reviews.  Meanwhile, 90% of managers are dissatisfied with the way their company conducts reviews, and 90% of HR leaders believe they yield inaccurate information.

What’s the alternative?

The biggest restraint on annual reviews is their heavy emphasis on financial rewards and punishments with the end-of-year structure.  Holding people accountable for their past behaviours at the expense of improving current performance can be difficult to navigate yet is extremely important for long-term sustainability.

Adobe’s recent study reported that around 80% of office workers would prefer an alternative method, such as on-the-spot feedback as opposed to annual formal reviews.  Many large organisations are now shifting towards a revised model involving more frequent feedback.

The ‘Check-In’ system adopted at Adobe is a new way of managing performance reviews, transforming the employee experience, and showing real, improved results. Meanwhile, some organisations plan to abolish the system of ranking and rating employees to determine their performance and reward altogether.  

Instead, systems are being replaced with frequent check-ins, involving ongoing one-on-one conversations with managers and employees without formal documentation.  Business researcher Josh Bersin believes that about 70% of multinational companies are moving toward this approach, that prioritises career development and employee experience.

The transformation of many top-tier review systems is providing organisations with a wide variety of options moving forward.

At Accenture their transformation from performance reviews has changed approximately 90% of past processes, says CEO Pierre Nanterne.  They have instead opted for regular and timely feedback following assignments.  This procedure aims to reach goals and address employee development, using more real-time, achievable and applicable feedback.

Similarly, at Deloitte, once-a-year performance reviews have been replaced with a set of four questions asked at the end of every project or every quarter.  Each question is straight forward, with the expectation of regular check-in conversations.  Along with a formal/standardised coaching system, this breeds a culture of mentoring and nurturing development conversations.

At General Electric, the long-time role model for performance appraisals has shifted focus towards well-rounded feedback to inform short-term and long-term goals.  With a focus on performance development, their instantaneous feedback app called PD@GE, is all-inclusive and allows anyone (managers, colleagues) to leave any kind of feedback for an employee.  This encourages workers to organise discussions with managers, prioritise goals and work on their performance on an ongoing basis.

Across the board, large organisations have set the intention to move away from the traditional model of performance reviews.  This includes technology companies such as Microsoft, Dell, IBM, Juniper Systems and other large organisations such as PwC, Gap, OppenheimerFunds, Adidas, SAP, Amazon and Goldman Sachs.

Case study: Adobe

Donna Morris, Adobe’s Executive Vice President of Employee Experience, drove the creation of Check-In, and has noted how this procedure simplifies performance reviews.  HR managers train leaders to have constructive conversations with their employees.  Feedback conversations are expected to occur quarterly, with ongoing feedback becoming the norm.  Adobe’s Employee Resource Centre is available to offer support and guidance where needed.  Managers are shown an internal salary tool that allows them to view their employees’ salary range for each role.  They are then encouraged to operate as a business owner and determine the impact each employee is making, whether they have unique skills in the market and whether they are paid competitively.

Adobe’s guidelines

Within Adobe, their Check-In system revolves around three central elements: expectations, feedback, and growth and development.

1.    Expectations: This includes setting, tracking and reviewing clear objectives.  The roles and responsibilities of each objective also have to be clearly outlined, along with their result or success.

2.    Feedback: Once the expectations have been established, feedback is required on how to achieve goals and improve performance at a faster rate.  Reciprocal coaching on a regular basis is necessary.

3.    Growth and Development: With this intention, ongoing conversations are necessary for the future development of employees.  This allows for an easier view of employee progression.

Results to date

Since the implementations of Check-In, time spent on performance reviews has been redistributed to more impactful Check-In conversations and more important priorities.  In the two years that it has been rolled out, Adobe estimates that over 100,000 manager hours have been saved each year.  They have also reported a drop in voluntary attrition, as well as more involuntary departures from workers who are not meeting expectations.

Based on employee surveys between 2012 and 2015, the number of employees that recommended Adobe as a great place to work increased by 10%, along with a 10% increase in those reporting that ongoing feedback helped their performance.

Adobe’s system of health checks and feedback loops alleviates pressure from such a formal process and saves hours of manager and productive working time.  It contributes towards learning and development goals as well as improving outcomes for individuals and the organisation.  Performance conversations serve to be a better experience for everyone involved, by shifting the emphasis onto development goals rather than punishments and rewards.  It also addresses some of the age-old issues of annual performance reviews, such as the difficulty recalling performance earlier in the year.

Modernise the performance review and see the benefits of an improved employee experience

The benefits of changing the performance review process are demonstrative and worthwhile, especially for smaller scale organisations.  Beyond these reasons, regular feedback loops and goal setting can instil and develop a learning-oriented and supportive culture in the digital age.

Annual cycles are no longer clear cut. In the gig economy of short-term projects and changing dynamics, employee goals and tasks cannot be accurately mapped out a year in advance.  New methods of performance review can support and promote the agile practices that so many tech companies and those in disruptive industries can employ.

In this rapidly shifting environment with reliance on real-time data, feedback can be one of these points that is collected and addressed on an on-going basis.  As businesses set strategic and development goals, changing the performance review process to be more iterative can also be a solid investment in the employee experience. A lot of work needs to go into the performance overhaul, but the results have proven the worth of this process both short and long term.

Support leaders by foster a feedback conducive culture 

The success of any change to systems of feedback needs to be supported culturally. At Psych Press, we recognise the importance of identifying employee readiness early. The Menu-Driven Business Personality Reflections^® is a bespoke 73 scale personality questionnaire that measures business-related capabilities to assist in selection and personal development decisions. 

Through scales like Personal Development, organisations can quickly assess how effectively their personnel would adapt to a feedback conducive culture.

 Personal Development

Personal development is a measure of an individual’s preference for obtaining and developing new skills, as well as their level of receptivity to feedback.  The Personal Development scale in the Business Personality Reflections^® questionnaire indicates the degree to which an individual is likely to desire understanding and developing new skills, and whether they believe advice and comments from others to be beneficial.  Personal development tendencies place individuals at a sizeable competitive advantage as they are catalysts for their own professional development and will continually seek to increase their own intellectual capital.  Without it, an employee may show reluctance in broadening their knowledge and skill set and may be less receptive to constructive feedback.

Individuals who score highly on the Business Personality Reflections^® Personal Development scale are more likely to want to master new situations, and are likely to regard feedback as useful and fundamental to self-progression.  Employees who have personal development characteristics are also likely to be self-driven, goal-oriented, and innovative.

The results of several studies show that the Big Five personality dimensions of ‘openness to experience and conscientiousness’ are positively related to personal development, specifically proactive learning and feedback-seeking behaviour (Maurer, Lippstreu & Judge, 2008; Orvis & Leffler, 2011).  In a longitudinal study, Seibert, Kraimer & Crant (2001) found proactive and open dispositions to be associated with heightened job performance and role satisfaction. This study also found personal development tendencies elicited long-term benefits for employees, including higher salaries and career success (Seibert et al., 2001).  Cultivating employee satisfaction and growing intellectual capital increases productivity and innovation, which will ultimately increase an organisation’s competitive advantage (Roffe, 1999).

A sample item for the Personal Development scale that you may see on our questionnaire could be:

“To be of the most benefit to their company, workers should continually learn new things”.

You might consider using a personal development scale in your selection and development processes if your employees require:

·         A feedback conducive environment

·         Team-oriented tasks where employees offer feedback and advice to challenge and support one another.

·         A flexible and dynamic working environment.

·         Constant career progression and development.

Organisations need employees who are high in personal development tendencies to succeed.  Let us help you find and develop the right people for your organisation so that you can maintain your competitive advantage.

If you are interested in learning more about the Personal Development scale, or the Menu-Driven Business Personality Reflections^® please simply enquire now for a free trial.