Why Organizations Need New Performance Review Processes

We’ve all been there... You filled out your annual self-evaluation. Your manager reviewed it. Your manager reviewed your performance and sent their review and your self-review to your second level manager for review and approval. You have a meeting with your manager to review the appraisal. You sign off on the appraisal. Your manager signs off on your sign off. Your second level manager signs off and finalizes the appraisal.

Other than sounding like one big game of Who’s on First, this performance review process is what many organizations and individuals associate with performance management. Done right your organization’s performance management process brings a greater understanding of how each employee fits into the overall organization’s vision. Done wrong, it’s a frustrating process with steps that don’t add value and dilute the impact of the feedback.

So what’s the solution? Let’s first understand the problem.

Top 3 Problems with Performance Reviews

1. The Annual Performance Appraisal is the Same as Performance Management. This is a pretty widely held practice. We get together once per year to discuss our performance with our manager and set the next year’s goals at that meeting. Then, the next year we do it all again. Many organizations consider the annual appraisal event their performance management process.
2. Performance Management is a One-Way Street. Remember when you were a kid and your mom told you, “Because I said so!” when you asked why? Were you motivated to do what they told you? Chances are that you were more annoyed than anything else. Now imagine your manager establishing your goals without asking for your input. It’s hard to feel connected to goals you didn’t have a say in.
3. You’re Not Really Measuring Performance. Often times, managers view performance management as a box they have to check each year, every six months, or at whatever interval is required of them. An employee is rated a “4,” and they “exceed expectations.” But what does that really mean? How does the number “4” truly measure a team member’s performance or development?  Or their increased or continued contribution to the organization? If they were rated a “5” the prior year, does this mean they’re now less of an asset? Without clear definitions and understanding of what the numbers mean, there is no meaningful measure of performance.

The Best Performance Management Process Trends

1. First, understand that “Performance Management” is not an event. It is a continuous process of setting expectations, providing feedback and assessing performance. It’s an ongoing conversation. The annual performance appraisal is still important, but it becomes a review and validation of all the previous conversations and feedback so there is no surprise.
2. Second, ensure that employee input is built into the goal-setting process. Best practice points towards a collaborative goal-setting process that allows both parties to have input into the definition of and timeline used for a team member’s goals. This ensures the goals are clear, have been thought through, and have buy-in from the person doing the work.
3. Third, clearly define the measures for success. Establishing a performance management process and measurement tools can be difficult. It can vary by industry, company size, and what the goals are for your performance management process. For more information on how to answer some of the considerations that should be addressed in this process, I encourage you to check out this blog on How to Solve the Three Biggest Problems with Performance Reviews.

Performance management is by no means one size fits all, but this is a trend that we believe will continue to shift across the board. For example, starting in January of 2015 here at Helios, we stopped using number ratings and tying performance to specific competencies. Instead, we share who we want to be when we grow up, how we can improve, discuss how we are progressing toward our goals, etc. on a quarterly basis. In this capacity, our managers serve more as coaches and give us ongoing, regular feedback. A government contracting client of ours asked us to redesign their appraisal process to allow quarterly conversations as well with structure that works for their industry. Even GE is replacing their annual performance reviews with an innovative app, that will instead serve as a tool to facilitate conversations between the manager and employee on performance development. In fact, The Washington Post reported that "to date nearly 10 percent of Fortune 500 companies have done away with annual ratings." Performance Management and providing the right, useful tools for managers was the topic of conversation among the keynotes this summer at SHRM's national conference, in the news today, so it will be interesting to see how other organizations continue to moving in this direction in the months to come.