Why HR needs to invest in frequent reviews for performance management

45% of HR leaders do not think annual performance reviews are an accurate appraisal - it's time for a new practice.

There’s no point in denying it: The traditional concept of annual performance reviews doesn’t seem to be working anymore. Neither employees nor managers find it effective and rewarding enough to improve the company's success.

In fact, 45% of HR leaders do not think annual performance reviews are an accurate appraisal of employee’s work.

And for a reason:

A performance meeting that takes place once a year feels infrequent and distant from timely issues. Plus, this lack of frequency makes organizations deal with issues only retrospectively.

Unfortunately, the annual review doesn't make companies aware of potential problems, and challenges employees experience during the year. In fact, its formal structure leads to a more defensive approach, focusing on assessing one’s skills rather than pressing issues.

A solution: moving to regular 1-on-1 conversations instead.

Frequent performance reviews help employees receive the ongoing feedback they seek, while for managers they offer an opportunity to deal with potential issues before they escalate. And so, in this post, we’ll discuss why your organization should restructure the way you do performance reviews, and focus on regular conversations with employees.

Challenges with existing performance management

Ask employees and managers, and I’m sure many would admit that they consider annual performance reviews:

  • too formal
  • time-consuming
  • one-sided, and
  • most importantly, lacking timely context that aligns with the business goals

And this trend happens across all organizations.

For example, Deloitte conducted a survey in 2014 to analyze their performance management approach.

They discovered that the company consumes a staggering 2 million hours a year in the process of performance management. Hours that weren’t improving the company’s transparency or productivity in any way. As a result, they recognized the need to create an engaged performance review that analyses and fuels high performance among employees. In turn, Deloitte decided to reinvent their existing performance management to focus on the people, their strengths and how to provide them greater clarity over their goals.

And as they admit (quoted via HBR):

“These brief conversations allow leaders to set expectations for the upcoming week, review priorities, comment on recent work, and provide course correction, coaching, or important new information. The conversations provide clarity regarding what is expected of each team member and why, what great work looks like, and how each can do his or her best work in the upcoming days—in other words, exactly the trinity of purpose, expectations, and strengths that characterizes our best teams.”

Although several companies acknowledge the need to keep up with the latest trends, it’s still common among businesses to rely on yearly performance assessments. But as modern organizations move at a fast pace, annual meetings clearly aren’t enough anymore.

And so, performance management should not be limited to a stand-alone annual meeting, but be part of a continuous process to enable people to feel more involved and motivated.

After all, there’s no need to wait for a year to hear how you did after the completion of a project and similarly, managers don’t have to spend more time on paperwork and formal processes if they are able to assess employee performance through the year. And it works. As it turns out, companies that have implemented regular feedback have 14.9% lower turnover rates than those with annual reviews.

Incredible, isn’t it?

How performance management is evolving

It’s hard to believe it, but only 28% of organizations report having “effective” or “very effective” performance management. This clearly suggests the need to improve this percentage by paying closer attention to employees and their individual performance.

‍(Image: Brandon Hall Group)

The fact that 72% of organizations don’t consider their performance management effective brings out the need for a revised performance management process. A people-centric approach with more frequent performance discussions through the year can increase productivity, providing the employees clear directions on how to improve their performance.

This will allow both sides to be aware of the set expectations, helping everyone achieve the business goals. And the first step to evaluate the existing performance management process is to set clear objectives.

The shift in performance management aims for a strategy that focuses on employees at an individual level. And its goal is to acknowledge and reward their work, while helping them to build on new skills.

An organization can achieve this with:

  • frequent 1-to-1 conversations
  • personalized feedback that is both positive and constructive
  • promoting personal development and collaborating on personal goals for employees
  • involving transparency over business goals and how every employee can help towards them

Communication is vital in this process, and it’s important to promote an open dialogue that will encourage feedback from both sides. Employees will feel more involved if they are able to express their thoughts, while managers need to build a system that involves both positive and constructive feedback. The ultimate goal of this change is to maximize the potential of each employee and here’s why regular meetings are the best way to achieve this:

Regular meetings lead to more engaged employees

According to Gallup, employees that have regular meetings with their managers are three times more likely to be engaged in their work.

And this actually comes as no surprise.

Frequent meetings help employees learn more about the company goals, and entice them to work harder to prove their skills in the organization. They also feel more motivated in their daily tasks, increasing the chances of a creative and productive workplace.

‍(Image: Gallup)

But positive feedback has to be timely and aligned with a recent achievement to be more meaningful. In contrast with an annual performance, a continuous appraisal can have a greater impact on the employee performance. Moreover, it makes it easier for the managers to focus on particular tasks, rather than organizing all the projects through an annual review.

Constructive feedback can also be useful, provided you present it in a genuinely helpful way.

Managers should seek for the employees’ improvement. An employee’s weaker area is rather an opportunity for improvement. Thus, the strategic implementation of constructive feedback can lead to more engaged employees.

How performance reviews can contribute to organizational improvement

A successful performance management system offers employees the framework to build their skills and improve their productivity. This doesn’t just help the individuals, but also the company. More specifically, the improved communication and the continuous feedback can lead to an effective workplace and thus, a high-performing company.

As an HR professional, you are responsible for implementing a performance management process that benefits both the employees and the organization.

Thus, a new focus on helping employees reach their full potential can have multiple benefits for the organization:

  • It can focus on the individuals, helping them build their strengths
  • Improve employee engagement through regular meetings
  • Help recognize employees faster
  • Make feedback more constructive through helpful conversations
  • Boost motivation through frequent appraisal

The combination of all these factors will make it easier for employees to feel an important part of the business. And also help managers track their progress and in doing so, help align their individual goals with the business objectives.

The biggest shift in performance management is to understand that every meeting should be an opportunity to help each individual grow. Regular meetings offer the chance to evaluate the employee's performance and discover all the ways they can grow.

Conclusion

Every meeting between the manager and the employee is an opportunity to build a relationship that aims to promote personal development and growth.

But a yearly performance review is not enough anymore. Employees are seeking constant feedback to become more productive and improve their skills.

As the HR landscape changes, there comes a need to analyze the efficiency of the existing performance reviews.

The role of the HR professional in a modern workplace is to spot the best ways to help people reach their potential. And a people-centric approach with frequent meetings can make feedback more meaningful, removing the inadequacy of formal annual reviews, focusing on continuous feedback through the year.

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