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Killing off the Performance Review: And why it’s not such a good idea…

Dilbert

Do you need to de-Dilbert your company?

This particular cartoon highlights everything that people don’t like about performance management, i.e. the single performance review that happens once a year, or maybe not at all, where performance is assessed based on the most recent few weeks and results in an arbitrary outcome that employees struggle to engage with and to top it off was probably more influenced by external factors, than management would like to admit.

Where’s the meaning, where’s the value? No wonder the majority of people want performance reviews to be scrapped! It’s not fun for employees, managers or the human resources team supporting them.

However, we need to be careful not to completely lose our way here. As beastly as performance reviews can be, the assessment of individual performance, as well as how it contributes to organisational performance is fundamental to many business-critical processes. So before we breathe the collective sigh of relief at the thought of never doing another performance review again, let's consider:

Individual and organisational goal setting - Well-written goals provide clarity and direction for employees and teams. While many employees will insist that they know what they intend to achieve; when asked very few are then able to clearly articulate their goals, or demonstrate how they link to the overall objectives of the organisation. Using a proactive performance review process allows employees and managers to consider, discuss, agree upon and formalise goals, thereby increasing the chances of them being achieved.

Talent Management – every organisation wants to be able to identify key talent, to know who the successors for critical roles might be, as well as who is willing and able to take on temporary assignments in other offices or functions. Individual performance (and a common way to assess it across a diverse organisation) may be only one criteria contributing to this process, but it’s a critical one. Spare a thought for those organisations that span multiple offices, regions or even continents. Talent Management and Succession Planning becomes near impossible for managers and HR if they are unable to identify or access performance information about potential employees.

Engagement – it sounds crazy to think that performance reviews can be anything other than un-engaging, but when done right, they are a key driver of employee engagement. Those who are familiar with Gallup’s 12 question engagement survey will be aware that effective performance conversations find their way into many of the questions. For example Q11 asks ‘In the last 6 months has someone at work talked to you about your progress?’, Q1 ‘Do you know what is expected of you at work?’ and my personal favourite, Q3 ‘Does the Mission/Purpose of your organisation, make you feel that your job is important?’; the premise here is that employees want to do better when they can make a connection between their individual performance and their organisation’s mission.

Yes, the once-per-year performance review that leaves both employee and manager feeling drained and demotivated has the opposite effect; generally people don’t know what’s expected of them (except only that they need to have a review once-per-year) and they don’t even feel connected to their manager’s goals never mind the organisation’s. The challenge is how will we achieve these things if we give up on performance reviews completely?

Remuneration decisions – we work in a society where 'better results' = 'better pay'. This is unlikely to change in the future, nor should it. We know that remuneration is not the reason that people will get up and come to work for you, but the reality is that poor remuneration decisions will be the reason why they get up and go to work for someone else. If we throw out performance reviews and therefore, performance-based remuneration decisions, we risk losing our high performers to those companies who will effectively assess and reward them.

Incentive allocation – as more companies control their fixed remuneration costs by bumping up ‘at risk’ variable pay; the expectations to deliver fair rewards to those that have earned them will continue to increase. Effective incentive plans deliver against individual performance, this is what makes them meaningful, what encourages people to work harder and ultimately justifies their discretionary effort. To do away with performance reviews means these incentives may need to be pared back to pay out against financial or organisational measures only, which reduces their efficacy and may create undesired behaviours in the long-term.

There’s no denying that the traditional performance review process is in need of a major refresh, but that does not necessarily mean that it needs to go the ‘way of the dodo’. If we look beyond the headlines and attention-grabbing tweets declaring ‘Death to the performance review!’ we discover that the performance review is really enjoying a rebirth, from the dreaded annual event to something more fluid, continuous and collaborative; Something more modern and more meaningful for today’s workforce.

R.Performance, by Remesys, uses engaging technology to:

  • Increase employee ownership of performance and development
  • Enable organisations to focus on pro-active performance planning
  • Improve transparency with performance leadership
  • Streamline workflow and provide real time reporting
  • Enable organisational Talent Management and Succession Planning

Looking to revive your current performance review process? Talk to us today about a demo of R.Performance…Contact us to request a demo.

by Andrea van Olst

Software

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