What do employee engagement, turnover rates, and an open company culture have in common? An effective performance management system! We’re not joking, it really can make all the difference.
And yet, a study by Adobe found that 59% of office workers feel performance reviews have no impact on how they do their job. For such a time consuming task, many simply don’t consider it something worth doing. There is clearly a major disconnect in what HR hopes to achieve with performance reviews, and the actual impact they have. But it doesn't have to be this way...
We’ve already shared our top 10 reasons on why you should reconsider the traditional performance review, and now we’re here to share 7 best practices to help you redesign them. So far we've helped over 150 companies reinvent their performance review processes, from which we’ve gathered all the knowledge below.
1. Have a purpose
Know what you want your performance management process help you to achieve. Do you want to help managers improve their leadership skills and practices? Do you want to help guide people towards continuous professional development? Perhaps you simply want to find a process that is more useful and engaging for everyone, as well as increasing efficiency. Or perhaps it’s all of the above.
No matter what your reasons are for redesigning your process, bring your people into the conversation by asking them what they want to get out of performance management. This is beneficial for all involved as people will feel engaged and valued, whilst you can use these insights to build a performance management process people actually want to use. In turn, this should support higher adoption rates when the time comes to change.
Most importantly, make sure you communicate clearly and regularly about the reason behind the change, so it doesn’t come as a sudden surprise.
2. Keep it simple
You’re probably aware that one of the biggest complaints is that annual performance reviews simply take way too much time. The point of changing them is therefore to make the process more efficient and less painful.
However be mindful with your approach! Introducing overly complicated changes is not going to encourage people to engage with the new process. Even though your previous one may have been outdated, change is difficult and often met with resistance, so you want to make adoption of a new process as easy as possible. Start with small steps that people can get used to one at a time.
3. Implement 360 feedback
With a changing workforce and an increasing number of millennials, gone are the days when performance management was limited to top-down reviews. Millennials want to know how they are doing, and they also want feedback on a more regular basis.
By introducing 360-degree feedback you can both answer millennials’ needs for more frequent feedback and change from a top-down only model by introducing peer reviews. It allows your people to gain a more holistic idea of how they're performing and what they can do to improve. It also removes the onus from managers of being the ones to collect all the feedback and deliver it.
4. Introduce upward feedback
Now we’ve introduced the concept of 360-feedback, it can also do more than support peer reviews. By enabling anyone on a team to voice their opinion, it gives managers the opportunity to gain insights into their leadership skills directly from their team. In order to be effective, managers also need to apply good coaching skills to support the development of their direct reports.
One of the most important parts of being a great coach is listening to and understanding the needs of your people. Introducing upward feedback shows an openness and willingness on managers’ behalf to improve, and sets the tone for a culture of feedback within the organization. It also helps to create a more open company culture in which everyone feels their voice and opinions matter.
5. Include goal setting
If you’re changing, chances are you want your new system to have a more holistic approach. A good performance review shouldn’t focus only on the past, it should also support future projects and achievements. One of the most important steps of the follow up is setting effective goals people can work towards. Ideally, goals should be tied to a person’s career progression or have a tangible outcome so people know what they’re helping them to achieve.
For example, someone in a sales role might have a specific target to achieve in the quarter. Upon completion, they may receive a bonus or they may progress to a senior level role if they consistently achieve their targets. This helps people not only have something to work towards, but have better clarity on why they’re doing it. When done well, goal-setting helps people feel more motivated and ensures they’re aligned with company-wide aims.
6. Drive change with 1-on-1s
One of the other biggest pitfalls of the annual performance review, is failing to follow-up after it’s been conducted. However even when using the traditional model, the meeting should give people some idea of what they can improve over the following year. Now that they have received this information, how can we be sure they're taking full advantage of it? How can we turn it into something actionable?
Follow-up 1-on-1s between managers and their direct reports can help ensure regular conversations about current work, things to be improved and those people are doing well. During the 1-on-1s, managers should take the time to discuss the results of the performance review with each team member, helping them to understand the information and clarify expectations. As the 1-on-1s continue, they can support regular check-ins on the status of initiatives and knowing whether people are on track.
Make sure you support behaviour change by encouraging people to have regular 1-on-1s after the performance review has taken place.
7. Create a continuous development process
With all of the above, you’ll already have implemented a few changes that should help increase overall engagement rates and performance. If done well, these should also support better clarity & alignment in the workplace.
But there is one more thing you can take into consideration, to fully revamp your process! Don’t just save growth for review time, allow people to continuously grow and develop with real-time feedback. It helps to reinforce the importance of learning and development throughout the year, and allows people to always know where they stand and what they can do to improve. This ensures people will no longer feel blindsided during the annual performance review, and supports a culture of feedback within the organization.
After taking all of the above into account, make sure you’ve considered which of these 7 best practices will work best for your organization, or which order you should implement them in so your adoption rates are high. In addition, remember to regularly communicate about the changes you’re implementing and why you’re doing it, so nothing comes as a surprise.
Our belief is that if you grow your people, you can grow your business, and the performance review is just one part of that. We want to support companies make the workplace somewhere people can reflect, learn, adapt – and grow. Find out more about our approach.
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