Performance appraisals: we need evolution, not revolution

Written by
Jean Martin

24 May 2016

24 May 2016 • by Jean Martin

How can this opinion change?

According to CEB data, nine-in-10 HR leaders believe the process does not yield accurate information. This is concerning, not least because of the amount of time that managers sink in to appraising employees’ performance. We estimate that managers spend more than 200 hours per year on activities related to appraisal, and globally a company of 10,000 employees spends about £22 million per year on this function alone. Despite such a vast investment, 95% of employees are left feeling demotivated and dissatisfied following their reviews. 

Our findings show that firms place too much of a focus on evaluating quantitative performance measures, such as ratings and rankings that look only at the past activity, and haven't invested enough in measurements that spur future performance. 

In most performance review conversations, managers typically provide their direct report with backward-looking evaluations of their performance in the previous year. Current neuroscience research shows that this causes employees to become defensive and triggers a ‘fight or flight’ response in the brain. When in this survival mode, people struggle to process new information making it near on impossible to have a constructive discussion.

So it’s easy to see why so many in the workforce view performance reviews as disruptive, and why this process creates such a tense relationship between employees, managers and the company that employs them. As a result, some companies are considering eliminating performance reviews altogether.

Yet, when it comes to getting greater business impact, it’s about the quality of the feedback from the manager to the employee. Rather than abandoning the performance review, as global giants Adobe, Accenture and Microsoft made headlines for doing, consider evolving your appraisal and remuneration processes.

To improve performance review outcomes and increase productivity and collaboration in the workplace, question your current practices:

Are performance conversations continuous?

Teach managers how to give feedback on an ongoing basis, rather than restricting this to one conversation a year. Real-time feedback improves employee productivity and reinforces goals and expectations.

Is the review process forward-looking? 

Help employees understand how to improve their productivity going forward by encouraging managers to use examples of past experiences – successes, progress and failures – as a way to focus on learnings for the future.

Do reviews give a holistic picture of employees? 

Gather feedback from multiple sources to get a rounded view of an employee’s contributions. This is especially important now that employees collaborate more often with more people and the depth of their contributions may not be as readily apparent.

Is feedback on performance a two-way exchange? 

Encourage employees to discuss career development – their personal aspirations as well as opportunities in the company during these conversations. Explore strengths and what new skills they could develop to expand their capabilities within the organisation.

When it comes to performance reviews, it’s clear that we need evolution, not revolution. Rather than abandoning the process, firms need to think about the changes that can be made as part of daily interactions, to make performance conversations more productive for both managers and their employees.