I recently completed a critique of the Performance Review process for a national sales organisation.
Sadly, I identified five fundamental flaws that were resulting in compromised outcomes, and three minor flaws that were negatively impacting on the employee experience.
My findings matched anecdotal and researched evidence that continues to identify that 90% of managers see no value in their current Performance Review processes and over 80% of employees do not trust the outcomes from their process.
Why do we (HR) keep getting it so wrong?
We (HR) are responsible for the design, implementation and management of the process. We also use the data from the process to feed into downstream management processes such as developing training plans, making salary decisions and initiating Performance Improvement Plans.
Yet if the processes we implement give compromised outcomes, do not add value for managers and the results are not trusted by employees, surely it’s time to consider improvements.
The types of fundamental flaws I see in many Performance Review processes include:
· Incorporating too many discussion issues in the same process
· Using the same Key Measures for all staff, even when the responsibilities and accountabilities are totally different
· Using the same 5 point Likert scale for all Key Measures
· Hiding risk factors by aggerating Key Measures into a single rating
· Including an independent overall rating that does not necessarily align to the assessment of the individual Key Measures
· Insisting outcomes fit a normal distribution (the Bell Curve).
· Providing employee feedback based on numbers (rating of a 3 out of 5)
· Including management of poor/under performance in the same process as performance review
· Trying to manage dis-engaged employee issues using the same performance management process
· Annualised processes when employees are supposed to be agile.
The types of minor flaws I see too often include:
· Setting objectives that conflict with person’s responsibilities and accountabilities
· Paper based processes
· Lack of, or poorly designed feedback mechanisms
· Lack of management action on outcomes
· Processes that suggest potential bonus payments for excellent performance, then make such payments subject to the financial viability of the business.
· Change the name of the process without fundamentally changing the process
· Lack of engagement with managers in the design of the process
· Implementing a one-shoe-fits-all process.
In my experience all of these problems and challenges can be successfully addressed by adopting the following design principles:
· Don’t replicate your current manual process in the User Interface of your computer system
· Use a new policy setting to exclude management of poor / under performance and problems caused by dis-engaged employees from ‘new’ performance review system
· Keep the discussion/ Key Measures related to the person’s job
· Replace Likert scales with BARS
· Flag risk factors independently from any overall rating
· Do not include an independent overall rating. Calculate it from the assessment of the individual Key Measures
· Dump the normal distribution (the Bell Curve). If everyone is doing a fantastic job, reward them all
· When reporting on performance, use BARS for feedback to individuals and single rating for management reports
· If you want to pay bonuses, budget for them and pay them out.
· Test any new process with managers and take their feedback into account
· Tailor processes for different employment categories
While this may sound too hard, it isn’t.
I’ve been helping businesses do this for 20 years – and it works.
The problems with Performance Reviews are compounded in these current COVID times as staff are working remotely, in more agile ways and increasingly on project-orientated assignments.
If your Performance review process is not meeting these new business needs, then it is certainly time for a change.