Performance reviews are valuable for both the employee and the employer. It's a chance for managers to appreciate exceptional work and offer guidance on what could have been done better, and to have an open discussion about the future of the company and the potential for employee growth.
However, annual performance reviews can be daunting as employees struggle to remember what they did months ago. An effective performance review should also allow for managers to get reviewed by their direct reports. These are some of the challenges that affect current performance review processes.
Human capital element is often the key contributor to business success and a good number of companies invest heavily in talent management. Time is invested in performance appraisal but is the time spent congruent with the performance improvement envisaged?
Are employees learning and developing their skills through this process or are they simply revisiting the past?
Perhaps it is time we rethought the entire performance appraisal system to one which creates tangible value for both the employer and employee. A system whereby feedback is crisp, useful and continuous throughout the year.
As performance management evolves, some companies such as General Electric, Google, Netflix, Microsoft, and Facebook have reimagined performance reviews to exemplify ongoing progress updates rather than a single annual exercise.
With more modern appraisal systems, management is looking to get rid of the current system which is subjective, past oriented and ultimately demotivating to employees. Sadly, it is often the case that a performance appraisal feels similar to an indictment in a court where a list of charges are brought and the employee is a defendant.
To deal with this problem, the new performance appraisal system encourages regular, candid feedback from various sources such as customers, managers, team leaders and suppliers. Due to the many mini-reviews that an employee receives within the course of the year, the results are more accurate, holistic and meaningful both to the reviewer and reviewee.
Performance trends also become clearly visible and efforts made by the employee during the year to improve on weak areas can also be demonstrated due to the ongoing nature of the feedback process.
This invariably means that employees are coached and developed to better yesterday’s best of themselves. This ultimately adds to the company’s bottom line as employees realise maximum productivity in their work sooner rather than later.
A continuous improvement culture is also entrenched in the company as junior employees and managers are given feedback that is present and future oriented.
As the world changes, companies need to adapt quickly and effectively.
Companies want tobuild objectives that are more fluid and changeable than fixed annual goals, have frequent progress review discussions rather than annual or semi-annual ones, engage in forward-looking coaching for development rather than backward-focused rating and ranking, and place a greater emphasis on teams than on individuals.
To achieve this, employers need to keenly evaluate the method they are using to assess the employees performance against the organisation’s key performance indicators. Is the time spent completing performance reviews in tandem with performance improvement across the organisation or is it simply a tick-the-box exercise that is time consuming?
In addition, where a company has invested in systems to document and record performance reviews, is the system fit for purpose or does it need to be modified to cater for an ongoing progress culture check? For example, a company with a young and mobile workforce may wish to consider a feedback app where superiors can give feedback in crisp and prompt ‘tweet’ form.
Managing talent can be a formidable task for HR functions as the approaches and methodologies keep evolving and this is why many companies and organisations are regularly engaging specialised HR consultants to advise on performance criteria and measurement; alignment of reward to performance; and building a performance culture that produces the desired behavioural change.
To get to a place where the performance review system is delivering the expected value to an organisation, companies need to first introspectively look at their vision, mission and goals and how these will be achieved by harnessing and synergising the people asset.
In order to be impactful, progress reviews should occur as part of an ongoing dialogue between managers and employees.
Formal reviews can be an opportunity to celebrate earned success, reflect on experience, recalibrate goals and start afresh, but they should never be a substitute for everyday feedback and coaching.
Joy Mwangi, Human Resource Consultant with PwC Kenya’s People and Organization department.