What’s the point of a performance review? Evaluating performance, yes, but to what end? HR teams, managers, and companies use performance reviews for compensation, evaluation, and tracking progress toward goals. All with the hope that it will motivate the employee to perform at a higher level. Alas, it often doesn’t.
Only 1 in 7 employees strongly agree that performance reviews inspire them to improve. The rest are left feeling neutral, isolated, surprised or, worse, judged. By this measure, performance reviews are an incredibly expensive waste of everyone’s time.
Fortunately, all is not lost. As a people manager for 15+ years, my experience along with the research suggests that if we simply change one word in the performance management conversation, we unlock the results we’re looking for.
Nobody wants to be managed
Newsflash: No one WANTS to be managed. Even the term “manage” evokes feelings of control and manipulation. Instead, people want to feel a sense of autonomy and self-efficacy in their role. For them to feel fully engaged, employees need the opportunity to do their best work, to feel appreciated, and to build the skills necessary for their desired career growth. But if managers are only giving awkward annual performance management reviews, is it really surprising that the process rarely works?
Over the years, there have been plenty of flavors of performance management, all different shades of vanilla. Assessments, numerical ratings, forced rankings, and 360-degree reviews have all shared common flaws: they’re backward-looking, punitive, bias-ridden, and ultimately demotivating.
“Assessments, numerical ratings, forced rankings, and 360-degree reviews have all shared common flaws: they’re backward-looking, punitive, bias-ridden, and ultimately demotivating.”
If an employee receives feedback from their manager who’s been only loosely involved in their development, they’re far more likely to reject any constructive criticism they receive. It’s only natural. If they don’t feel that their manager truly knows them, their work, and their strengths, why would they believe that their manager has a good grasp on where they need to improve? Many employees who find themselves in this situation will question whether their manager is even qualified to be giving them feedback. And when the review process is closely tied to earning a raise or promotion, employees can’t afford to be open to feedback, both figuratively and literally.
The annual performance management review process is just as painful for people managers. Most haven’t been effectively coached on how to have these important conversations, so they dread and avoid them. HR leaders are forced to act as the process police, herding everyone throughout the organization to their reluctantly appointed end. HR teams bear the brunt of the complaints, the procrastination, and the universal frustration with the user experience of many legacy HR review systems.
“HR leaders are then forced to act as the process police, herding everyone throughout the organization to their reluctantly appointed end.”
But what if a simple word choice could make things better? What if, instead of promising to manage people’s performance, we instead promised to develop them?
What’s in a name?
Gallup found by simply increasing the amount of time managers spent talking about the employee’s development versus reviewing their performance, it positively lifted employee performance. Devoting 75 percent of the conversation (rather than the usual 25 percent) to an employee’s development led to higher engagement and retention, greater feelings of career path clarity, greater satisfaction with their advancement prospects, and better preparedness for changing customer demands and business needs.
“Employees perform better when performance conversations are focused on their development versus a review of the past.”
This is part of a trend toward a new style of performance management that is, “more frequent, less formal, and centered around future growth,” reports research firm Development Dimensions International (DDI). Employees need to know how they can improve so they can do it, rather than be harshly evaluated ex post facto on behaviors they didn’t know needed to change. Simply shifting the conversation from a focus on the past (review) to a focus on the future (development) can improve outcomes dramatically.
“When meetings focus heavily on development planning, employees perform 25 percent better.” -DDI
When meetings focus heavily on development planning, employees perform 25 percent better. They display a 31 percent improvement when they feel that the process was fair and transparent and a 24 percent improvement when performance management discussions occur continuously rather than yearly.
Yet, only 34 percent of companies practice performance management this way. The rest are forcing square pegs into round holes and asking employees and managers to save all their feedback for one big, messy year-end review. There, managers dole out feedback that employees interpret as blame. Few feel inspired to do better the following year.
Nobody likes to be managed, but everyone wants to be developed. It’s time we start giving employees what they want and replace “reviews” of their past performance with more talk of how to “develop” their future. That simple change can make a difference in the engagement of every employee.
Want to sew development conversations into the fabric of your culture? See BetterWorks in action and try it, free, with your team.