This article, written by Rob Preston or Oracle, was originally published on Forbes OracleVoice
The business press is rife with stories declaring the demise of an HR ritual: the annual employee performance review.
Managers view them as a chore, especially if the review process relies on archaic systems. Employees see them as one-sided, formulaic, and too infrequent. The HR leaders who oversee them worry that they aren’t an accurate appraisal of people’s contributions.
Yet recruiting, developing, and retaining highly skilled, talented people is the No. 1 priority for CEOs worldwide, according to various surveys. And because employee ratings are tied to compensation, succession planning, and other HR processes, eliminating ratings altogether is too drastic a leap for most companies, making it incumbent on them to modify or overhaul their review processes, notes Jeffrey Haynes, director of human capital advisory services at Baker Tilly.
Here’s just a sample of the evidence that the current process is broken.
The upshot: Managers and employees alike view the process as an unproductive, sometimes demoralizing waste of time and resources.
What to Do?
There’s no one-size-fits-all performance review process; different companies and individuals will always require different approaches. But there’s a simple framework of best practices that every employer needs to revisit, especially those that either got complacent over the years or over-engineered their review processes in response to the latest HR fads, says Kayla Flint, human capital services consulting manager with Baker Tilly.
Increase the frequency and improve the quality of manager-employee communications. No HR handbook ever discouraged managers from giving their people feedback outside of the formal review cycle. Yet a majority of employees meet with their manager as infrequently as less than once a month, according to a Gallup survey. Regular feedback is critical, Flint says, especially among millennials, most of whom grew up getting that regular attention and validation.
That feedback can happen using any number of channels—in scheduled catch-up calls, during in-person meetings, in stop-by conversations, in email follow-ups, and on wiki chats about specific projects. The formal performance appraisal then becomes a year-end culmination of the real-time feedback (and regularly adjusted goal-setting as business conditions changed) that preceded it, not a be-all-and-end-all event, Haynes says.
Tie individual goals to outcomes, both personal and organizational. Employees want to know: Will meeting the goals set in my performance review help increase my productivity and/or expertise? Will it raise my profile within the company or organization? Will it help advance my career and earning potential?
Will meeting the goals then help to produce higher revenue for the company, fatter profit margins, faster product development cycles, improved customer service ratings, and heightened brand awareness?
Haynes urges employers to focus on effectiveness rather than efficiency. Instead of measuring how many employees were onboarded this fiscal year, for example, measure things like how the improved onboarding program impacted financial results.
“The message I want to drive home to HR people is this: It’s not just about us measuring ourselves at how good we are at running HR. It’s about us measuring the impact on the business as a result of the investment we’re making in technology, people, and process,” Haynes says. “It’s a much more sophisticated step up for HR.”
Facilitate internal mobility and provide development opportunities. Flint offers the example of a client that simplified its employee rating models in conjunction with initiating ongoing talent review meetings.
In those meetings, she says, leaders are able to “pull out different comparisons and depictions of how their talent is progressing through the ranks,” identify high-potential employees, create stretch assignments for people on certain career paths, and anticipate where the company is most likely to have a skills shortage. “They’re able to do better supply and demand planning for their talent,” Flint says.
Meantime, employees see this development-oriented review process as in their interests, not just their employer’s, so they’re more likely to embrace it.
Take advantage of the latest tech tools. Modern human capital management (HCM) systems can now do it all: Give employees, managers, and business leaders up-to-date evaluations of worker performance; provide self-help learning and education materials; document, share, and measure employee goals; even help business leaders and managers predict employee performance and attrition, so that they can intervene where necessary.
Cloud-based HCM tools are also much more user-friendly and interactive than HR applications of prior generations, with UIs more akin to a Facebook page or Pinterest app than an enterprise records management system.
Says Haynes: “The technology has evolved to a point that there’s really not a reason to have a burdensome review process.”