Making the Case for Proactive Employee Experience Management
What do your employees think about your workplace? Many organizations struggle to approach employee experience management, often hoping a few high-level ideas will hit the
By Rebecca Taylor, CCO and Co-founder of SkillCycle
September 19, 2024
Annual performance review season eats up resources in most organizations, but rarely drives the meaningful performance improvement needed for growth. It’s a reality that is causing many executives to wonder — what is a performance review season costing us? And is it worth it?
The answer is, probably not. Annual performance reviews delivered without goal setting and development opportunities aren’t effective, and they cost companies dearly.
Yet, organizations that focus on their people’s performance are 4.2 times more likely to outperform their peers, realizing an average 30% higher revenue growth and experiencing attrition five percentage points lower, according to McKinsey.
Clearly, managing performance is essential, but the impact will come from your approach.
To better understand why traditional performance reviews fall short, let’s look at:
Let’s go back to the beginning for a minute. Companies initially created performance reviews to establish clear expectations for employees and evaluate their performance against those expectations. In the past, jobs were more straightforward, making measuring performance against set standards, like production rates or sales targets, easier.
A standardized review process helped managers ensure that employees were consistently meeting the company’s standards. Yet, over time, these reviews have lost their impact. The nature of work has become more complex and nuanced, making it harder to apply the same black-and-white performance standards.
Additionally, the pace of change within companies has accelerated, often requiring goals and expectations to shift rapidly with innovation and market trends. These developments make assessing whether an employee is meeting goals difficult, especially when the original goals may no longer be relevant due to changing business priorities.
Another significant factor in how the review process has changed is the evolution of managerial roles. As managers take on more responsibilities beyond managing their teams, the focus on performance management diminishes.
A longer list of responsibilities creates conflicting priorities for managers, as they struggle to balance their task load with developing their employees. Managing performance becomes a secondary task, driving down the effectiveness and prioritization of performance reviews.
Managers may even dread review season more than employees do because they are responsible for evaluating the entire team.
Every year, an employee sits down with a manager or HR rep to hear how they performed last year. And every year, many employees face these meetings with apprehension.
Too often, organizations try to manage performance with an annual review process that does little to motivate employees. Nearly all employees and managers dread annual performance reviews, yet they are still one of the most common performance management tools used in organizations.
Employee feedback without development opportunities cannot lead to growth. If you fail to engage employees throughout the year and only discuss performance during an annual review, you’re missing a tremendous opportunity to develop and empower them. A better alternative is to set personal and overall organizational goals and give people the tools they need to reach and exceed them.
What is a performance review’s value in today’s workplace? In their traditional form, likely low. They’re often loathed by employees and organizations alike for a variety of reasons. Employees rarely know how they’ve been performing throughout the rest of the year, which is anxiety-provoking.
On top of that, the information offered in these reviews highlights how they’ve performed in the past without providing any insight or tools to develop the skills necessary to improve. The process leaves little room for human connection, causing more anxiety and dehumanizing an opportunity that could otherwise lead to growth.
Eighty percent of employees who report having received meaningful feedback in the past week are fully engaged at work, according to Gallup. Yet only 16% considered their last conversation with their managers extremely meaningful.
So, we know feedback is vital, but it must be relevant and timely. It’s important to remember why performance reviews are important as one element of performance management, not as a standalone solution. Organizations that connect feedback to goals, talent development, and planning instead of leaving them as a static document will see better results.
Sitting down with employees to discuss their performance once a year weaponizes these reviews and turns them into a negative experience for your staff. And when one in five employees is looking for a new job, keeping people happy is a priority.
Letting them work for months without feedback, support, or redirection doesn’t allow them to improve their performance in real time and does a disservice to your employees and your organization.
Worse, there’s often nothing built into the process that offers a clear path for any future with the company, much less a successful one. Career pathing shows people the opportunities for growth within the company and is critical to engage and retain talent.
If you aren’t having planning discussions with your employees about how they can develop within your company, it’s unlikely they’ll plan to stay. A lack of communication on this front signals to employees that they’re not seen or valued in the company, which sharply decreases their motivation to do well.
Considering how often companies use annual reviews to create paper trails for constructive dismissal or letting people go, it becomes easy to see why performance reviews can do more harm than good for employee motivation.
Identifying a problem doesn’t help change what’s happening in your workplace, but changing your review process can bring significant benefits. It’s time to ditch the annual review and implement continuous feedback.
Here are four changes you can make to shift your company’s annual performance review structure to an ongoing, continuous feedback approach.
Connecting with employees during their workday as they learn a new skill or tackle new challenges can help drive better results because the information is timely and on topic. These conversations can then roll into an annual review that will be much more productive and enjoyable for all parties.
While a review of past performance may still be required, it shouldn’t be the focus. Instead, spend more time discussing what the employee would like to accomplish moving forward so you can come up with future goals together. Taking a proactive approach to goal setting also enables you to set bigger goals for improving skills and capabilities within the company.
Evaluations that help employees understand how others perceive them can be a helpful developmental tool. While traditional performance reviews include feedback from management or HR, a comprehensive 360 review process includes input from all those who work around the employee, including peers, direct reports, and sometimes even customers.
Performance management becomes an ongoing function after you take care of setting goals and laying out expectations. Providing ongoing development resources that allow your employees to meet their goals and exceed your expectations is how you make the process more meaningful and help employees succeed.
The key to transforming performance reviews into a more meaningful experience lies in making performance conversations more organic and ongoing rather than formal and infrequent. Employees benefit from continuous performance management when you integrate feedback into everyday work and remove the stigma around discussing growth.
Providing both employees and managers with real-time data about performance helps to empower employees to lead conversations about their development and allows managers to approach these discussions with clear, objective information.
This ongoing exchange fosters a more open dialogue, reduces the fear of starting conversations, and ultimately makes performance management a more constructive and engaging process for everyone involved.
The solution to most common challenges with performance reviews can help improve results for both employees and organizations. You’ll start with the fundamental reasons why performance reviews are important, then build forward with a fresh approach that connects ongoing performance feedback to continuous learning and development.
The key is to move from an annual review process to an ongoing feedback cycle in which learning, coaching, and checking in with employees become a routine part of their workday.
Creating a positive experience for your staff is vital to higher job satisfaction and better retention. An ongoing feedback process allows employees to take an active role in goal-setting.
According to Gallup, employees are 3.6 times more likely to strongly agree that they feel motivated to do outstanding work when managers provide daily feedback instead of annual feedback.
There’s a strong case for shifting to a continuous feedback process in your organization. Adopting forward-looking reviews over standard annual performance reviews can increase employee performance by 13%, which can drive positive company performance results.
Creating a stronger link between organizational and individual goal-setting can help you identify opportunities and challenges in your capacity to meet future needs for skills and capabilities. With 40% of employees’ core skills expected to change by 2025, half of all employees will require reskilling in that period. Companies must plan and proactively train their workforce to prepare for these realities.
It’s critical for organizations to adapt and respond to changes more quickly than the annual review process can provide. Continual feedback can help you and your employees prepare to navigate whatever the future holds.
We help you deliver continuous performance feedback with development plans that drive tangible improvements in performance. Schedule a demo to learn more.
