Why you should make the move to more progressive performance reviews

While skill and performance are one side of the coin, overall cultural fit impacts cohesive team performance.

The challenge for business owners

When you think about the performance review in businesses that don’t have an HR resource, you can actually see pretty easily how the tool has become a little unstuck. Business owners rarely have the HR background and know-how to create authentic values for the business. Those who do manage them this far then struggle to objectively judge employee behaviour against the values of the business. Lastly, in many small businesses, the managers and the owner often either lack the skills or the time to create meaningful,  measurable goals and KPIs for each role. While some templates and spreadsheets are assisting with this plight, there is then the burden of time, distributed data via spreadsheets or word documents, version control and tens of hours of extra admin around any resulting performance goals, salary impacts and communications administration. This is all on top of a busy day’s work - and not usually something that business owners or busy managers factor into their capacity planning. Because of this, and despite the clear benefits, the performance review has seen some flack in recent years from the market:

  • Once a year is too infrequent to give feedback and acknowledge strong performance.
  • When performance reviews are annual, managers fail to make notes and monitor performance throughout the year, so then employees are only judged on their performance in the weeks leading up to the review.
  • Ample time is not budgeted for, making it feel rushed and not well prepared for.
  • The annual review can be subjective, and therefore says more about the manager than the employee.

… or, the performance review - done right

Modern best practice suggests that companies should foster a culture of ongoing feedback between manager and employee.  Problems arise where the annual performance review is the only feedback employees get. Yet, there is no reason why ongoing feedback and annual performance reviews can’t coexist. Frequent one-on-ones, where both sides provide open and honest feedback is just good managerial practice. Frequency builds trust and openness between manager and employee, and when you introduce regular coaching and development within these meetings, you are building a culture where the employee feels supported, and is therefore more likely to open up.

The annual review then becomes a culmination of all the ongoing feedback given throughout the course of the year, and is mainly used as a way to review salaries. Formalising the process gives the Finance department a solid point of reference and place in time to review the financials. Time-based goals or KPIs are essential. They ensure that a review is less subjective - less focused on the mistake that happened last week, and more focused on the employee’s overall performance and commitment to their role.  But don’t struggle over these yourself if they are not naturally coming to you.  A few hours with an HR consultant or a business coach will see some strong, measurable goals introduced. HR consultants can also help you create a system to assess behaviours against values.

HR software is invaluable in helping businesses facilitate the performance review process. Each employee can have set goals and KPIs tracked regularly within a system so that it’s not lost in messy paperwork. When employees have clear goals outlined for them and planned performance reviews, the experience is actually enjoyable as opposed to feeling like a chore. You can also collect the views of peers and colleagues in prep, which gives you great insight into why Jan from accounts always ducks and dives whenever Peter from sales makes an entrance. This gives you a little more insight into both goal-based performance as well as overall cultural fit, and helps you assess whether any behaviours need to be adjusted.  

A company doing performance reviews - the right way

As one of the first companies to make a move to more progressive performance evaluations, Adobe famously ditched its traditional employee performance reviews in favour of a check-in model. In their new model, managers set clear expectations for employees and regular give feedback at a time that suits the employee and the role the perform. This allows managers to make micro-adjustments to employee performance right throughout the working year. In the first year of this shift, the software giant estimated it saved 80,000 manager hours, the equivalent of 40 full-time employees. At the same time, the company was able to demonstrate higher employee engagement and retention.  

Systematic and streamlined performance reviews

A major factor in introducing a progressive and ongoing feedback loop that works means is that it doesn’t create more work for you. In fact, it should minimise it. A continual approach, punctuated with a periodic full review has to be systematized and streamlined.

Performance review software can help you make ongoing performance management a natural fit for your businesses. With features that help create and support personal and company goals, you can empower employees and managers to have meaningful, ongoing performance and career-related discussions. With a cloud-based HR system, you have access to a full suite of annual performance review documents, and a place where you can record ongoing discussions with the employee about their performance and career aspirations.

You can document all check-in discussions, which you can easily access to review and ensure it’s all on track. Such software also helps you keep a running log of notes on an employee throughout the year. This help you paint a complete picture about the individual’s performance over time so when the annual review comes around, it’s a culmination of all of the ongoing feedback.

Time for change?

It’s important to remember that giving feedback to employees on how they are performing is as important as ever. When employees are recognised, they become happier and ultimately, more productive. Making performance a natural part of how you work means employees will speak up when they’re struggling or seek help earlier in the process, rather than waiting until the formal review process comes around.   Get this right, and you’ll have:

  • Motivated employees with a clear understanding of their individual goals and how their role ladders up to company goals
  • Top performers who feel recognised, because their progress has been tracked objectively against performance goals
  • Reduced employee turnover and increased engagement  

Free Demo                                                                                                                

To see for yourself how our software can help your business streamline your performance review process, and make it an integral part of your business success story, book in for a free demo with the team. You’ll be surprised at how efficient your performance review process can be.

Want to see more? Book a demo today.

Employment Hero is Australia's first all-in-one cloud HRIS offering a comprehensive HR software, payroll system, and employee benefits platform in one easy solution. Trusted by Australian businesses, Employment Hero is about making rostering, onboarding, performance management, time tracking, payroll, and award interpretation a snap. Employment Hero’s HRIS also integrates with Xero, MYOB, KeyPay, and Accountright Live. Stop wasting time with spreadsheets, and request a demo today.

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