And they’re not wrong – the Society for Human Resource Management says 90 percent of performance appraisals are painful and don’t help improve performance. In fact, The Psychology Bulletin found that 30 percent of performance reviews actually had a negative effect on performance and productivity levels.
As companies begin to recognize the flaws of performance appraisals, more and more are moving away from the traditional way of thinking to instead focus on managing performance.
So how can companies design a performance evaluation process that actually works? Here are four steps every organization should take to create and implement a successful performance management policy.
Just like with any new initiative, you should start by defining what you actually want to achieve with your performance reviews.
Some questions to ask yourself are:
Defining your standards of behavior and performance will help you identify what metrics you want your employees to meet.
Consistently and frequently documenting employee performance is a key aspect of performance management. After all, it’s much easier to document instances of achievement or poor performance as they happen, as opposed to trying to rack your brain one month, six months or even 12 months later trying to remember them, especially if you’re a manager with multiple employees.
Managers should endeavor to make documenting employee performance part of their daily or weekly habits. Whether that means keeping a running list of feedback in a notebook, jotting down notes on Post-Its, or keeping a log in an electronic document, having this ongoing record of performance will make it much easier for managers to more accurately evaluate performance at the end of the year.
It’s important to remember that performance management is an ongoing process. Even if formal reviews or evaluations are only conducted once or twice a year, managers should make a point to frequently discuss performance with employees throughout the year. This gives employees the chance to correct any negative behaviors immediately, if necessary.
Don’t think your employees want to have these conversations? Think again. According to a 2013 Globoforce report, 71 percent of employees prefer immediate feedback, even if that feedback is negative.
It’s a common belief that the sole purpose of performance reviews is to determine compensation. If an employee scores high, they get a raise. If not, they get no salary increase, or are terminated.
Wrong. The ultimate goal of performance management is to help employees grow and develop their skills and abilities, not to punish lower-performing employees. If organizations approach performance management with the mindset that they’re looking to identify areas for growth, the process becomes much more inviting for both managers and employees.
Companies who take this four-step approach to performance management to heart when evaluating their own process will certainly have a head start in the race to develop a high-performing workforce, but building a truly effective and efficient performance management process can be a big investment of time and energy, one not every company can make on its own.
Check out the recap of our webinar that discussed performance management best practices: Performance Appraisals – A Broken Practice.