SilkRoad's Blog
Nov 24, 2015

Don’t Kill Your Performance Review! Performance Management Current Challenges and Future Outlook [Infographic]

By Andrew Kouba

SilkRoad explores how the employee performance review process stacks up, and how to make them better. 

No one likes performance reviews.  Managers hate to give them and employees hate to hear them.  HR professionals across the globe are starting to believe that annual or bi-annual performance reviews are killing the productivity they are supposed to inspire. According to the Washington Post, companies such as Microsoft, Adobe, Accenture, and GE have gone so far as to abandon the annual performance review entirely. But is this really the best policy?

To take a look into performance management trends in the workplace. SilkRoad conducted a survey in September to find out how organizations are currently conducting performance reviews, how HR professionals feel about their organizations performance reviews, and what plans they have to change them in the future.

In the survey 90% of the organizations reported conducting less than five performance reviews a year, with 62% of them only using annual performance reviews. Of those surveyed 54% were dissatisfied with their current organizations performance management process.

Why are so many organizations dissatisfied?

The most telling findings in our survey were that

  • 72% of HR professionals reported performance standards across the organization were inconsistent
  • 56% reported that the connection between employee performance and compensation was weak
  • 45% of managers lack the skills to coach and develop employees, and 32% do not have the time to assess employee performance throughout the year.

Our survey also found that 55% of organizations look at performance reviews as a yearly tactical event. However, most of the discrepancy for inconsistent standards and overall dissatisfaction is rooted in the fact that most organizations don’t have a clear reason as to why they conduct performance reviews.

This year we’ve seen companies such as GE, Accenture, and Adobe abandon their annual performance review process entirely. We’re likely going to see more organizations follow suit. But those organizations aren’t actually abandoning their performance reviews. According to Sharlyn Lauby of HR Bartender, “Companies that are abandoning the performance appraisal and in its place creating ‘formalized touch points’ aren’t really eliminating the performance appraisal. It’s just a shorter discussion, happening more often, using a different name.”

Even if an organization moves to an agile performance review process or stays with an annual one, HR professionals should start asking “why” or little is likely to change. Especially, as our survey suggests, if managers are already struggling with skill gaps and time management.

So how should organizations manage their employee’s performance?

  • Define “Why”. HR professionals should define what the performance reviews mean for the company and clearly explain the purpose of the review process and how it will be conducted. This can help build a connection between employee reviews and compensation as well as create a consistent review process to move toward the organization’s goals.
  • Changing terminology. For years organizations have been using a traditional 1-5 rating scale of Outstanding, Exceeds, Meets, Inconsistent, and Ineffective. If 3 is accomplishing company goals, with 1 and 2 is not, what is the purpose of these numbers?  At SilkRoad we have tailored our annual review to be more casual as well as informative by simply rating employees as Rockin’ it, On Track, and Course Correction. GE has taken a similar approach by simply telling employees to “Continue doing something, or consider changing something”
  • Automate part of the process. According to our survey 37% of the organizations reported that they will be utilizing technology this year to improve their performance review process. This is relatively low since strategic automation can save so much time. According to the U.S. Small Business Administration, the average business owner spends approximately 25% time handling employee related paperwork. Through automating paperwork and the paperwork associated with performance reviews HR professionals can save up to 10 hours each week to focus on training managers on things like…
  • Give effective feedback. One of the biggest issues our survey uncovered was that managers aren’t trained to give constructive feedback. The way criticism and feedback is given in an organization has the largest impact on the effectiveness of performance reviews. A recent neuroscience study shows that employees respond better when feedback is given about how they work versus who they are.  For example, in a performance review say, “it seems like you put a lot of effort into your latest project”, versus “you are a hard worker”.  The key point is that in the first statement, the focus is on the effort which is a variable that can be changed in the employees mind, while the last comment is a judgement on the person that they may feel pressure to live up to. When a manager gives feedback that judges the employee instead of the work, even if it’s positive, may trigger a flight of fight response.  Nuances in feedback like the last example show why it is imperative that managers are trained on how to give effective feedback.

What can we expect for next year?

We may see performance reviews change in big way for many organizations in the coming year.  As HR professionals evaluate their current performance management systems and adopt new technology to create a more effective performance management process we may see improvements in productivity and less dissatisfaction with the current performance review process. However, since this issue has been controversial for so long only time will tell.

How is your company going to conduct performance reviews this year? Leave a comment below.

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