There are two problems plaguing performance reviews today. The first is how to accurately measure performance. The second is how to develop or improve performance.
Research shows performance reviews are not accurate, due to recency bias among other factors. But even if your annual performance evaluation could be accurate, the anxiety associated with evaluations and ratings can take a hit on employee engagement that lasts months, and negates any benefit of having run the review cycle.
In response, leading companies including Accenture, SAP and GE have reinvented their performance practices in the past year, some choosing to ditch reviews completely while others change the scope or frequency of appraisals.
A study in the International Journal of Productivity and Performance Management by
Hal J. Whiting, Theresa J.B. Kline and Lorne M. Sulsky explored this second facet of performance reviews: how to improve performance with an appraisal. The result is a list of 14 attributes (of the 47 studied) that predict employee satisfaction with the performance appraisal process.
As companies explore ways to improve performance management to better empower employees and develop talent, these attributes can provide insight into what actually motivates employees. Here are some of the key learnings.
Make Sure Expectations are Communicated
At mid-to-large companies, employees expect to be given some sort of appraisal — reviews are entrenched in the corporate process and are expected to drive promotions and raises. But whether an annual review and rating influences an employee’s pay in practice is a different story.
Sometimes the rating is one factor of many. Sometimes an employee gets perfect ratings year after year and the same standard raise as the rest of the team. These situations are a big driver of dissatisfaction and will undermine employees’ trust in the performance review process when they don’t see a clear connection between reviews and impact.
“The more important thing is that it’s congruent with what you say you’re going to do with the data,” Whiting says.
This means expectation should be laid out. If a promotion is only possible when a more senior position is vacated, and no perfect performance review can change that, employees need to know. If pay raises are based off of performance reviews, employees should know this in advance so they can be prepared. Possible uses for performance reviews include salary, development, succession planning and performance improvement plans, and any intended to be used should be documented.
Allow Space for Pushback
Perhaps a junior salesperson met or exceeded all her goals for the last quarter, but was denied a promotion after getting mediocre peer and supervisor performance reviews. It’s OK if those reviews are locked in — but the employee needs to have a chance to give her own feedback.
This helps the perception of the appraisal, Whiting says. It doesn’t matter if the employee puts in a formal statement to HR that they believe their review was incorrect or if they just express this concern to their manager – as long as they’ve been able to air grievances, the perceived fairness of the appraisal will increase.
Don’t Punish Moving Targets
Talent is getting more and more mobile. At some organizations, a person may do a performance appraisal having only been in their role for a few months. Alternatively, a role itself could expand throughout the course of a year. In the situation that goals set 12 or even 3 months ago, employees should not be held accountable for old, stale goals.
Sometimes an internal project is shelved completely. Other times a partnership falls through, and other teams’ results are affected. “If you can’t take into account those things you have no control over, you will get disengagement,” Whiting says. Evaluating on outdated goals should not be an excuse to give out a low rating to allow for differentiation.There's an art and a science to it — as much as everyone wants it to be a science Click To Tweet
With today’s evolving business objectives, the secondary application of this factor is to develop a more agile goal-setting process, so these outdated goals do not remain on record.
With all the companies publicly denouncing performance reviews, it can get lost that many companies still need and rely on annual or more frequent performance appraisals. Many facets of these reviews are outdated, but when done well, a performance appraisal can indeed give employees much-needed feedback and improve their performance in the upcoming cycle. While this research indicates factors that make for a good performance appraisal, part of it is just changing the conversation between managers and employees – to focus on development, not comparing employees to one another.
“There’s an art and a science to it — as much as everyone wants it to be a science,” Whiting says.