How to Improve the Performance Review Process

How to Improve the Performance Review Process

If the performance review process were to undergo a review itself, the results wouldn't be good: Only half of human resources professionals think annual reviews are an accurate way to appraise an employee's performance, according to a survey by the Society for Human Resource Management. And 49 percent of respondents said they believe their company's performance review process should be re-evaluated.

Findings from a more recent study by Deloitte uncovered similar thoughts. Fifty-eight percent of executives don't believe their performance review process drives engagement or performance. Overall, about half of the executives felt their programs were weak in driving feedback and business value – and were a waste of time. 

But before an organization gives the idea of performance reviews the pink slip, its HR leaders should consider this: It's possible to improve the process. Here are five ways to deliver more effective reviews that actually matter.

Shift the focus away from salaries
Many organizations use performance reviews as a time to decide whether an employee is deserving of a pay raise. But with so much focus on the financial impact of performance reviews, employees can lose sight of the real reason they should be appraised: professional development. Setting goals, reviewing progress and talking through the next step of the career ladder can all take a backseat to talks of salary. Organizations can help put the spotlight back on development by staggering salary increases, so that they happen at a different time of year than—but are still informed by—the performance review process.

Schedule interim reviews
According to the Society for Human Resource Management, only a scant 2 percent of organizations conduct ongoing performance reviews. But limiting reviews to an annual process is a detriment to employees and employers alike: Positive growth requires ongoing feedback and guidance. Critical feedback that's delayed until an annual review can take an employee off guard. To maximize the impact of performance reviews, set up a schedule for more casual check-ins, whether monthly or quarterly, to monitor progress and set new goals.

Provide the right training
Previous studies have shown that only a small percentage of managers are highly skilled at performing employee performance reviews. Even fewer managers are highly skilled at setting realistic and smart goals for their employees. The lesson of these surveys is that many managers are thrown into annual reviews without the proper know-how. With so much at stake, such as employee development and engagement, there is reason enough to invest in training managers to better deliver performance reviews. Seminars and one-on-one sessions can have more impact than merely including directions on the evaluation forms the manager is instructed to fill out. Deloitte agreed and stated companies must teach managers to offer more instructive feedback.

Include peers in the process
The modern workplace is as much about collaboration as it is about reporting to a direct manager. Yet many organizations limit the performance review process to only a manager's appraisal or include only people in leadership positions in a traditional 360-degree review. Recently, though, some companies have turned to crowdsourcing as a means of getting more diverse feedback on employee performance, according to The Wall Street Journal. By using HR tech to track and analyze peer comments and ratings, these companies can deliver comprehensive reviews that touch upon how the employee works with everyone in the organization.

Encourage dialogue
When managers conduct a review with the evaluation forms in sight, the meeting can quickly turn into merely reading down a list of traits rather than a true discussion. Many reviews become an "administrative ritual," according to a review published in the journal Industrial and Organizational Psychology.  The review found that most employees leave a performance review discouraged rather than motivated. One way to make the process more meaningful is to encourage managers to keep the review forms out of sight during the actual review.

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