How to Improve Performance Appraisals

When it comes to performance appraisal, the old Nike slogan of “just do it” just doesn’t apply! Unfortunately, that’s the approach that many companies continue to take as they go through the motions of what has become a predictable, yet highly inefficient and extremely non-productive process of providing feedback to employees. 

There’s an interesting paradox for organizations when it comes to performance appraisal.

Employees don’t like the performance appraisal process. But, and here’s the paradox, they do, increasingly crave feedback. In fact, Gallup research has indicated that millennials, in particular, crave feedback—but they’re not getting it. Chief Learning Officer reports that: “Gallup reports only 19 percent of Gen Yers receive routine feedback from their managers. Then, only 17 percent of millennials report the feedback they do receive is meaningful. Gallup also found only 15 percent of millennials regularly ask for feedback.”

Because they’re not asking for feedback, supervisors and managers may be blithely assuming they don’t need it. They do—but not in the traditional way they’ve tended to receive feedback, in formal and frequently flawed performance review processes.

Purportedly designed to improve employee performance, typical review processes tend to do just the opposite. In fact, according to SHRM, a 2019 Gallup study found that “only about 10 percent of U.S. workers felt engaged after receiving negative feedback on the job,” and that Workhuman Analytics & Research found that “55 percent of workers believe annual reviews don’t improve their performance.”

The problem? By and large, most organizations are going about the performance review process all wrong. Yet they continue because, at some level, we all believe that feedback is important and that it should help to improve performance. But we struggle with how to make performance appraisal effective. Here we look at some strategic methods of performance appraisal and offer some performance review tips for managers and HR leaders. 

Strategic is the key word.

Make It Strategic

In many organizations the annual performance review process has been in place for some time and continues each year with only minor tweaks to the process—and the requisite forms (now largely electronic) that must be filled out, processed, and saved. It’s not an iterative process; it’s a repetitive process. What it tends to repeat are the same problems and issues that made the process ineffective—and led, ultimately, to the widespread negative views that many employees and managers hold—in the first place. 

Most performance review processes need a major overhaul. And not in the “flavor of the month” way that trendy ideas like OKRs or eliminating performance reviews altogether perpetuate.

Instead, HR leaders need to step back and consider why they’re conducting performance reviews in the first place.

And, actually, the pandemic and organizations’ experiences over the past several months have actually required many organizations to make major shifts in how they conduct their performance reviews. Some have taken advantage of the opportunity to improve and streamline their processes specifically with an eye toward making the process relevant for employees both on- and offsite.

It starts first with your organization’s needs. What results do you need performance reviews to drive? Accountability? Development? Recognition? Alignment? Values? Any of these may be relevant, but each must relate specifically to your organization and its unique operations. For example, if you’re hoping to drive accountability, but your organization doesn’t really have a solid process for measuring results, your performance review process is doomed to fail from the outset. If you’re hoping to boost employee development, but your largest employee segment is frontline workers who value a paycheck more than a promotion, you’re wasting your time.

Make It Frequent

We’ve referenced the “annual” performance review. That’s because, in most cases, the formal review process occurs on an annual basis. Even those involved in the process, though, would agree that once a year feedback is far from enough to help employees understand what they’re doing well, and where they may be able to improve—or to help managers understand the tools, resources and support they need to achieve personal, professional, and company objectives.

Again, what works best for your company and your employees and managers will vary. What won’t work is an annual review process. What might work is a process that involves quarterly check-ins, weekly one-on-ones, or continuous feedback. When it comes to methods of performance appraisal, more is more!

We know that more frequent, goal-focused check-ins drive professional development.

Make It Matter

Making performance review matter to your organization starts with a thorough understanding of the “why” behind performance review, as we’ve seen, as well as the alignment with desired strategic goals and objectives. Based on those goals and objectives, the organization, with advice and counsel from its HR leaders, needs to consider the knowledge, skills, and attributes (KSAs) needed by employees, the KSAs they have, and the gaps that exist.

But the review process should be more about focusing on development needs—and the future—then what employees did, or didn’t do, during the previous weeks or months.

Making the performance review process work—for employees, managers, and the organization—means focusing on developmental needs and desires and determining ways to close the gaps that may be keeping employees from getting to where they’d like to be and where they are today.

It also means having metrics in place to leverage data in smarter ways designed to inform career planning, hiring, and other key business decisions.

Next Steps

Let’s take a look at the flip side of Gallup’s data indicating that only 10 percent of employees feel engaged after receiving negative—we would say “constructive”—feedback. Gallup also tells us that “engaged employees are more likely to improve customer relationships, which results in a 20% increase in sales.”

An outdated, ineffective performance management system will not engage employees. A strategically designed, and carefully aligned, performance management system will.

The starting point: giving careful consideration to your why and what it will take to help your organization achieve its goals and objectives. Haven’t taken the time to take a deep dive into your company’s strategic plan and strategic objectives? It’s time you did.