Human Capital Management Blog

Strategies for HCM Professionals

The Annual Performance Review is Dead – Create a Performance Development Culture Instead

Fact: HR headlines over the last few years have been questioning the livelihood of the annual performance review. “Is the annual performance review dead?” “It’s dying.” Yes, it’s definitely dead.

Taking a quick look at the current landscape, there are several obvious indicators that the annual performance review is no longer relevant.

Technology is driving change. The number of smartphone users worldwide is expected to grow to around 2.5 billion in 2019. The Internet of Things is pervasive – our world is an ever-expanding collection of connected devices, environments and experiences. Individuals now seek constant stimulation, engagement, knowledge-building and feedback – and this is applicable across our multi-generational workforce, not just to younger employees.

These changes matter. To develop high performers, employers must be able to empower them. Today’s performance management process – including the annual review – doesn’t address the expectations of today’s employees, nor does it drive employee engagement or motivation. It’s seen as an outdated, compliance-driven event lacking transparency and consistency. And, in this always-on environment, a once-a-year review between employees and managers isn’t enough. As GE’s head of human resources told Quartz, “The world isn’t really on an annual cycle anymore for anything.”

It’s time to stop managing performance and start developing it. Because performance development is a year-round practice, employers need to design processes to obtain better feedback, foster productivity, and support employees versus simply assess them. This means envisioning new types of employee-manager relationships.

Here are four ways to create a performance development culture.

Focus on Coaching Over Managing

Managers play a critical role in the development of high-performing teams. Progressive organizations are putting a greater focus on coaching, with an emphasis on on-going employee development versus competitive assessment. Coaching in this context is about enabling employees to achieve their best performance through positive support, direction and instruction. Conversations focus less on strictly performance feedback, with managers and employees working together to look at goals throughout the year.

Managers also provide just-in-time coaching. That is, instead of waiting for a scheduled and formal one-on-one with their employee, give feedback actively, in the moment and on an on-going basis.

Implement Development Planning

Development is an on-going process of improving one’s skills, capabilities and knowledge. The process of development planning should be built into the year,. A logical extension of coaching, feedback and performance appraisals, it enables managers and employees together to determine how to address performance gaps.

HR professionals need to ensure they are providing the tools and resources to enable managers to have development conversations with their employees. At Ceridian, we provide guides to employees to help prepare for their performance conversations. The guides provide a framework for employees to step back and reflect on their development trajectories. For example, what steps must be taken to achieve their goals? What are potential roadblocks? Employees should come prepared with answers, and solutions to any foreseeable challenges, so that the meeting becomes more of a discussion with their manager instead of solely a feedback session.

Rethink the Approach to Goal-Setting

The best organizations have changed the way they think about goal-setting and cascading goals. There are two key points in rethinking the approach to goal-setting.

The first is that goal-setting should be an on-going process. Bersin by Deloitte found that organizations that have employees revise or review their goals quarterly or more frequently were three-and-a-half times more likely to score in the top quartile of business performance. It’s a manager’s job to ensure they are regularly coaching their employees and implementing a performance development plan as part of this process.

The second is that employees should take an active role in defining their goals and how they align with the greater good of the business. This is a shift in the traditional approach of cascading goals down through the organization.

For example, at Ceridian, employees and managers work together to align personal and business goals back up to wider organizational goals. This way, employees are more engaged and motivated by understanding how their work impacts the overall success of the organization. We also put an emphasis on setting goals through the lens of our brand values – it’s not just about what we do, but how we do it.

When developing goals, we recommend that employees set five goals – with at least one personal goal on the list – and make them SMART (specific, measurable, achievable, relevant and timely). Metrics help to define clear expectations, and ensure that the goals are not only challenging and motivating, but also realistic to attain.

Provide Differentiated Rewards and Recognition

A key difference between an annual review and an ongoing performance development process is that the latter provides the opportunity to recognize employees throughout the year, and in the ways that they like to be recognized and rewarded.

For example, recognize employees for milestones through their goal-setting, or find those coachable moments to give just-in-time recognition or feedback, whether it’s by sending them a note, or recognizing them more publicly.

For example, we use the LifeWorks tool, an online engagement platform that empowers everyone in the organization to recognize employee contributions.

Remember that rewards and recognition are about more than just merit (read: monetary value). In fact, at Ceridian, we have separated performance discussions from merit discussions to facilitate more robust conversations about performance.

 

The future of the workplace depends on how successful companies become at building out new systems and processes that improve the employee experience. Managers are key to establishing a performance development culture by supporting and driving the constant feedback loop. Organizations need to equip their managers with the tools and development opportunities to make this possible.

3 comments

  1. I too believe that Performance Reviews need to be gone. Developing a plan for goals with rewards would work much better.

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