Out with annual performance reviews and in with continuous coaching and feedback.
By Anita Bowness
When it comes to performance management programs, many organizations are no longer happy with the status quo: The annual review meeting where managers provide employees with feedback, a rating, and a compensation increase if earned. Then the file is closed until next year. One and done.
Best-in-class organizations understand that an approach like this falls short in several areas. Performance management that’s limited to a once-a-year activity has shortcomings:
• An inability to flex to changing business goals, priorities, and conditions;
• No insight into employee progress and skill gaps; and
• The outcome is a negative rather than positive experience for employees and managers.
Annual performance reviews often don’t make a tie between performance and organizational objectives or outcomes, leaving employees unsure about their role and how they contribute to the business and its success. In fact, according to Gallup, 50 percent of employees don’t know what is expected from them at work, which leads to lost productivity and lost dollars.
Redefining Performance Management Processes
In the simplest of terms, performance management is about giving employees an understanding of how they’re executing tasks, areas they are succeeding in, areas they can improve in, and a plan for how to grow and develop in their career. For the process to be as effective as possible, it needs to be monitored on a continuous basis.
Making the shift to an ongoing performance management model is an effective way to ensure individuals receive the feedback, coaching, and development they need to become engaged, high-performing employees focused on delivering results.
There are five approaches organizations can consider in order to turn performance management into a continuous process that yields benefits for both employees and the bottom line.
1. Collaboratively set and revisit goals. Goal setting isn’t a manager-only activity—and goals shouldn’t necessarily be carved in stone. Managers should help employees align personal commitments to business goals and adjust them as business needs or priorities change. Ongoing dialogue is essential for managers to understand how employees are progressing toward meeting their commitments. These discussions provide employees with a deeper understanding of the impact their work is having on the organization, which can also drive higher job satisfaction, engagement, and productivity.
2. Schedule frequent check-ins. Regular check-ins between managers and employees provide an opportunity to review progress on goals, commitments, and projects. During these meetings, managers can offer feedback and coaching to encourage growth, improvement, and development. For employees, these meetings provide the ideal time to voice thoughts, share challenges, and seek advice. Check-ins, whether formal or informal, can go a long way in building trust and elevating engagement levels and should occur on a weekly or monthly basis.
3. Gather feedback from multiple sources. Soliciting feedback about an employee from colleagues, other department managers, direct reports, and partner stakeholders, is a great way to get an overall view on an employee’s performance. Multi-source or 360-degree feedback works well in in more flexible, agile organizations where employees report to different people throughout the year. When implementing a 360-degree feedback process, organizations should tailor feedback forms to different types of employees so it’s easier to evaluate and assess competencies.
4. Take time for development discussions. When employers promote and support personal development and career progression on an ongoing basis, they’re more likely to attract top talent, engage their workforce and increase retention rates. China Gorman, HR thought leader and CEO of Great Place to Work, underscores the importance of training and development to employees and organizations: “As companies grow and the war for talent intensifies, it is increasingly important that training and development programs are not only competitive, but are supporting the organization on its defined strategic path.
” When creating development plans, it’s important for organizations to be mindful of the motivations and challenges faced by different generations of employees and adapt to their individual needs. Development plans and activities—like training and mentoring—should:
• Link to the ways they’ll drive business success;
• Align directly to individual competencies; and
• Support employee’s career aspirations.
5. Hold project-based reviews. Matrix-style organizations group employees by project, which enables them to work with and report to different departments and team leaders. To best evaluate employee performance within a matrix environment, managers should consider using a system where feedback is collected as the project progresses. A 360-degree review is an excellent way to gather and capture feedback from an individual’s entire work circle—from peers and managers to team leads and external contacts.
By using this type of ongoing performance review, managers get a summary of all employee feedback gathered during different phases of the project. Management gains valuable insight into how an employee did throughout the assignment and can reference this information in follow-up conversations about performance management once the project ends.
Two Case Studies
While many organizations are still thinking about how to take their performance management processes to the next level, other companies are forging straight ahead to turn ideas into reality. Two of these companies are Basic American Foods (BAF) and Dogfish Head Craft Brewery.
Basic American Foods (BAF)
Managing employee performance on paper was not helping convenience food leader BAF achieve its business objectives. The organization has been able to transform its employee performance management from a once-a-year chore to an ongoing, year-round process. A 360-degree feedback process provides BAF with a more well-rounded view of employee performance while providing employees the broad, balanced perspective they need to develop, improve, and focus on results.
Dogfish Head Craft Brewery
Dogfish Head Craft Brewery has created a culture of ongoing performance management, shifting the focus to conversations rather than numbers. The company has made monthly manager-employee check-ins a part of its culture, enabling employees to receive regular, meaningful feedback they need to develop. Check-ins also lead to higher engagement because employees always know where they stand, which means no surprises at annual review time.
The secret to driving maximum business results from happy, engaged employees is by making sure performance management is an ongoing and iterative process. There is no specific formula, but the five suggested approaches help drive higher performance and better business results year-round.
Anita Bowness is global business consulting lead for Halogen Software.