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Improving Annual Performance Reviews

Guest post by: Allison Grace

Article Overview: Employees and managers alike complain about the annual performance review process being a tedious, biased, ineffective morale-buster. A 2007 study of 2,200 employees by Salary.com found that more than 60% of workers say reviews don't do anything to help their future performance. Nearly eight in ten companies conduct performance appraisals, and of those, 72% report being only somewhat satisfied, not very satisfied or extremely dissatisfied with the process, according to a 2006 SuccessFactors study of 1,000 HR professionals. So why have a performance appraisal system in place when everyone is so unhappy with them?

Improving Annual Performance Reviews

Employees and managers alike complain about the annual performance review process being a tedious, biased, ineffective morale-buster. A 2007 study of 2,200 employees by Salary.com found that more than 60% of workers say reviews don't do anything to help their future performance. Nearly eight in ten companies conduct performance appraisals, and of those, 72% report being only somewhat satisfied, not very satisfied or extremely dissatisfied with the process, according to a 2006 SuccessFactors study of 1,000 HR professionals. So why have a performance appraisal system in place when everyone is so unhappy with them? Because performance appraisals still represent the best way to measure how an employee performs during a certain time period and the best way to determine how to help improve performance. And in today's litigious society, employers must defend themselves against unlawful termination lawsuits by providing documentation, usually a performance review. No matter how much people complain about doing performance reviews, employees, managers and organizations still need them. Performance management is like budgeting - it's required in every organization, it's cumbersome and it never comes out exactly as you planned. But you wouldn't get rid of budget planning just like you shouldn't get rid of performance appraisals. The fact is that managers and organizations need to set expectations and manage them, and the performance appraisal process is the best way to do it.

How can you improve the process so that managers and employees alike feel like they're getting value from it?

First, the annual review shouldn't be a surprise. Some companies are implementing midyear or quarterly check-ins or devising processes that require more continuous feedback. If you've given feedback throughout the year, the annual performance review should be just one more meeting that isn't a surprise to anyone.

Second, allow employees to have input into the process. Companies that include an employee self-evaluation step have had positive results because employees feel they have a voice and a say in the review and the process. And it makes the review process easier for managers, because employees can provide them with examples of what they've done well and a list of accomplishments so the manager isn't starting with a blank sheet of paper. The annual review meeting then becomes more of a two-way discussion between the manager and employee.

Third, consider separating discussions about compensation and performance. When these are tied together into one discussion, the employee may be so focused on finding out their salary increase that they aren't listening to anything when it comes to their performance. If your company pays bonuses, a separate goal setting and review discussion should be held at a different time than the annual performance review.

Fourth, include a process for calibrating ratings. Many organizations use calibration meetings to ensure consistency among performance reviews and manager ratings. Some managers may be "easy graders" and others more difficult.A review of the ratings by other managers and by upper management can motivate managers to work hard to justify the ratings of his or her employees because they will be subject to scrutiny by his or her peers or superiors. It can also give managers extra support if an employee doesn't agree with his or her rating.

Fifth, explain that "meets expectations" is a good rating. Solid performers who get the job done consistently are vital to an organization, so communicating this rating in a positive way is essential. Managers also need to discuss with employees what they are doing well and what they need to do to achieve the highest rating.

Lastly, an overall review by HR or a designated member of the management team (if there is no internal HR person) should be conducted to help ensure fairness of ratings and thoroughness of reviews, and to spot coaching and training needs for managers and employees. The review should uncover managers who are rating on the extreme - either too many high ratings or too many low ratings - and provide an opportunity to achieve more balance in the process.

Instant HR Solutions has worked with many companies to implement effective ongoing performance management processes. Contact us today for assistance.

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Article Tags: performance appraisals, performance reviews



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