The future of performance reviews

Employer Human Resources Advice Retention

The elephant in the room … what if we told you that times are changing and that annual performance reviews are out and giving regular feedback is in?

Performance reviews are essential for staff development but they can also be stressful, time-consuming, and ineffective if done poorly. For many businesses the term ‘performance review’ can be the elephant in the room, where many employers know it’s a shortfall in the people management space and they don’t know how to fix the challenges and frustrations it can cause. For some companies the way they conduct their reviews is quite archaic and cumbersome, with employers and employees merely using it as a tick box exercise.

A performance review is defined as an assessment with an employee and their direct manager to evaluate performance, define strengths, identify weaknesses, review professional goals and plan for the future. The goal of a performance review is to use the feedback received for improvement and to identify any areas of concern.

When performance review processes don’t work effectively in an organisation, for instance people not filling in the review forms correctly or on time, the process often receives the blame. This then becomes the excuse, and reasoning staff use for non-completion. So as a business, instead of making changes to the rating/scoring systems or revamping the document that is sent to the employees’, the process needs an overhaul, and what performance management looks like in the future should be seriously considered.

As a manager or business leader, you’re not only responsible for successfully guiding your team, but also for nurturing their individual growth and development - performance reviews play a pivotal role in achieving this. How can you make your performance review system more engaging, meaningful, and productive for your employees and your organisation? In this article, we delve into the traditional performance review system, its historical background and explore some new thinking and innovative practices and how they can help you improve your staff retention, motivation, and performance.

Shortfalls of the traditional ‘performance review’
Traditional performance reviews generate mountains of paperwork, and they hold people accountable for past behaviours at the expense of improving current performance and training talent for the future. The annual timeframe creates an excuse for delaying feedback and addressing issues and is described as a ‘last century’ practice, blamed for creating lack of collaboration, creativity, and innovation.

The old school rating scale creates a ‘threat response’, as we hear the phrase “can I give you some feedback?”, our hearts immediately sink, and we brace ourselves for attack. In addition, performance ratings are rarely accurate as it is impossible to review a whole year’s worth of performance into one simple score. Attempting to do so, can increase those feelings of threat, unfairness and purely creates a ‘tick box’ exercise.

History of performance reviews
Historical and economic contexts have influenced the evolution of performance management over previous decades. In the past, the traditional approach worked well when the market for talent was plentiful and this approach assisted businesses with focusing on which employees to retain, reward and let go. Similarly, the traditional approach can be tracked back to the World War I days where the US Military used performance appraisal schemes to identify poor performers using the rating scales.

System improvements moving forward
Traditionally, performance reviews have been an annual occurrence, but many businesses are replacing annual reviews with frequent, informal check-ins. These regular check-ins allow managers to keep their fingers on the pulse and ideally should occur when milestones are reached, challenges arise and when projects are completed.

It’s easy to gravitate toward the negative, but true leaders focus on the good in their employees and bring out their best traits. Offering a supportive, coaching, and mentoring approach will lead to more meaningful discussions, deeper insights, and greater employee satisfaction. This can be achieved by replacing previous templates and review forms with open and short questions asking how employees feel about the work that they are doing, what is going well, and what they would like to improve on. It is also key to make sure that discussions centre on development goals and growth opportunities.

Innovative thinking and the future of performance reviews

360 reviews
Anonymous peer reviews or also known as ‘360 reviews’ are becoming more and more popular. Unlike a typical employee performance review in which an employee's work performance is evaluated by only their manager, a 360 review considers feedback from all directions of the organisation (peers, reporting staff, customers, suppliers etc). The feedback is compiled, analysed, and delivered to the employee by their manager. This process is highly recommended and improves the performance of both the individual employee and wider organisation, leading to overall improvements in productivity and morale.

Agile Reviews
With organisations moving at pace, it doesn’t make sense to hold on to a system that’s built mainly to assess and hold people accountable for past or current practices. Businesses today, no longer have clear annual cycles, projects are short-term, and many changes occur day-to-day. Therefore, employees’ goals and tasks can’t be plotted out a year in advance with an expectation to be accurate and relevant. Agile reviews are frequent and collaborative, focusing on feedback, learning, and improvement rather than evaluation and ranking. They involve setting short-term goals, having regular check-ins, and using peer reviews and self-assessments. They benefit by increasing employee engagement, alignment, and reduce bias and anxiety.

Development Reviews
Another innovative performance review practice is shifting the focus from evaluation to development. Developmental reviews are based on the premise that performance is not a fixed trait, but a dynamic skill that can be improved with feedback, coaching, and learning opportunities. Developmental reviews are designed to identify the strengths and areas of improvement of each employee, and to create personalised development plans that support employees’ individual growth and career aspirations.

Gamified Reviews
A newly innovative review practice is using gamification elements to create fun, interaction, and motivation. Gamified reviews are based on the idea that people are more engaged and productive when they are challenged, rewarded, and recognised. Using game mechanics such as points, badges, levels, and missions to track and reward performance, as well as encouraging feedback, collaboration, and competition. This approach can increase employee motivation, participation, and retention, as well as create a positive and high-spirited work environment.

Continuous Reviews
Continuous reviews or also known as ‘monthly touchpoints’ are based on the notion that performance is not a static snapshot, but a dynamic process that requires constant feedback and adjustment. The goal is to push frequent conversations with employees and to keep revisiting key questions such as: What am I doing that I should keep doing? And what am I doing that I should change? These conversations are holistic and involve giving and receiving feedback on an ongoing basis, using a variety of platforms such as apps, surveys, online chats etc. In turn, continuous reviews can improve employee performance, communication, and trust, as well as reduce stress and surprises.

When it comes to determining the style and frequency of your teams’ performance reviews, it is important to seek what works best for you and your organisation. Are your managers holding a weekly 1:1 meeting with their direct reports? Does your company culture promote and encourage feedback? Is your current performance review structure working for your business? Do your team members ask for more feedback?

No matter which performance practices you choose to implement, you should continually foster a culture of regular feedback and employee and manager discussions. Not only can regular feedback improve communication, performance and overall engagement, a much more effective performance review model could be transformative for your staff and business.