If you were to Google “Trends in Performance Management,” your search results would inevitably list a plethora of articles discussing how several well-known companies have moved away from the standard annual performance review and performance ratings. This includes companies like General Electric, Adobe, Microsoft and Deloitte – to name just a few. However, only a minority of companies in Alberta are following this trend.
According to the most recent HR Trends survey of HR professionals, conducted by CPHR Alberta, 68 per cent of employers have annual performance reviews, whereas just four per cent have monthly performance review meetings. Another 10 per cent use informal and ongoing coaching conversations in place of a formal performance management program.
Performance reviews can provide valuable data to an organization’s HR team. The data can contribute to the predictive people analytics, but only if there is a high rate of compliance so that there are minimal gaps in the data and, most importantly, if the right data is being collected. Unfortunately, around a quarter of survey respondents said they are achieving less than a 75 per cent compliance rate with their performance review program. Half of respondents said they are achieving compliance above 75 per cent, but they are not yet seeing full compliance. The remaining quarter said they achieved full compliance with their performance review program. Clearly many employers are struggling to gain full buy-in from managers for their performance review programs, despite the fact 71 per cent of survey respondents reported that compliance with their performance management program is a priority for their organizations.
Perhaps it is the lack of full participation in performance review programs that is leading to less-than-effective results. Just 22 per cent of respondents agreed or completely agreed that their performance management program is effective at managing the performance of employees, 39 per cent somewhat agreed, 15 per cent somewhat disagreed, and 20 per cent disagreed or completely disagreed with the statement. Or perhaps, there is a need for employers to alter their approach towards performance management.
Performance management doesn’t just have to be about managing performance. A performance management program can be harnessed as a tool to increase employee engagement. In this context, performance management should feel less formal, happen more frequently, be forward looking and align the employee’s development with the organization’s strategy.
The formality of the once-a-year review and accompanying performance rating lends to creating a process that is uncomfortable for both managers and employees alike. Managers struggle to evaluate and rate their direct reports’ performance in a comprehensive and fulsome manner that is based on more than just what is fresh in their mind – the past few months preceding the review. Likewise, employees can feel blindsided if the constructive criticism contained in the review has not been raised before. By encouraging managers to have more frequent check-ins (quarterly, monthly or even weekly) with their team members, areas for improvement can be identified and challenges with performance can be addressed in a timelier manner. Similarly, accomplishments can be recognized closer to when they are achieved. Briefly documenting these conversations throughout the year will help managers put together more objective annual reviews – if the organization chooses to retain them as part of the performance management program.
Improving the timeliness of performance conversations isn’t enough to improve engagement, but it’s a move in the right direction. Engagement will grow the most when each team member understands how the work they are expected to do contributes to achieving the organization’s business plan and strategy and feel supported in that work. With this understanding, the employee, with the guidance of their manager, can set individual performance goals and expectations knowing they will be supported when barriers to success arise. Having a forward-looking focus to performance conversations will also help to identify development opportunities for team members that are aligned with future and current needs of the organization. It will make developing an internal pipeline of future leaders easier.
It appears the shift away from annual performance reviews and the accompanying rating system will continue as our workplaces transform to keep up with the rapid rate of change. The demographics of the workforce are changing and the new generation of workers bring with them new expectations for their employers. If you, as a business leader, are considering adopting a new approach to performance management, reach out to your human resources team. They can assist you in evaluating how to proceed in a way that is consistent with your organizational culture. If you don’t have internal HR support, you can find a listing of HR consultants on CPHR Alberta’s website.
The workplace is undergoing transformation. Maybe its time to transform how we manage performance as well.
Dan Boucher is CPHR Alberta’s director of regulatory affairs and research. He leads the semi-annual HR Trends survey, and is committed to delivering high-quality research and information for Alberta’s HR community.
