A Strategic Approach to Performance Management

As a CEO, you want to know that everyone in your business is performing well, working on the right things, and staying engaged along the way. Traditional performance management doesn’t always deliver the value you expect or drive toward these outcomes. Nonetheless, many companies continue with the practice the way it’s always been done, even though it can be quite costly.

The Rise of Disengagement 

In 2015, SHRM found that managers spend 210 hours per year on average working on performance management efforts. They cite research from the CEB which found that “more than 9 in 10 managers are dissatisfied with how their companies conduct annual performance reviews, and almost 9 in 10 HR leaders say the process doesn’t yield accurate information.” Impraise found that 22% of employees have called in sick rather than face a performance review, 35% have admitted to complaining about reviews to their peers, and about 15% have burst into tears during a review. Inside HR found that half of employees reported being surprised in their reviews, and the vast majority of the surprises were negative. Data from multiple sources shows that in any case, the process of completing annual reviews actually causes more employees to disengage and perform poorly. (Source for these stats). 

Employee engagement is not a new phenomenon, but by all reports, it’s not getting any better and it’s not going away. Having disengaged employees hurts your company in more ways than one. Not only are they more likely to leave, creating the need to find and onboard new employees, but they are also costing you productivity and hurting the morale of your other employees. I recently saw a stat in Forbes that companies could be losing about $16,000 per disengaged employee per year. 

Ouch! Why are we wasting so much time on a process that people hate and doesn’t work? There’s got to be a better way.

Getting this right has a big impact on your business. Not only is the process of completing a traditional performance review process overly cumbersome, draining time and resources, but doing this process well can move the needle on business results in the right direction. If you can harness a regular rhythm of effective feedback, recognition, and reflection on career growth opportunities, you can crack the code to bring out the best in each employee.

Laying the Groundwork for Success

• Start with Role and Goal Clarity. Work with your people leadership team to ensure each person in the company has a simple Job Scorecard. The scorecard should only have a few attributes - the purpose of the role, a few specific desired results, a few specific key responsibilities, the competencies needed for success, and the company’s Core Values to guide behavior and mindsets. Provide the gift of clarity up front so everyone knows how their success will be measured.
• Connect to Company Strategy. The goals for each person should align with the company’s goals. Otherwise, why bother? If someone on the team sets a goal to learn to write code, but their job is to sell widgets and the skill they need to improve is communication, your performance process may be missing the mark. However, if they know the goal, and improve their skills in the right area, and you can see the link between their improved communication skills, the number of widgets sold, and the company revenue target for the year, that’s a huge win-win for everyone.
• Track Progress Every Week. Eliminate drama and surprises by reporting on the desired result goals for each role weekly. Managers and team members should always be able to check into how the job goals are going, and what progress is being made on any growth goals. It only takes a few minutes a week to provide an update on the handful of goals, and keeping the goals visible and top of mind is key to success.
• Ongoing Feedback. Having a regular cadence of feedback throughout the year is far more effective than an annual review. Weekly status updates and team meetings for problem-solving and collaboration are a great way to start. One-on-one meetings between managers and direct reports are the right vehicle for bringing to light any potential issues before the review. Often, these meetings can be ineffective - managers may tend to steer the conversation to tactical items and avoid addressing uncomfortable topics like how the employee is feeling and what may be holding back their performance. Growing managers’ skills in these areas is critical, and you should support managers with simple tools to make them more effective.

A Simple & Effective Approach to Reviews

• Simplify the Process. Leverage a technology tool that does the monotonous parts of the work for you. There’s no reason to have managers and team members hunting around, trying to pull information together, or for HR to be manually managing compliance through spreadsheets and emails. Keep the review focused on a few key components - how am I doing, how can I get better? 

• Keep it Objective. Provide a rating scale that’s simple, clear, and objective. Assess performance on the predefined components of the Job Scorecard - no surprises. Making this process as fair and transparent as possible between the employees and their managers is essential. Otherwise,  you risk turning them off rather than engaging them.

• Focus on Growth. Coach managers to focus on the employee’s growth. If there are areas for improvement, discuss them candidly. If there are strengths to celebrate, recognize the person’s efforts. Provide an opportunity for the employee to give feedback to the manager, too. Chart a path together for what the person’s career path looks like in the future and how they can start growing toward those goals now.

When done well, the process of reflecting on performance quarterly (or even annually) can improve focus, alignment, and accountability and drive growth both for individuals and the business. Learn more about how our performance management solution can help. 

Watch our CEO talk about how to simplify performance management to track the right KPIs, provide goal clarity, and engage and retain top talent below.

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Want Better Employee Engagement? START With Your Values!