How To Use Performance Reviews To Create Meaningful Business Value
Discover how to conduct performance reviews to improve employee experience and create meaningful business value.
Performance reviews are probably one of the least favorite exercises for most people in an organization. However, if done right, it can improve an individual’s performance while rewarding and retaining the right people. Jeff Smith, head of product & design, 15Five, discusses how to conduct performance reviews to create meaningful business value.
Performance reviews seem like everyone’s least favorite part of the employee experience calendar. Many HR leaders and professionals view this months-long process as “review hell” as they beg people to complete the reviews, stitch together spreadsheets and survey responses to disentangle data and create reports that few people even see. Further, they retrain managers to have meaningful conversations with their people about the results. For organizations that suddenly became remote or hybrid over the last few years, these perceived challenges may be amplified, as some managers report feeling disconnected from their teams since they can no longer “see performance” by walking around an office.
However, organizations need a process to recognize, reward, and retain the right people. Managers need to increase the performance of their people and teams. Individual contributors need useful feedback, career paths, fair pay, and more. When done properly, performance reviews can help you efficiently meet these needs and more with significantly less headache.
Performance Review Strategy
Looking ahead to your next review cycle, consider tools like performance management software that allows your individual contributors and managers to quickly gather resources related to the performance review throughout the year by documenting wins, progress, and opportunities for improvement. This not only combats recency bias but also reduces the time it takes to complete the review.
As you build out your strategy, start with the goals of your performance reviews: what do you want to accomplish? Nearly all organizations have on their wish list some or all of the following:
- Inform fair compensation and bonus decisions
- Inform fair promotion decisions
- Increase retention, especially of high performers
- Accelerate team member growth
- Increased performance for individuals, teams, departments, and the organization
Many organizations I have worked with have a general sense of what they want to accomplish. Yet, there is no specific, shared understanding across the HR or leadership team. Documenting the goals of your performance review gives you a lens through which you can create a new process or curate your existing one. Each element of your performance review process, from the technology you choose to the questions you ask, should be evaluated against these goals.
See More: Manager Performance Review: A 5-Step Guide and Examples
Developing Your Review Principles
After you have prioritized and documented the goals for your performance review process, it is helpful to create a short list of principles to keep in mind as you add (and hopefully subtract!) things for your review processes. For example, a list of principles might include fairness, simplicity, and actionability.
For fairness, you and your team can evaluate your review process using questions such as “How well are we basing our decisions on objective data and consistent standards?” and “Do we have the right checks and balances in our processes to catch inconsistencies and oversights?”
For simplicity, questions such as “How well does each question we ask in the review serve our organization’s goals and/or team member needs?” and “Is there anything we can remove?” can help you create a process that is efficient and valuable.
For actionability, asking, “Will this review give us the data we need to make downstream decisions about merit increases and promotions?” and “How effectively and easily can managers coach their people based on these results?” can be extremely helpful as you design your questions and determine what kind of reporting you need.
As you create your review process, periodically evaluate whether your goals and principles are properly represented.
Avoiding the Pitfalls
In addition to goals and principles, it is helpful to keep these three common obstacles in mind to avoid them or minimize their impact: administrative headaches, poor employee experiences, and a perceived lack of business value.
I have managed performance review processes that relied on disconnected spreadsheets and included the joy of manually tracking down people. I feel for anyone who is running a process without centralized administration. Clear status reports on who has completed what, simple reminders for people who are behind schedule, all of your data in one place, and easy-to-create, useful reports are just a few of the benefits of using a purpose-built review technology. Less time and effort administering your review means more time ensuring that your results are fair, actionable, and impactful for your organization.
Ensuring Fairness
Common employee experience complaints about performance reviews often involve the following: this is unfair, takes too much time, and is useless. Fairness is foundational to an effective review process. Fortunately, simple guidelines can help promote a fair process and perceived fairness:
- Use objective data when possible
- Always use consistent criteria, such as competencies
- Train your people about common biases
- Clearly define designations such as ratings
- Allow people to review themselves as part of your process
- Include checks and balances in your process, such as calibrations
- Review your results for inequity and abnormalities before they are finalized
- Share the questions you ask and your process transparently
- Ask your people what went well and what can be improved after a review cycle
Less Is More
Finally, use the least number of questions necessary, especially open-ended questions, in your review. I have seen reviews with more than a dozen open-ended questions for the individual contributor and manager to complete! Most people cannot take the time to answer each of those questions thoroughly and thoughtfully. Few HR teams have the time to organize all of that qualitative data into a valuable executive-level report. Choose a few critical open-ended questions about wins and opportunities for growth to supplement multiple-choice questions about someone’s performance level, competencies, and promotion readiness. For open-ended questions, give guidance on response length.
Addressing individual contributors’ “this is useless” complaint often requires curation and subtraction. Keep your review simple and focused on what matters most: What were someone’s most significant accomplishments? How does their impact compare against what is expected for their role? How well are they demonstrating your values? What are their most important opportunities for growth? How will you support their growth? Your review process should enable your managers to answer these questions for each team member in a personal, impactful way. Hold your managers accountable for having meaningful conversations about review results.
Take Action
Most executives and leaders think that performance reviews lack organizational-level value. Because performance reviews historically have been focused on individual results and are so exhausting to administer, there is little time and energy left to discover insights and take the right organization-level actions based on results. Your review process and technology should provide data and insights related to the following, which are critical for any executive:
- Who are our highest-performing people? Which of these people are flight risks? How are we investing in them?
- Where is our individual performance strong? How do these perceptions of individual performance align against organizational and departmental performance against our business objectives?
- Which areas of our business are underperforming and need additional support and coaching? What are the themes related to underperformance? Where do we need to take action as leaders?
- How well are our people demonstrating our values? Any areas that we need to reinforce as leaders?
- What initiatives and actions are our HR team taking to support our organization’s needs based on these review results?
In summary, even though you might feel stuck in “review hell,” keep going. Or, if your review cycle has ended, plan strategically for the next one and choose software that can help simplify the process. This way, leaders and HR teams can transform their performance reviews from a check-the-box exercise to a meaningful employee experience that creates business value for your organization.
How are you using performance reviews to improve employee experience and create meaningful business value? Let us know on Facebook, Twitter, and LinkedIn.
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