Why The Annual Review Process Damages Employee Engagement
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Throughout the 18 years I worked in corporate America, at numerous organizations and in many different roles, there was one process that never changed – the annual employee review. Anyone who’s ever been reviewed in this way knows that it’s a lack-luster experience at best, devastating at worst. Unfortunately, managers rely on this one opportunity each year to tell employees how they are faring in the eyes of management, often glossing over critical accomplishments, experiences and contributions. The ratings we’re given, too, often feel arbitrary, and these annual assessments seem to come out of nowhere, providing feedback that is long overdue and too little too late.

To learn more about improved approaches handling employees reviews that will engage, motivate and inspire positive change, I connected with Dominique Jones, Chief People Officer of Halogen. With over 15 years of HR experience, Dominique shares her take on better review practices that companies can implement, such as the project-based review rather than once-a-year annual reviews. She sheds new light as well on how managers can adapt different terminology in the review process, to make for a more effective and motivating end result.

Kathy Caprino: Dominique, what happened at IBM and Yahoo that points to the need for nontraditional employee review systems in the workplace?

Dominique Jones: At its core, performance management is intended to improve the performance of employees at every opportunity and should be supported by offering coaching and timely feedback to commit to achieving results that matter to your organization – all year.

The movement affirms general dissatisfaction with the old “once-a-year” approach to performance reviews and forced performance ranking.

As workforce demographics, leadership styles and technologies shift, more and more organizations are seeing the value in creating a manager-and employee-driven culture of ongoing performance, modeled by leadership, and supported by HR – not led by HR.

Caprino: What specifically is wrong with these traditional employee reviews – what works and what doesn’t, with these?

Jones: The challenge with traditional annual review cycles is that they typically operate separate from the regular rhythm of the business. As a result, discussions about employee performance are often “one and done”.

Annual cycles also typically utilize separate processes, systems and tools, and require burdensome overhead on all participants to complete (especially if they processes are paper-based, which is the reality in some cases).

The result of annual review cycles is that they fail to positively impact employee engagement , address development needs or improve future productivity, and have a neutral to negative impact.

However, the reality is there is still a place for employee reviews. In other words, the concept of employee performance reviews aren’t dead, but the old way of thinking about their place in today’s workplace – the one-time event to talk about employee performance — certainly is.

Annual cycles are most effective when they are treated as an opportunity for leaders and employees to look at a performance summary of all relevant activity from the year, which includes coaching and feedback observations, and setting development and learning plans to address gaps and further enhance skills.

Caprino: What new employee review practices are cutting-edge, innovative companies today implementing?

Jones: Leading organizations are making next generation performance part of their unique business rhythm. Their performance management practices are adaptive, personal, collaborative, reinforcing of positive habits, and available across multiple devices/locations – creating conditions to replicate high performance.

Additionally, leading organizations are providing frontline managers with guidance and training on how to provide ongoing coaching and feedback to employees. For example, here are five alternative opportunities where managers and employees can discuss performance:

- Quarterly commitments
- Development discussions
- Project reviews
- 360 Feedback assessments
- Check-ins

The benefit of making performance management an ongoing process is that it no longer operates in isolation to the business. Rather, it should be aligned to strategy to support the needs of the business and make informed people decisions such as attracting, engaging and retaining top talent.

Caprino: How can today’s managers learn to manage more proactively, effectively and in more empowered, positive and results-oriented ways that inspire their employees to contribute at the highest level?

Jones: Employees, regardless of where they are in their career or what generational category they belong to, need to understand how their individual commitments link to larger company objectives. It’s important for managers to work collaboratively with employees to help them understand how their work contributes to the big picture. This type of leadership skill is important to keeping employees engaged and productive.

As a result, it’s important for organizations to provide managers and employees with the resources and tools to be able to collaboratively set clear, achievable commitments that are linked directly to organizational goals.

However, setting commitments is just the beginning. To achieve the desired outcomes established during the commitment setting process, managers need to be able to monitor progress to ensure employees are meeting expectations. To help keep goals on track, managers can provide regular feedback and coaching. This ongoing dialogue helps ensure individual performance stays on track, and allows individuals to adjust their commitments as needed to keep pace with evolving business requirements.

I can give you an example of how leaders and managers inspire high performance at Halogen Software. We start the year aligning all our employees around our organizational goals for the year ahead. We want employees to commit to them and understand how they directly influence their outcomes. We set three company-wide goals and senior leadership shares these goals with all staff in early January.

Employees use these three goals to then set departmental and individual commitments in support of these goals. This ensures everyone has a common purpose and is aligned around their activities. Helping each individual employee understand what it is they are expected to do and why (i.e. how it ties into achieving the organization’s overarching goals) makes it easy to start the year focused and stay motivated. The company’s goals are reinforced throughout the year at team meetings (large and small) and results are constantly shared so employees can see how we are progressing in meeting our desired outcomes.

Caprino: Sounds good in theory, Dominique, but what do organizations need to do to help managers become better coaches?

Jones: The shift to ongoing performance management creates a pressing need to support managers in doing performance management well, which is all about coaching the individual – not focusing on what generational category they belong to (e.g. Millennials, Baby Boomers, etc.)

Organizations must make it a priority to provide managers with the resources and tools needed on how to review employee commitments, address any performance gaps, properly provide feedback and coaching, and discuss development plans and career goals. When these conversations occur on a regular basis, it supports better business results, higher team performance and engagement.

Caprino: How is HR being incorporated into overarching business goals and how do you see this continuing to evolve?

Jones: When talent decisions are aligned to the needs of the business, it means the organization is better able to translate talent management and development investments into economic success. Are people working on the right things to support the business strategy, or do they need to course-correct and make adjustments on goals?

A talent management solution that’s based on an organizational-alignment model lets you input your corporate objectives and ‘cascade’ them down to divisions, departments and employees. It enables continuous line of sight to show how each individual is contributing in the context of the overall business strategy.

Furthermore, HR in partnership with other areas of the business needs to assess whether the organization is investing appropriately in the right things to generate future growth. For example, there needs to be a focus on 1) understanding where in the organization hiring and retaining top talent is critical to future success and longer term profitability, 2) how investments in people development are translating into a higher-skilled and a higher-performing workforce, and 3) understanding how employee productivity and performance translates into better business outcomes.

Dominique’s suggested strategies seem to point to a far better approach than the outmoded annual review process and other obsolete HR procedures. What I observe, however, is that for these strategies to work, managers need a great deal more training, guidance and support to learn how to communicate effectively , motivate their staff powerfully and inspire employee engagement more deeply, if they’re to become capable of fostering true employee growth.

Read the original article on Forbes.