During a time of crisis, it can be difficult to operate business as usual. Amidst the uncertainty, HR faces the challenge of being pulled in different directions – from managing communications and crisis response planning, to maintaining some level of continuity of business operations.
As SHRM suggests, it’s critical for organizations to aim to manage operations with minimal loss and disruption to the normal business flow. Uniting your employees around the common goal of doing their best to run “business as usual” can help inspire and enable them to refocus during a crisis. Maintaining the organization’s operations also offers some of the safety, normalcy, and comfort that people would usually find in the routine of daily life at work.
We’re all facing unchartered territory and learning as we go. This means that many organizations are currently reassessing their feedback strategy and will need to weigh in on a variety of factors in order to meet their unique organizational needs.
Over the last few days, we have heard of organizations deciding to either abandon their current or upcoming performance cycle, give everyone the same rating, or just continue with evaluations as planned.
But many HR leaders are still unsure about how to manage performance reviews during the COVID-19 pandemic. In this article, we provide some options, perspectives, and things to consider before you close out your current or begin your next performance cycle.
The purpose of performance evaluations
The purpose of performance management is to follow a process that contributes to the effective management of individuals and teams, in order to achieve their goals and organizational success. Effective performance management should create alignment and a shared understanding of what has to be achieved and what individuals or teams have to do, learn, and develop to be successful.
Performance evaluations help measure employee’s achievements against goals and expectations and determine performance standards across different types of roles and levels. When done right, evaluations help establish a common language and goals around behaviors or skills. Moreover, evaluations are a useful tool to differentiate between low- and high-performing employees and gauge frequency of and variations in desired behaviors and skills. They determine where in the organization employees are excelling and where they are struggling, and where additional resources may improve organizational outcomes. Finally, performance evaluations act as a foundational component for the distribution of compensation increases, promotions, and development opportunities.
For the majority of organizations, performance evaluations are the key measurement tool for performance management and they heavily rely on set goals and objectives. However, during a pandemic, goals and organizational priorities are likely to change.
Should you keep running performance evaluations during the COVID-19 pandemic?
When deciding what to do during a time of crisis, the following framework may provide some guidance. Answering these three simple questions can help guide you while you decide whether you will continue your performance evaluations, or abbreviate your approach for the time being:
- Is your performance review process fairly established (e.g. have you conducted at least two cycles)?
- Is a large part of your employee population still working?
- Do you tie bonus payments to performance reviews?
If you answered “yes” to the first two questions, in terms of workforce continuity, your organization is running close to business as usual. You might be able to schedule your performance evaluations as planned.
If you answered “no” to either of the first questions, you may want to consider an abbreviated approach to evaluations that focuses on iterative goal setting throughout the crisis, with a strong concentration on continuous, on-going feedback.
Option #1: Cancel performance reviews
Performance evaluations can take a lot of time and intentional focus from every single employee throughout an organization: weighing in on their own and colleagues’ performance, summarizing and explaining ratings or decisions, and ultimately – especially for managers and leaders – considering next steps, such as compensation increases, recommendations to implement a performance improvement plan, and role changes. Paired with the all too common perception that performance management isn’t fair to begin with, abandoning performance evaluations seems like it would be beneficial to employees.
However, abandoning evaluations could result in managers losing critical business performance data in a moment in which leaders are expected to make tough decisions on where to focus resources. Ultimately, this could lead to poor business decisions and an increase in regrettable turnover when high performing employees fail to receive the recognition and opportunities they deserve. Furthermore, when poor performance is not identified, employees who need support end up floundering and organizational performance risks become stagnant.
Evaluations enable you to differentiate between employees who are performing at a high level, those who need development, and those who may not be in the right role. If you can’t discern between those groups, it could have a long-term impact on your business: when an individual’s manager doesn’t know which necessary skills an employee is lacking, the organization can’t offer the necessary training or coaching this employee would need to succeed. The Boston Consulting Group research found that learning and development opportunities are crucial during times of crisis to maintain organizational effectiveness and, based on our own research, L&D programs are a key differentiator of engagement.
Another regrettable consequence of abandoning performance evaluations is the loss of continuity and communication that regular feedback enables. Ongoing feedback doesn’t just keep employees on track and working towards the agreed-upon goals, but it helps them feel a sense of connection and psychological safety, which is particularly important during times of crisis.
Option #2: Review and lighten your performance evaluation process
During a pandemic, employees might not be as productive due to crisis-induced circumstances. They might be adjusting to fully-remote work, dealing with unexpected life changes, or juggling caregiving responsibilities. In this environment, performance evaluations can be a heavy lift. Note that if these feel like too big a burden at all times, irrespective of the situation, it could signal an opportunity for you to rethink your performance framework.
Particularly during a time of crisis, managers and employees should be encouraged to explore whether it’s necessary and possible to take something off an employee’s plate. For example, there might be a low-priority project that could be pushed out or taken on by someone more junior as a stretch assignment.
This is also a good moment for a manager and employee to reset expectations around work hours, responsiveness during the day, and prioritization of tasks.
If possible, consider offering a reduction of working hours and compensation for those who might request it.
Finally, during a crisis, it’s often necessary to adjust organizational, team, and individual goals, for both workforce- and market-related reasons. Managers and employees can set adjusted individual goals in a collaborative fashion, then agree on what has to be accomplished while considering what’s realistic for an employee to achieve.
One final crucial consideration when deciding to take a pause on employee evaluations is to ensure that employees still have a framework in which they can provide each other feedback and continue to learn and grow during the crisis period.
What should you do about performance-related bonuses?
Revisiting the third question in our framework, many organizations pay out bonuses to further incentivize high performance and tie them to individual and/or company performance. During a pandemic, bonuses can be a lever to pull, either to support your employees by giving everyone a bonus, or to save money and get through tough times by canceling bonuses. Let’s consider the consequences of both avenues.
Giving everyone the same rating and the same bonus
While we can understand the desire to take this approach – after all facebook led with this -, we believe it could have a negative impact on employee motivation and performance.
Imagine if an employee worked hard, refined and acquired crucial skills, met their goals, role-modeled your company’s values, and went out of their way to help their teammates be successful. On the same team, another employee demonstrated a desire to learn and grow, has gaps in their skill set, and worked hard but wasn’t as successful, while a third team member did the bare minimum to keep their job.
Giving all three of them the same rating and bonus could have multiple negative consequences. The high-performing employee could lose motivation after working extra hard but not be recognized for it and be rated the same as the others. This loss of motivation could lead to a potential drop in productivity or become a retention risk. Another possible negative consequence is that low-performing employees could view this as a sign that a mediocre performance might be ignored or accepted. Finally, the motivated employee who was working hard but was just not there yet might miss out on key conversations, learning and development opportunities, and coaching to improve their performance as a result of an abandoned process. This employee might lose motivation and you might lose a future high-performing employee.
If you’re considering providing financial support for employees during times of uncertainty, we would recommend to clearly communicate that any monetary aid is not tied to performance or considered a bonus.
Not giving out any bonuses
Research conducted by the Boston Consulting Group on organizations that previously had to respond to a crisis – specifically, the 2008 recession – found that cutting back on bonuses tied to both company and individual employee performance had negative effects on both effectiveness and employee commitment during the crisis. Likewise, when learning and development (e.g. coaching, functional training) were cut back, executives also indicated that it had even larger negative effects on both effectiveness and employee commitment than cutting back on performance compensation.
Therefore, in order to maintain employee effectiveness, it may be critical to honor a commitment to bonuses if they are a normal and expected part of your compensation system.
However, during a pandemic, some organizations might simply not have the option of giving out bonuses as it might threaten their ability to remain in business. If this is the case at your organization be transparent in communicating why that decision was made and what employees can expect in the future.
Conducting your performance evaluations as planned
For some industries, such as hospitality, entertainment, and sports, it is impossible to operate business as usual. In these cases, goals and expectations need to be heavily adjusted. However, organizations that are able to move a large part of their employee population to remote work can anticipate much fewer disruptions to their business. (If you are one of those organizations, here are some tips on how to make remote work, work.)
In an interview of 90 execs, BCG found that amongst various aspects of performance management, aligning performance metrics to the new environment was one of the highest-rated factors for HR to consider, alongside engagement and learning and development. Their findings suggest that a crisis is an opportune time to recalibrate the performance management systems to long-term business goals, instead of focusing on the short-term. While calibrating performance management systems, organizations should also consider how they can better integrate factors such as teamwork, cooperation, engagement, and ethics.
If your workforce can work remotely, operate close to business as usual, and adjust their goals, you could consider running your evaluation process as planned. This approach might even help your employees experience a sense of normalcy – or at least stability -, as well as feel that they’re being well set up to remain or become successful during or after the pandemic.
Choose the option that best fits your company’s needs
Depending on your business context and performance management process maturity, we recommend that you consider adapting your performance management processes to suit significant changes in the organizational environment. It’s critical to ensure that your employees feel equipped to adapt both their daily work and their goals to the new situation, as well as communicate a shared goal and mission to work towards. Furthermore, providing them with the opportunity for bonuses and learning and development opportunities throughout times of uncertainty will help alleviate their stress, keep them motivated, and allow them to learn faster through feedback. By putting people first, you will help set up your organization to be successful in the future.
For further information on how to respond to this crisis
check out our dedicated Culture First resources page