Performance reviews are viewed so poorly on average that, in a recent survey, recipients ranked them as more despised than cable companies, internet service providers, and health insurance companies.
Results like those paint performance reviews in such a negative light that it’s a wonder they continue to be widely-used tools at all. However, recent research has proven their value for organizations that do them well, pointing toward the need for a performance review evolution, not elimination. As a matter of fact, research shows that companies that conduct effective performance reviews are 30% more likely to meet their financial target and three times as likely to manage change successfully.
The purpose and value of performance reviews
While outdated approaches persist, more and more organizations are unlocking the power of performance reviews. When employers do them right, employees tend to provide more useful feedback to the company, gain motivation that can catapult their career development, and crucially, help achieve business goals.
Good performance reviews allow managers to deliver fair and actionable assessments to their direct reports. This can increase employee engagement, provide strong recognition and encouragement, and create tangible paths for employee growth that are rooted in accountability.
In short, in organizations where performance management is done well, employees will see reviews as one of many tools that help them succeed.
3 ways to help your employees understand the value of performance reviews
Crafting an effective performance review process requires preparation and practice, and employers and managers must model the thoughtfulness they hope to see from their employees.
First-time managers, in particular, should commit to extensive preparation before conducting their first performance reviews. Those focusing on fostering a culture of employee engagement and buy-in for performance reviews should concentrate on attainable goals. Employers must communicate the benefits of performance reviews for employees, and they should demonstrate that performance reviews can lead to real change. This will help employers and employees work together to create a larger culture of feedback and recognition.
1. Clearly communicate the benefits
When something has a bad reputation (hello, performance reviews!) but is a necessary process, clear and transparent communication about the benefits is vital for employee buy-in. Unfortunately, it's too often a skipped first step.
Your motivated and confident employees may approach their performance review process with enthusiasm, already understanding the benefits. But most employees may dread performance reviews, seeing them as an opportunity for their managers to tell them everything that is wrong with their work.
While honest feedback is an important part of any review, employers must first emphasize the benefits for the employee. What would convince your direct report that these conversations are a worthwhile use of time?
For starters, performance reviews align an employee’s role and daily tasks with the company’s larger vision. This helps employees understand the “why” of their work rather than just asking them to follow orders. And it makes employees feel like key members of a larger team rather than isolated individuals.
Employers must also help their people understand that performance reviews are not a reprimand (or a chance for one) but rather a candid and productive check-in. These sessions can work as a realignment to prevent misunderstandings and as a way to pause, step back, and recalibrate tasks and workload. When constructive feedback is offered, organizations and managers must give time and thought to both what and how that feedback is delivered.
And finally, employers should communicate to their employees that performance reviews are an opportunity to progress toward promotion and a possible pay raise.
2. Demonstrate that performance reviews lead to real change
If employees don’t believe that performance reviews can lead to meaningful change – either for them individually or for the organization – they are likely to go into them with a pessimistic, obligatory, or even confrontational attitude. If you communicate a process as mandatory, yet nothing improves as a result of it, employees will feel cheated, or at the very least, that the annual exercise is a waste of time.
When outlining the power and purpose of performance reviews, you have to stress that the manager’s role is also that of a listener, not just someone who delivers feedback and seeks correction.
Encourage employees to use performance reviews to discuss what has been on their minds and how they see themselves within the organization. In particular, be prepared to address important topics that you might not touch on in regular 1-on-1s. These could include things like:
- Issues of bias – whether conscious or unconscious
- Whether their work is recognized when done well
- How the employee can grow to fulfill their own goals and better serve the company
After clarifying that performance reviews are for the benefit of both employees and employers, companies should follow up and take action on what their employees are saying. Action is the best way to show an employee that you’ve heard and value their feedback. Performance reviews are opportunities to discuss challenges and opportunities, as well as a forum for developing plans and strategies to tackle them. Managers can take a strong role in driving this mindset, while also empowering their employees to do the same.
3. Create a culture of feedback and recognition
Creating a company culture of positive feedback and recognition goes beyond individual performance reviews, but such regularly scheduled conversations are essential. They provide an opportunity to validate employees’ time and energy when their work is done well while also demonstrating that the company is there to support them with constructive advice when faced with challenges and new opportunities.
To create such a culture, feedback and recognition must be a consistent priority in the organization before, during, and after performance reviews. If feedback and recognition are considered the norm, reviews will be less anxiety-inducing, and employees won’t have such a negative perception. Instead, they’ll come to see their performance review as a positive formal exercise designed to help them grow within a consistent, empowering culture rather than as a “show-down” between employees and their managers.
Organizations and managers should get familiar (and comfortable) with how to solicit feedback. Some suggestions to get you started are surveying employee opinions, understanding where employees are in their journeys, tracking progress, adopting a development-oriented mindset, and going deeper into specific areas when necessary.
Performance reviews don’t need to inspire dread
Strong organizations don’t use performance reviews as one-way streets where managers speak, and employees listen. And a performance review should never feel like you’re taking the SATs.
The best organizations instead make performance reviews part of larger cycles of consistent recognition and feedback, leverage their insights to power change that is productive for the organization, and communicate the objectives and benefits well in advance.
Employees who understand the power and purpose of performance reviews will buy in, approach them with a positive mindset, and see them as growth opportunities.
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Performance reviews are an important part of helping your employees fulfill their potential, but they aren’t the whole picture.