Why it’s time to ditch traditional performance reviews (what to do instead)
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If you work in the world of HR, you’ll know that there’s more to performance than the once-a-year conversation that occurs in traditional performance reviews. Measuring, maintaining and fostering high performance needs to occur throughout the entire employee lifecycle, from onboarding to offboarding and every event in between.
We’re supportive of performance reviews here at intelliHR, but we also believe in a future which will be performance review-free, which is why we encourage our customers to completely replace traditional performance reviews with a more continuous and timely approach.
After all, performance is more than just one moment in time.
Still not convinced?
Here are some reasons why traditional performance reviews simply don’t work for most businesses anymore.
Why ditch performance reviews?
1. Formal performance review periods create unnecessary stress
Placing additional unnecessary stress and angst on our people doesn’t serve to aid performance, in fact, it’s more likely to diminish it. Need more convincing? Check out these statistics from Adobe, who have also ditched traditional performance reviews.
58% of office workers find annual performance reviews stressful.
22% of people have cried after a formal review, 37% looked for a new job and 20% quit.
73% of Millennial Managers say the time spent on formal reviews negatively impact on their ability to do their job.
It also forces team members to spend a lot of time thinking about where they have been rather than spending more time thinking about where they are going. This isn’t to say that looking back is necessarily a bad thing, but do your HR processes encourage just as much time thinking about the future? If they don’t, should they?
68% of Millennial managers say traditional performance reviews are ineffective. – Adobe
After uncovering these learnings about the ineffectiveness of a traditional annual performance review system, Adobe has since transitioned its whole organization to a regular check-in process instead. By having a performance touchpoint that’s continuous and light, organizations can still obtain key data in a less threatening way.
Regular check-ins also change the whole tone of the conversation away from “what have you done for the past 12 months?” and towards “how have you been going this month?”. This keeps the conversation proactive and allows a focus on development instead of challenges or issues.
2. Annual reviews are out of date
Only reviewing performance once a year creates a lot of room for bias, as there is more likely to be a focus on recent events, compared to everything an employee has achieved throughout the past 12 months.
90% of HR leaders feel traditional performance reviews don’t generate accurate information.– CEB
3. Traditional review processes are open to bias
Performance reviews based largely on observations or anecdotal evidence are not only going to give you inaccurate data, but they can also deny employees of a fair appraisal.
On top of this, industry standards are now moving toward this method of collecting performance data. The focus is now on capturing qualitative and quantitative data in real-time, rather than retrospectively.
We created our performance summary report to enable this. intelliHR customers are already tracking key metrics in real-time, and can now simply download an up-to-the-minute summary in a few clicks.
RELATED: How to audit your performance management processes
4. On the spot feedback carries more weight
If people have to wait months to hear they’ve been doing a good job, how can we even expect them to stick around that long? Real-time feedback at work is far more meaningful and keeps employees engaged by reinforcing positive behavior as it happens. This provides momentum and motivation to keep going.
80% of Gen Y employees would prefer to be recognized on-the-spot than in formal reviews. – LinkedIn
Not only can we reinforce positive behaviors on the spot, but also take a proactive approach to potential problems. A more continuous feedback process exposes skills gaps or under-performance sooner, so action can be taken to help the employee get back on track with the resources they need. This can help prevent disengagement from festering and also halt any bad habits before they become ingrained.
So if traditional performance reviews aren’t the answer, let’s explore what tools you need to replace them in your organization, and how you can create an end-to-end, complete performance toolkit with intelliHR.
RELATED: Why continuous feedback is critical to your organization’s success
The better way to measure performance
When an organization uses intelliHR, traditional performance reviews become redundant, and instead you’ll be adopting a continuous performance management model.
How? All elements of the performance mix are being tracked and documented in intelliHR as they happen, and a snapshot of performance can be gathered at any time by generating a performance summary covering a time period of your choosing with a single click.
We believe in bringing together detailed and accurate snapshots of performance for every employee is crucial to helping improve their performance (not just capture it)! In your next performance discussion, we encourage you to look at the following:
Continuous feedback
Goals
Training
Performance improvement
Diary notes
Happiness
1. Continuous feedback
A monthly feedback process replaces the need for a once-a-year conversation. The major benefit of continuous feedback is 360 degree insights can be gathered from managers and their direct reports, allowing issues to be identified and dealt with immediately rather than waiting for an infrequent review.
Check-ins
The ideal process begins with sending out a monthly, automated online check-in for employees to complete about themselves (self-review) as well as one for managers to review their direct reports, and peers to review each other. Together this forms a 360 feedback process.
To be effective, these check-ins must be light, quick and convenient to complete. They should also focus on asking the team member where they need help and support, which empowers employees to do better, rather than shaming them for “under performing”. Placing all of this in an online system that employees can access online and from any device is ideal to ensure maximum adoption and completion rates.
We know there are two key problems with traditional performance reviews: they cause undue stress and they take hours to prepare. A quick, proactive check-in process eliminates both of these.
Employees are also increasingly appreciative of receiving a broader range of feedback sources. Receiving feedback from a manager and submitting a self-review offers some perspective, but facilitating broader feedback mechanisms from peers and even customers expands the perspectives available, providing a more holistic view. This gives the team member more to reflect upon, particularly with regard to broader team performance.
This should then be followed up by a one-on-one between each direct report and their manager. The information gathered from the online check-in is invaluable to inform these one-on-one meetings and ensure both parties get the most value from them.
Ultimately, the goal is not to replace human interaction, but to make these interactions more meaningful, and have a process in place to ensure they actually happen on a regular basis.
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Rating scales
Check-ins created through intelliHR, can also incorporate rating scales. This provides an opportunity for employees to be ‘rated’, as a self-assessment, by their manager and peers, on top of written feedback.
These rating scales are also fully customizable, so can have whatever wording you need. To take a more proactive approach, you will want to ensure that the ratings being applied reflect a ‘positive action’. If an employee is struggling, they may feel apprehensive to hit a “below expectations” button, but “needs help” is much more welcoming and shows that the result of their selection is more likely to lead to improvement, rather than result in a warning letter!
Another way to use rating scales within intelliHR is to see how your people are tracking against company values, some of our customers have put this into practice and find it invaluable.
Learn more about intelliHR’s employee engagement tools.
2. Happiness
Another metric that can be tracked through continuous feedback and included in the performance summary is happiness (employee satisfaction). Employees are asked to rate their level of happiness in their role and this can then be analyzed individually, looking at changes over time, but also across business units and under different managers.
By looking at happiness alongside other performance insights holistically, you can identify things like high-performing employees who are becoming disengaged at work or lower-performing employees who are being held back by their environment.
intelliHR’s wellness analytics show how your team are coping and trending issues.
3. Goals
One measure of performance is to see how employees are progressing on their goals, but we take this one step further. By giving individuals the ability to set, track and view progress on their own goals, within strategic guidelines set by their manager, they can maintain motivation to keep progressing on them.
Goal tracking
With this tool, everyone in the organization can not only set their own goals, but track progress, allow team leaders to support, and see a real-time overview of their goal progress in their dashboard each time they log in. This way employee performance goals stay top of mind and remain a priority, every day of the year.
We also designed this feature with gamification techniques in mind. By making the act of tracking goal progress fun (addictive, even) this gives all employees extra motivation to keep coming back and working on their goals consistently over time. 
Cascadable goals
When assessing an employee’s performance, it’s also critical to ensure everyone in your organization has clear goals to work towards every day. Not only does this give your people clear boundaries to operate within keeping them aligned to organizational objectives, but it also reduces the expectations gap between managers and their direct reports. Everyone knows what is expected of them and their team, and there is transparency in how each person’s performance is measured. Allowing employees to set their own goals, in line with overarching organizational strategy, has the added benefit of empowering them to feel in control of their role and their success.
All goals created can be cascaded to other peers or direct reports. For example, the CEO can set a goal for a department manager, who can then set complementary goals for their direct reports to help the original goal reach completion. Peers can also share goals with each other when working on projects together as a team. In this way, it is so simple for everyone to have visibility over what is required, see where they fit into the big picture, and stay on track.
Goal communication
When goals are managed within intelliHR, any elected members of the leadership team are able to see every single goal that has been set within the organization and who is working on it. On top of seeing the goal itself, they may also see the progress achieved so far and communicate with the goal-holder in the comments section to check in. This can be a powerful way to identify even if a small roadblock is preventing progress, so managers can help mitigate this and get staff back on track.
From the employee’s point of view, having this form of feedback on a goal to support their progress is a powerful way to encourage a sustained effort and keep people engaged.
Once employee performance goals are defined for everyone, performance can begin to be monitored with goal progress as one source of benchmarking. The end goal here should always be to identify areas for improvement proactively, and offer solutions to help people improve, before problems escalate.
5. Training
Similar to goals, employees can also track and request their own training within intelliHR. Records of training undertaken can then be pulled into the performance summary automatically as a record of professional development.
An added benefit of staying across training undertaken on a more frequent basis, is it allows skills gaps to be identified and filled sooner, as well as conduct a follow up on progress post-training to measure its effectiveness.
Learn more about tracking training in intelliHR.
6. Diary notes
Diary notes are an important step in the performance process. Creating a history of key interactions with team members helps us to understand successes and failures, and help inform future approaches, while also protecting the organization in the event of termination.
Follow-up capabilities are also built-in, for example, after meeting with a team member, diary notes can be used to record automated reminders to check in at a later time and gauge if improvements have been made.
Diary notes can be used to record recognition as well. According to research from Deloitte, organizations who reinforce employee achievements with recognition see 14% higher productivity and performance compared to those who give no recognition.
RELATED: How to measure employee performance (using quality metrics)
7. Performance improvement
When performance issues do arise, it’s crucial these are mitigated in a timely manner. Performance Management typically involves sitting down with a team member to discuss how they are progressing and areas they need to specifically address, but what happens next is the important part.
intelliHR offers a Performance improvement plan workflow which is kicked off by the team leader following such a meeting. This prompts the team member to write their own performance improvement plan as an outcome from their meeting. The plan can be approved by the manager and will be automatically followed up with the team member over the stipulated time to complete. This structured process allows the team member to “own” the improvement process, making it much more likely to succeed.
RELATED: How to performance manage a remote employee
8. Leadership development
The performance summary can also provide a snapshot of how those in management roles are performing as leaders in terms of their team’s performance and happiness in their role. For employees not yet in a management role, the performance summary can be used to identify if they may be a good fit for a leadership position in the future.
9. Performance summary
By capturing all of this performance data and feedback earlier, and more frequently, action can be taken before it is too late. We passionately believe that replacing the formality of a performance review (which is quite different to how we normally work), with something regular, light and naturally supportive of the way we are working leads to far better outcomes.
Once you are gathering all of the above information in a central place, then you will have the means to pull all of this data together into an instant Performance summary report for any given team member. This provides an instant snapshot of past efforts, allowing the conversation around performance to be informed by real-time data, and without any real effort or hours wasted on administration.
By implementing all of your processes in one place, you can ensure that every interaction on performance is free from bias, and gives the full picture of performance. This allows you to respond to issues proactively as well as empower employees and their leaders.