Employee Performance Review: How a Ground Up Approach Builds a Foundation For a Thriving CultureMay 15, 2018
In the past, employment reviews were fairly basic. An employer would rate your performance, with an overall score, often annually and this rating would be compared to fellow employees. By doing this, business owners could find their best, and worst employees and ideally employees receive information about how to improve so that they can boost their ratings. This was the general idea, but research has shown countless times that this doesn’t work as effectively as it should.
Let’s start by thinking about the gaps between employee ratings. One of the main goals of employees ratings is to be able to weed out weaker members of the herd, creating a far stronger overall team. The issue with annual employee performance reviews is that according to research the annual scores only predict about a third of the variance in next year’s scores. Due to this, it’s difficult to actually conclude that an employee should be let go compared to a poor score one year. They could make great improvements at the next annual review and let’s not forget, these performance reviews aren’t always accurate.
It’s also worth pointing out that employees loathe, detest and despise numerical scores and don’t like the idea of being compared like this to another employee. Studies suggest that employees would rather be given a more vague rating like average instead. In fact, Wharton’s Iwan Barankay was actually able to show that rating employees like this actually lead to a decline in employee performance. Immediately, then there’s a problem for both the employee and the employer with the old-fashioned form of employee performance reviews. Instead, a more modern take is needed with a new angle that will lead to greater results.
Specifically, we’re talking about building an employee review system with a grounds-up approach. This will lead to a stronger, healthier culture in the workplace and ensure that the team and the company has a greater level of efficiency. What does this mean?
By grounds up, we mean that employees will be approached directly and you should gain as much from the performance review as the employer. The main aim of the employee performance review or appraisal shouldn’t be to rate the worker but rather give the information the employee needs to improve. Let’s look at some key ways to do this.
More Regular Employee Performance Reviews
Previously employee reviews have always been annually and organized like clockwork. This has lead to a number of issues that we’ve already discussed. Specifically, the feedback is out of date, and what little information the employee gets is no longer useful. Instead, companies need to move towards a model where employee performance reviews are a regular process. They can be completed when an employee reaches the end of an assignment or completes a goal. Instead, of annually, they can be monthly. You’ll get a much clearer and more accurate picture on both sides of the line by doing this. Employers get a clearer view of how their team is operating, and employees get insightful, specific feedback that they can use to improve their performance and strengthen the business model.
Personal And Private
Feedback should also be completely personal to the employer. Every member of a team in a company is an individual, and while this might sound obvious, it’s worth repeating. It’s easy for employers to start looking at workers as cogs in the machine. That’s why you need a great employee performance review system that offers personal questions. Employers need to be able to understand the variables that could impact the performance of their workers. Some of these variables could even relate to personal issues that can seep into the work environment. But this information won’t be revealed if the right questions aren’t asked.
As well as this, there’s no need for employees to be compared publically to other members of the team. This will create a hostile and highly competitive environment. This is an effective way to run a company. It’s far better for employees to work as a team helping one another, without knowing or worrying about who is the best and worst members. This will lead to a unified, stronger team of employees at the centre of a company, operating as a driving force.
How Can You Do This?
The answer is of course technology. In the past, it made sense to only complete employee performance reviews annually because it was a long process that took a lot of time away from seemingly more important activities. These days, apps and software allow performance reviews to be conducted privately and rapidly for each individual of the company. It really is beneficial to use this approach because as soon as they get the information, employees can move towards course correcting and improving their performance. Or, if there are issues causing low performance, an employer can rectify the problems, address the concerns and build a better work environment. It’s very much a two-directional system or a loop. The employee gives feedback which helps the employer improve their work environment as well as the company model. In turn, the employer provides feedback, helping the worker improve in key areas. Both lead to a thriving work culture.
Lower Numbers Of Dismissals
It’s not helpful for a business to lose members of the team. If they can, they should keep them, building strong relationships. Old fashioned annual appraisals made this difficult because a problem with employees went on for too long causing issues in the business model. Then, when they were finally let go, the company needed to go through an extensive process to replace them.
It’s far better if workers can stay on and improve which is exactly what a modern employee performance system allows. Since performance reviews occur regularly struggling employees are spotted and receive the increased level of coaching that is needed. This reduces dismissals and diminished the number of employees that are not performing up to the standards of the business.
As you can see then, with the right employee performance review system, both the team members and the employer can benefit. A great system can be the basis for a brilliant, healthy business culture.