The Ongoing Evolution of the Performance Review

The Ongoing Evolution of the Performance Review

by Callie Hansen

Just as HR and the traditional workplace have shifted over the last decade, so has the annual performance review. Employers are starting to ditch the performance ratings in a review and are opting for something new. Harvard Business Review conducted a study that showed employers who got rid of performance ratings in annual reviews noticed a shift in focus from the rating itself to “thinking about growth and development.” This shift has resulted in better employee development, because it removed the quantifier of an employee’s performance in a position.

What does this mean for the traditional performance review? Here are four ways the performance review is evolving and why.

A Changing Workforce

This shift comes at the beginning of a changing workforce and nature of work. The Millennial generation (also known as Generation Y) has forced companies all over the world to reevaluate what it means to have a job and work in the 21st century. Insert Generation Z, which is just beginning to come of age, and you, as an employer, have a conundrum on your hands.

Welcome to 2015. With a workforce of Millenials (plus a few Gen Zs) on your hands, who disregard tradition in nearly every sense of the word, you must look for alternatives to retain these employees. The solution rests with the alteration of the performance review.

Ratings aren’t a very good indicator of top talent

Get Rid of Ratings

A myriad of studies have been done about Millenials, and from data gathered, it’s clear they look for opportunities for growth in a career and have a strong desire for learning. Putting a number on an employee’s work performance does more harm than good for an employee seeking after these things.

Ratings aren’t a very good indicator of top talent. In some situations, companies are forced to implement a rating curve that allows only one or two people to be given a top rating. The whole team may be performing well, but the way the current performance review stands, it inhibits growth and good team moral by only giving a single person the glory, which in turn increases negative competition.

Employees want to be treated as human beings and not a number. If an employee is underperforming, work with them to find ways to help them improve in their position instead of giving them a grade.

Implement a New Review Process

Employees don’t just want to be told they aren’t performing well, they want to know why and how they can improve to do better in their position. This is especially true for exemplary employees. Everyone wants to know how to improve and do better in every aspect of his or her life. As human beings, we are constantly learning from our mistakes and always on the lookout for ways to improve our circumstances and solve problems we are faced with.

Everyone wants to know how to improve and do better in every aspect of his or her life”

Look at it from a parenting perspective: A child learning to ride a bike is going to fall. They will bruise, get scratched up, and even bleed a little. That two-wheeler bike can be an intimidating thing. A parent will teach the child the basics: how to balance, maintain momentum, and how to stop. But a parent can only teach the child so much. It’s up to the child to practice and improve on what they’ve learned so far to accomplish the task.

After the hundredth fall, that child may look at that bike and ask, “How am I ever going to ride a bike? It’s impossible!” One day, that child will take everything he or she has ever learned about riding a two-wheeler, get on that bike and ride. Now, it isn’t so hard.

As time goes on, the child will grow a little bit older and learn new tricks, like how to ride with no hands or how to pop a wheelie. Maybe that child will go on to become a BMX biker and become a master of riding bikes. What matters is that the child tried and improved upon what he or she learned about riding a bike to become better at it.

What if the parent gave the child a rating on how well he or she was performing when just learning how to ride the bike? That child would never have wanted to learn how to ride a bike. But the parent kept encouraging the child to try again, to get back on the bike and learn how to ride. The child didn’t stop there. The child kept learning, improving, and learned from others the best tricks to riding a bike to become the best he or she can be.

If an employee is underperforming, work with them to find ways to help them improve in their position instead of giving them a grade.”

The same applies to performance reviews. What better way to help employees improve in their position and maintain employee retention than by helping and encouraging employee development? The first step is to remove performance ratings from the review process. This has allowed many companies, like Adobe and Microsoft, to implement a new review process where managers have been able to sit down with their employees several times a year to discuss development. HBR found that the elimination of ratings and an increase in developmental reviews improved communication and collaboration between teams and boosted moral overall.

The Ongoing Evolution

Performance reviews aren’t dead—they’re changing. There is an ongoing shift in the workforce and is reflected in what employees expect from an employer, a job, and a career. The workforce is fluid; it expands and contracts, goes to places it’s never been, and does things that have never been done before. An annual performance review isn’t just a number anymore. It’s a time for collaboration between teams, communication between a manager and an employee, and an opportunity for an employee’s role to expand and improve in a position and career.

Take the time to listen to your employees and do everything you can to assist them in their position and help them improve. This breeds success and faster development and growth for a company. This change is only just beginning, but as time goes on, we’ll be sure to see the difference by focusing on the positive aspects of employee development in performance reviews, rather than the bad.

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