Is the Performance Management Process Broken?

Each year millions of companies across the county go through the process of reviewing employee performance, ranking their employees against their peers then communicating their strengths, weaknesses in face-to-face discussions as a way to motivate staff and presumably to improve productivity.   The question is should this process continue or is it such a failure that this key management tool should be discarded and a new way of evaluating performance be developed?

Using our employee engagement survey tool as the backdrop to this question the data suggests that the process is not broken but the way the process is administered and communicated needs to be fine-tuned to better reflect the current workforce.

What is a Performance Review?

First of all, let us define what a performance review is and why it is such an important tool in managements toolbox.    The performance review is a mechanism to document an employee skill level based upon a clear understanding of the duties and responsibilities of the job and the results expected.  The performance review is a unique way for management to motivate and maximize performance and productivity, as well as outline career goals and expectations.  It also facilitates a ranking mechanism for management and is an excellent way to provide succession planning services.

What is the Manager’s Role in the Process?

The manager’s role in the process is to properly set the stage to ensure the success of the discussion as well as encourage employee motivation and engagement for the future.  The manager must discuss the job, standards and expectation and summarize their subordinate’s strengths and weaknesses by providing specific examples of successes and challenges in their performance.  Highlighting these areas in generalities will not support the specific areas for improvement that the employee faces nor will it support the overall rating.  In our survey data our respondents indicate that they want a timely review, that is layered with specifics and offers them a path to improve.  The respondents also indicate that they want to seek agreement with their manager on the performance improvements desired and work in an environment where the company will support their professional development.  Where managers fail is that they are not prepared for the discussion, do not provide specifics and are unwilling to hold their direct reports accountable.  Successful managers also need to let their employees know that they have a responsibility in the performance process as well.

What is the Employee’s Role in the Process?

The employees need to come prepared with a self-review so that they can provide honest feedback about their performance.  They should also be prepared to express their short term and long term goals and what they expect from their manager over the next performance review cycle.  If there are any ambiguities with respect to the job, standards or expectations they should be addressed during the performance review discussion.  Finally, if improvement is necessary both the manager and the employee should come to a mutual agreement on what is expected in the future.

Where Does the Process Fail?

The process will often fall short when several key principles are not adhered to by the manager and they include the manger not being honest about their employee’s strengths and weaknesses.  It is often easier to just gloss over the employee’s substandard performance than it is to address the challenges and work with the employee to make them successful.  The survey data suggests that it is easier for managers not to hold people accountable.  Also, managers will often not tie pay and performance but rather take the approach that all employees should receive the essentially the same merit increase regardless of performance.  Once again this may be the easiest path; however, it does not recognize contribution and excellence on the job.  The merit increase program administered through an effective compensation strategy can motivate those employees that are high potentials and successful.

Key to a successful performance review process are managers being honest and prepared and recognizing the differences in the performance of their subordinates.  Employees need to have an attitude that is open to improvement and learning in order to further develop their skill-set.