Why is the Performance Review So Important Today?

With all of the changes over the past several years and the shift of the Human Resource profession from a tactical to a strategic focus, one of the questions we hear from many of our client’s is the performance review relevant in today’s business environment?  Businesses today are driven by metrics and the HR programs that have been in place for many years need to be evaluated to determine if they are effective.

Given the current work environment where more employees are working remotely,  our survey data indicates that the performance review remains a valuable tool to motivate and ensure high levels of performance.  To support this position, we examined our survey data in order to determine what our clients and respondents are saying about this key management responsibility.

What is a Performance Review and How Do We Define this Process?

The performance review is a mechanism to document an employee’s skill level based upon a clear understanding of the duties and responsibilities of the job and the results expected.  Performance reviews have been viewed as an effective tool for management to help motivate and maximize performance and productivity.  It is also a way to outline career goals and identify expectations for the future.  The performance review if consistently applied across the organization can facilitate a ranking mechanism for management which helps identify high-potential employees as well as provide succession planning services for key positions in the company.

Do Employees find Value in the Process?

Based upon our employee survey data areas of employee satisfaction with management are varied; however, employees find the management responsibility of conducting the performance review especially important for ensuring high levels of performance along with the maintenance of superior employee-management relations.  Holding all employees accountable creates a team environment where honest and constructive feedback is valued.  Employees; however, do not view the performance review as an isolated event but rather a continuous process.  The formal performance review, while typically conducted annually, should be communicated and offered as a tool for on-going employee development.

Do Managers find Value in the Process?

Our survey data suggests that the need for managers to motivate employees through a progressive performance review process facilitates a stronger organization which allows the employee to grow professionally.  The opportunity to present a strategy for continuous improvement and tie pay to performance along with recognizing excellence on the job creates an environment that is more innovative and creative.  If done properly, managers believe that the annual performance review can retain high performers and lower turnover.  Furthermore, if performance, pay and incentive plans are linked the performance review process will have more significance and importance.

What is the Problem with the Annual Performance Review?

With managers and employees finding value in the process why are there so many issues with this key Human Resources program?  Managers will often wait to deliver bad news to the employee during the annual performance review rather than addressing any challenges immediately.  This approach creates the environment where the employee cannot alter their behavior or make changes until it brought to their attention and by then it is too late.  Employees will often not want to appear lacking in their performance and when challenges surface they are reluctant to bring any impediments to their success out of fear on not being viewed as knowledgeable.  Both parties want a successful process only the communication process is lacking and not cascading through the organization.

What is the Role of HR to make this Process Work?

HR’s role is to create an environment where all employees are treated fairly, and their manager is viewed as a strong coach and mentor.   Human Resources is also a facilitator for change and thorough a performance management training program this particularly important management task can remain relevant and a key metric for managing and retaining talent.  HR professionals will need to devote more time and attention in the future to providing leaders of the organization with the training on how to deliver an honest assessment of their direct report’s performance in a timely manner.

Given the current work environment where many employees are working remotely the performance review has taken on additional importance as it provides feedback to the employee, keeps them engaged in the success of the company and provides a formal link to the organization.

 

What is Employee Engagement and How to Make the Survey Process Successful During a Pandemic?

Potential clients will often approach our firm and indicate that they want to conduct an employee survey to find out what the employees are thinking.  The motives of the Human Resource leaders in making this inquiry is based upon a need to discover what is happening in their organization.  Given the pandemic it is important to find out how the company is responding to employees who are working remotely.  Acting and responding to the employees will break down the communication barriers that could develop given that so many team members are working from their home/office.  In order to have a successful outcome we recommend that our clients follow a three-step process to determine if an employee survey is the most appropriate means of evaluating satisfaction and engagement given these uncertain times.  Here are the recommended steps to ensure a successful survey:

1.  Define engagement and inform the employees what this means and how engagement supports the business.  Our definition of engagement is as follows:  “Employee engagement is the relationship between an organization and its employees.  An engaged employee is one who subscribes to the values and goals of the organization and works to ensure success.” Engagement varies by industry and employer and much like a mission statement, engagement should have the support of the organization by being published and marketed through-out the company.  Employees could be experiencing a lack of engagement given that they are currently working remotely.  A survey will send them two messages – we want to hear from you, and we want to ensure you remain connected to the business. 

2.    An engagement survey is not an isolated event but rather a process to improve employee satisfaction and make your company an employer of choice.  While measurement is key to the program’s success the action planning process will make or break the initiative.  If managers do not assume responsibility are not held accountable for improvement the survey process will not be successful.  HR needs to transition from administering the survey to supporting the needs of the business by working with key leaders to develop action plans and accountability measures based upon the data collected during the survey process.

3.     Ensure that a process for following-up on the agreed upon action plans is adhered to and becomes part of the culture.  If a consistent process is not established the survey process will be lost by newer initiatives, a business crisis or change in personnel.  Our experience has shown that during the current health crisis an immediate response from management will ensure that employees are connected to the business.  Ensuring accountability to the survey process and addressing issues are much more important when employees do not have a day-to-day connection to their manager and/or HR.  In addition, follow-up pulse surveys to evaluate trends and long-term employee satisfaction and engagement will support progressive business practices.

An increase in employee engagement will boost profits and productivity.  Creating a high-performance culture of obtaining feedback will identify the strengths and weaknesses of the individual and the organization.  Businesses today want to understand how they can secure more creativity and support from their employees.  In conclusion, employers today face extraordinary challenges with respect to managing the business and at the same time meeting the needs of their employees.  Human Resources leaders need to take the long-term perspective with respect to engagement and the survey process.

 

What is HR’s Role During COVID-19?

Over the past six months business in the United States has changed dramatically.  We have gone from exceptionally low levels of unemployment and a healthy economy to a work environment where 40+ million Americans have filed for unemployment insurance, business failures and constant chaos.  During this time HR has played a unique role in developing polices to meet this challenge.  However, given that the pandemic will not be ending until a vaccine is available and administered; HR will need to adapt and play a strategic role that is focused on three areas to assist their employees work more effectively, become more productive and improve communication.

Using Technology to Work Effectively

Technology over the past several months has been the life support for many employers as they continue to have many of the team members working remotely.  Internet applications such as Teams ©, WebEx © and Zoom © are invaluable program to support the sharing of information.  HR will need to continue to support these strategies so that employees remain in touch, are given information to complete their daily tasks.  Training and webinars to support on-going learning will help build confidence to empower the staff to learn how to utilize these tools.  Video conferencing will be the future of most meetings and serve as the key communication tool.

Providing the Staff Tools to be More Productive

Many of the employee’s resources before the pandemic were just down the hall from where they worked.  Whether it was an HR issue, a systems problem resolved by IT or a product pricing question answered by the Sales department; these issues were handled by reaching out to those employees that could address the issue quickly and efficiently.  Today that is not necessarily the case.  HR now and in the future will need to create a checklist to ensure that the employees have the tools to be productive.  This may include a FAQ of typical problems that employees may encounter while working remotely and to whom they should contact.  One of the most common issues raised in our pandemic survey was the lack of resources to deal with systems issues.  While many employees are skilled in their technical area of expertise, systems challenges remain a significant burden for many staff members working remotely.  In addition to a checklist HR will need to periodically audit what is need by the staff to determine what has changed over time and how they can address their needs.

Communicate, Communicate and Communicate

Employee communication while always a challenge will need to be further enhanced to ensure that managers are successfully supervising their staff.  This will help guarantee that they have the tools to be successful in this new normal.  Constant and consistent communication will be critical as employees will be working Independently with little supervision and minimal support.  Managers and the leadership team will need to be highly organized to evaluate roadblocks that their staff may encounter and determine the best course of action to address these barriers to success.  Daily communication from managers to their direct staff, weekly communication from the division leaders and monthly communication from the leadership team will need to be calendared and adhered to.  Given so much uncertainty in the business environment along with insecurity in one’s personal life a structured work environment will help.

While the challenges of COVID-19 are many, human ingenuity and the resourcefulness of the Human Resources profession has not changed.  Your team will learn new skills, become more effective communicators and contribute to the success of your business.

How Will the Work Environment Change after COVID-19?

Starting in early March 2020 business in the United States changed dramatically.  We have gone from low-employment and a robust economy to a work environment where 30+ million Americans have filed for unemployment insurance over the past 7 weeks and those that have jobs are working remotely.  Congress has addressed this issue by offering workers expanded unemployment insurance and for businesses; grants, payroll protection programs and low-interest loans which can be forgiven under specific circumstances.  More support from Congress is planned for the future.  While Federal support is critical for the economy, the States are also offering programs to help their citizens

Given all of these changes what will happen to the American worker when we are finally able to return to normal.  I would suggest that we will never return to “normal” but rather there will be changes in how we work in the near term along with long-term challenges.

Short Term Changes

The short term effects of COVID-19 may include some of these challenges:

§  Office workers will not be following the normal 8 to 5 work schedule but rather a more flexible schedule will need to be adopted by companies, not-for-profits, and governmental institutions.  Employees will work in modified shifts which will stagger their hours to ensure social distancing.  Testing for COVID-19 will be administered on a weekly basis and this cost will be a burden shared by the employer and government.

§  Office workspaces will need to be modified to ensure that physical distancing between employees and customers is adhered to and that barriers to physical employee inter-action will need to be constructed.  Certificates will be given to those employees that have acquired COVID-19 anti-bodies which will ultimately be their passport to avoid future testing.

§  Manufacturing, production, and line employees will need to adhere to the social distancing guidelines which could mean that production may not be at peak for the near future.  Protective gear will need to be assigned to employees and replaced on a frequent basis.  Testing for COVID-19 will be administered on a daily basis and this cost will be a burden shared by both the employer and government.  Similar to office workers certificates will be given to those employees that have acquired COVID-19 anti-bodies which will ultimately be their passport to avoid daily testing.

§  For those employees where working remotely is an option, companies will encourage staff to set-up home offices.  They will only be required to visit their physical office on a very infrequent basis.  This will create significant challenges for management to hold employees accountable to verify that performance and productivity standards are maintained.

§  Technology will become even more important as a tool to maintain the communication channels between the leadership team and rank-and-file employees.  Video conferencing will be the future of most meetings and serve as the key communication tool.

Long Term Challenges

The long term effects of COVID-19 may include some of these challenges:

§  Less office space requirements will depress the commercial real estate market and the result will be a declining inner-city.  City versus suburban infrastructure financial resources will put pressure on the HR professional as additional unemployment in this industry will occur.  A perfect example is retail space in shopping centers and the potential bankruptcies of big retail companies.

§  Management will need to develop tools to keep employees appraised of the company strategy, successes, and challenges through nontraditional means.  The days of “all-hands meetings” are over.  Conferences and large professional events maybe eliminated until a vaccine is developed.

§  While working from home worker injuries will need to be evaluated and policies developed to ensure that workers and the employer are both protected.

§  Employee communication while always difficult will need to be further enhanced to ensure that managers are successfully supervising their staff to guarantee that they have the tools to be successful.

§  High unemployment will be a significant challenge for the future with many people looking for work in industries that no longer exist.  Examples include retail, restaurants, hospitality, and travel.  Until a vaccine is developed and widely distributed, human psychology would suggest that these types of industries will not bounce back quickly.  People are scared and do not want to put their health at risk by shopping, going out for dinner, going to a hotel, or boarding an airplane.  Companies will play a key role in supporting these former employees through outplacement services and technical training.

While the challenges of COVID-19 are many, human ingenuity and resourcefulness has not changed and there will be a vaccine which will protect all of us.  The key question is how long will it take to develop and what intervening factors will change how we work in the future between now and then?

What is an HR Metric that is Useful Today and how Does this Metric Impact Fairness?

The Human Resource profession over the past several decades has become much more sophisticated by utilizing metrics to examine employee trends.  Our profession has become better at anticipating future challenges and opportunities through the use of metrics that evaluate historical patterns and trends.  As a result, we are better able to respond to on-the-job challenges.  Metrics are also a common measurement across all professions and are used as a way to hold people accountable.  One key metric that is being used by thousands of HR professionals is the employee engagement survey.

Using normative data is important for our clients as this information serves as a benchmark which allows a company to compare their own mean scores with the client base.  Normative scores are updated continuously and, due to the size of our database, we can utilize a 99.9% confidence interval, resulting in a margin of error of +.01.  This means that our clients have a high level of confidence in the data they receive.  In the past, clients have often requested that we provide benchmark data against their industry or region in the country.  Today, however, we have begun to see a shift from benchmarking within one's own industry toward benchmarking against other “best places to work”. This is particularly true with regard to benchmarking in the areas of organizational climate, culture, engagement, management and leadership.

One key goal of conducting an engagement survey is to assess the relationship between the employee and one’s manager.  Management effectiveness is very important data point as our survey data indicates that an employee’s manager is critical to an employee’s job satisfaction, engagement and retention.  Today many organizations are experiencing moderate to high levels of satisfaction with respect to employee management relations.  Maintaining and improving employee relations and management practices has a lasting effect with respect to overall employee satisfaction.  The survey statement “People are treated the same at the company regardless of race, gender, age, ethnicity or other differences” received a rating of 3.84 in 2020; however, in 2001, the same statement achieved a rating of 3.33.  This development indicates that significant improvement with respect to being treated fairly has occurred over the past twenty years.  Equal treatment of all employees will continue to be a challenge for the future to ensure that employee treatment does not decline.  One way to ensure the strengthening of this value is to continuously enhance managers communication and performance management skills.  This will help ensure that fair and consistent leadership practices are driving their management actions.

HR is the most appropriate department for explaining and addressing employee concerns with respect to fairness and the data suggests that significant improvement has occurred over the past two decades.

Is America Facing a Skills Gap and How Can a Culture of Learning Address this Challenge?

Today, in the United States a skills gap is becoming more of an issue as many skilled American’s are retiring and the gap between what employers need and what their employees can actually deliver is becoming significantly wider.  Organizations with a neglected culture of learning may experience high turnover, struggle to retain customers, and may ultimately fail. Organizations with a culture of learning which addresses the skills gap typically thrive by cultivating their employees through learning opportunities and on-going professional growth.  While the skills gap will only worsen over time, there is hope for the pro-active employer that is willing to address this issue.  To meet this challenge, HR leaders can plan and anticipate gaps in employee skills by implementing a series of initiatives which will hopefully reduce this gap.

Conduct a Needs Assessment Survey

Companies today that encourage the collection of employee data and metrics will be in a better position to address the skills gap challenge.  It is often the employees that understand what they require in order to be more efficient, productive and successful on the job.  Human Resources should consider conducting a needs assessment to evaluate the skills require in order to determine what training programs should be considered and who should be made available for this additional support.  Training programs to improve employee skills can include both technical training, certifications as well as soft-skill training.  A survey to determine where the gaps in knowledge should be conducted and then discussed with the employee to develop a plan to meet the employee needs and the requirements of the job.

Create Succession Plans for Key Positions

Succession planning is a step-by-step process for identifying and developing new leaders typically at the exempt level.  Successful succession plans also increase the availability of experienced and capable employees that are prepared to assume these new roles as they become available.  The goal is to replace the departing employee as quickly and efficiently as possible with limited interruption to the business.  Succession planning requires an in-depth understanding of the skills the organization needs and the ability to identify key players who have those skills and could step into a new role and be successful.  Sensible succession plans also require that incumbent employees be suited for a series of positions of greater responsibility.  Fulfilling that objective entails matching individual talents with required tasks. A job analysis to determine any skills gap will reveal where there are deficiencies that are impacting performance.

Support a Culture of Learning

Professional development programs are designed to enhance professional acumen and/or advance an employee’s worth to the organization.  Building a learning culture will encourage creativity, innovation and if successful reduce turnover over time.  A culture of learning needs to establish clear links between learning, performance and the strategic goals of the company.  While the company supports the programs that will bridge any gaps in skills the employee needs to be held accountable for their own development plan.  The company needs to make the employee available for training, provide the financial resources and budget to support the culture of learning

Finally, the question that every company faces as it considers a learning culture is its readiness to embrace and support such a program. With the skill gap becoming a bigger issue in the future the HR professional will need to support, promote and encourage their organization to develop a learning culture. This will enable the organization not just to survive in a very competitive business environment but grow and thrive.