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.