Every employee needs feedback—including both constructive criticism and praise for a job well done. Traditionally, this feedback is given during the annual performance review, in which managers and employees set time aside once a year to discuss their mutual goals and expectations.
Recently, the annual performance has come under attack. Performance review reformists claim that feedback should be ongoing—instead of once a year, organizations need to invest in consistent conversations happening in the workplace to actually improve employee performance. But at the end of the day, the problem isn't the fact that the "annual performance review" only happens once a year.
While frequency of feedback is certainly an aspect of improving performance, the foundation of performance management comes down to quality conversation and communication. People are inherently bad at having frank, honest and vulnerable discussions about performance—whether it happens five times a year or one. Otherwise known as corrective feedback avoidance.
If you can improve the way people—executives, managers and employees—communicate about failure and success in the workplace, you will have more productive, more engaged employees who won't have a knee-jerk reaction to a piece of constructive criticism or expect solely positive praise. Here are three key ways for any HR organization to reinvent and improve the performance review:
Divide Compensation and Performance
It's important to decouple conversations about compensation and performance—even though the two are related. When an employee sits down for a conversation about performance that directly leads to a bonus or raise, it's natural that they'll start to focus on the reward (or lack thereof) and not absorb the feedback for it to land constructively with the employee.
Even if your compensation strategy depends heavily on performance scores, scheduling separate meetings dedicated to each will allow employees and managers to give their full attention to the "performance" side of the conversation. Then, when appropriate at a near but later date, you can follow-up with compensation based on the earlier review and the employee's performance since.
Hold Informal Conversations and Evaluations
Social feedback is important to switch up the traditional style of performance reviews. This can be done through employee gamification such as badges, engagement surveys, comment cards, awards and peer reviews. Employees can get a unique perspective on their productivity through feedback from coworkers above and below them in the workplace, instead of only receiving feedback from managers. You can also invest in programs like Situational Leadership, leadership motivation, development and communication to train company leaders on how to have Crucial Conversations—formal or informal—about performance.
If you want your employees to accomplish their goals, it's important to tie those goals to larger company objectives. By communicating your organization's vision clearly and consistently, you provide employees with a strong reference point for their personal goals.
If it's clear that your organization is invested in finding ways to improve and grow, then your employees (particularly in leadership positions) will follow suit. Transparency will lead to stronger employee loyalty and better performance.
Consistent feedback in forms of multiple conversations and evaluations is key to improving employee performance. By teaching company leaders how to have clear, crucial sit downs with their employees, productivity will increase and business goals will be completed in a short amount of time. The key to performance management is not how often you have a performance review—but how much you invest in creating high-quality, useful communication among employees and leadership.