Why Performance Reviews Aren’t Working

What exactly isn’t working when it comes to performance reviews? While the answer may vary by organization, there are a few factors that usually play major roles in contributing to the lack of success around performance management systems. Here are three to consider:

Future of Work
The workforce is rapidly changing. One of the biggest trends we’re seeing is the increasing fluidity of roles. Teams are no longer only comprised of full-time employees who have a single job within an organization. Instead, we see more freelancers and remote workers being brought in and people wanting to hold multiple roles within their company. Seventy-five percent of Generation Z employees have even indicated that they’d be interested in having multiple roles in one place of employment. Unfortunately, the traditional performance review wasn’t built to accommodate this future of work. It was originally meant for the nine-to-five worker with rigid organizational structures in place. As the workforce continues to evolve, old-school performance reviews aren’t able to keep up and become a bad fit for most modern organizations.

Employee Expectations
When employees have a performance review, they expect it to be fair, accurate, and clear. Instead, surveys find that less than half of employees feel like the way they’re evaluated is fair or transparent. There are also a number of unconscious biases that, if left unaddressed, can lead to inaccurate reviews. As a result, employees feel frustrated because their expectations aren’t being met. They may also feel like they’re not being set up for success since they’re not receiving actionable feedback they need to improve.

The majority of employees and managers find performance reviews to be time consuming and stressful. So it’s no surprise then that an outdated approach to the performance process leads to feelings of disenchantment that can cause lower employee engagement and, ironically, lower performance. In fact, a study found that organizations that scored high on culture were 32 percent more likely to experience high employee engagement and 97 percent more likely to experience high organizational performance. This indicates that the culture around performance reviews can have a huge, positive impact on important KPIs.

How to Change the Status Quo
It’s not easy to change the status quo around a process that has been around for ages. But we strongly believe that performance management has the potential to be improved and provide genuine value to managers and employees. Below, we share a few tips that will not only better the performance review itself but also the culture around performance management.

Build a Culture of Learning and Growth
Performance reviews were historically seen as a transactional process to deliver feedback to employees. The focus wasn’t on the employee’s growth but rather on having them “fix” things about their performance for the sake of the business. Today, that type of culture doesn’t align with the needs of the modern workforce. Instead, the focus should be on creating a culture of learning and growth, one where employees are continuously receiving feedback—both positive and constructive—on their performance and using those moments as opportunities to grow in their careers.

Find a Performance Tool That Will Grow With You
A big way to change the culture around performance reviews is to upgrade the tools you use. This means finding a performance management platform that was built for the modern workforce and has the flexibility to grow with you. For instance, our performance product includes everything from goal setting to feedback to evaluations. And these functions aren’t static; for instance, when you create goals, you also have the flexibility to update them, note progress, and even align them to broader company goals. Regardless of which tool you select, always make sure your vendor has proof points that show the results they’ve delivered for other partners.

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