When it comes to employee evaluation, what is most effective: Formal performance reviews or informal ongoing feedback?
With the EOFY upon us, many organisations are adding ‘performance reviews’ to their ever-lengthening to-do list
SEEK has undertaken research on the scope and breadth of the process – but underlying the research, we’re sensing the beginnings of a sea change towards a different way of thinking.
Appraisal or development?
“It’s a natural human phenomenon to review yourself and others,” says Tim Baker , managing director of WINNERS-at-WORK, and author of The End of the Performance Review. “But in today’s world, performance reviews are more about appraisal rather than development – which are related but separate activities.”
Baker draws an analogy with going to a gym. “If I had a choice between a trainer who would give me a score, or one who would give me developmental feedback, I’d choose the latter.”
“Some people in business argue that performance reviews should be about both appraisal and development, but in reality, there’s no time.”
Schools of thought
Baker believes that there are three schools of thought out there:
- Performance reviews are rubbish. “I’m in this group, and it’s getting larger,” says Baker.
- Performance reviews are fine as they are, and objectors ‘can’t handle the truth’.
- The process is fantastic, but managers need more training to make it work. “I find this disturbing, because they’re not ‘looking in the mirror’,” says Baker. “This group have a ‘command and control’ mindset that is not helpful in a changing workplace.”
“There’s no research that I’ve seen anywhere in the world that indicates that performance reviews increase performance. So why do we do them?”
The way forward
Baker’s ideal is for companies to have regular, short, conversations about performance, that get to the core issues. (Performance reviews discourage this kind of process, as people on both sides ‘save it up’ for the review).
Managers should aim for ten 15-minute conversations per year, with each person who reports to them, and they should be scheduled, as otherwise “business gets in the way”. Importantly, managers need to be given the questions to ask, as they often don’t have the skills to do it themselves. “I refer to this process as the Five Conversations Framework.”
“In general, we need to encourage all kinds of conversations in the workplace,” says Baker. “Conversations about strengths and talents, opportunities for growth, learning and development. I call it ‘bringing the human being back to work’.”
The view from the bridge
One organisation that’s moving away from traditional performance reviews is Deloitte Australia. After discovering that their performance review approach did not drive engagement or high performance, they decided to reinvent performance management.
“We were spending a lot of time debating performance ratings focused on past performance,” says Sophie Conabere, a director in Deloitte Australia’s People and Performance team (HR). “We’ve now shifted our investment of time to coaching, development and giving people real time feedback with a focus on the future.”
The core elements of Deloitte’s new approach are as follows:
- ’Check-ins’ are the foundation of the approach between individuals and their direct manager. “This could happen weekly, discussing priorities for the week, people’s strengths, how they’re performing, and how we’re supporting them,” says Conabere. Check-ins typically take 20 to 30 minutes the first time, then ten to 15 minutes subsequently, and are scheduled between the individuals involved. “Our own research has found that the more that employees ‘check in’, the more engaged the employee is.”
- Shifting the approach to performance data. “We found that assessing someone’s skills produces inconsistent data and have shifted to four simple questions asking team leaders about future actions with respect to the individual,” says Conabere. “We’ve seen a significant shift in performance differentiation and have more frequent, valid and reliable data that is future focused.”
- Shifting what were previously moderation sessions to future focussed activities. “It’s about getting the best out of our people, around their career aspirations, etc,” she says. “A discussion about the individual rather than their ‘ratings’.”
Conabere has found that staff are responding very positively. “Employees are really appreciating the increased focus on ongoing feedback and coaching, and higher engagement leads to higher performance.”
“The new approach focuses on speed, agility, ‘one-size-fits-one’ and constant learning, and is underpinned by frequent, reliable and valid performance data. There is a direct correlation to driving higher engagement levels and business performance.”