“I adore performance appraisals,” said nobody, ever. And is it any wonder?
The typical attitude towards performance reviews has perhaps been best summed up by legendary management consultant, the late W. Edwards Deming, who said, “It nourishes short-term performance, annihilates long-term planning, builds fear, demolishes teamwork, nourishes rivalry and politics… It leaves people bitter, crushed, bruised, battered, desolate, despondent, dejected, feeling inferior, some even depressed, unfit for work for weeks after receipt of rating…”
It makes one wonder why any organisation would bother. But actually there are plenty of good reasons, the main one being that performance reviews conducted regularly, consistently, transparently and with ownership equally spread between staff and management can make a real, positive difference.
A performance management success story
Lendlease, an organisation that employs around 12,000 staff internationally, is regularly seen at or near the top of global engagement and performance surveys. But two years ago the company’s internal research process revealed an anomaly. Staff were not satisfied with the performance management systems.
When the executive team reflected on the feedback, their immediate desire was to fix the problem quickly, and focus on the system and the process, but Michael Vavakis, Group Head of Human Resources, counselled otherwise. He reinforced the importance of asking the employees about what would make it better.
“We changed our strategy and instead of immediately reacting to the issue, engaged around 400 employees globally in face-to-face focus groups,” he says. “We asked them what they thought the problems were. What did they think about the idea of getting rid of ratings? What did they think of certain processes followed in other companies?”
Employees said they didn't want the business to get rid of ratings; they simply wanted the process to work better. They stated there was a lack of transparency around how ratings were determined, that they did not have enough involvement, and that managers had to be trained to offer input in an objective, continuous and fair way.
There were several reasons they wanted the process to stay, not least because high-performers expected recognition and reward for their efforts, and to be differentiated from others.
“We had two key goals. One was to embed regular conversation into how we manage performance and secondly we wanted to simplify things,” says Vavakis.
New types of conversations were identified. One was around goals, another about long-term career aspirations and a third was to do with health and wellbeing, including discussions around flexibility and the workplace itself.
“We also simplified by looking at our existing processes, such as how we set goals. We previously tried to fit things into four boxes around strategy, operations, financial and people. This suits executives but not many others,” he says. “We asked people to name three to five goals they think are important over the next three to six months. Then we see how they go with them and we change them, because goals should be flexible and iterative throughout the year.”
Staff members are given responsibility for launching some of the conversations with their managers, particularly around career aspirations. The business provides tools to support the process.
Performance reviews don’t need to be so bad after all, Lendlease staff and management have discovered. In fact, they can be quite positive. This is one of the major findings of recent SEEK research into employees’ attitudes towards performance reviews.
How do employees feel about performance reviews?
The research, conducted on behalf of SEEK, which surveys 4,800 Australians (that are representative of the workforce) per year, has shone a fascinating light on the topic.
Of the respondents, only 44% participate in a performance review process.
Despite the negative reputation of the performance appraisal process, 48% of those currently not appraised believe their company should implement some sort of appraisal system. It would help them to have their achievements and efforts recognised, they argue. It would allow them to be accountable and to seek further development opportunities.
One in three of the non-appraised group, in fact, feel the lack of performance feedback is detrimental to their progression and development.
What about those who do participate in appraisals? Half receive a mix of both formal and informal feedback and 28% receive appraisals only through formal channels, while 24% receive only informal feedback.
While one in two don’t look forward to performance appraisal processes and one in four disagree that such processes are valuable, 82% see value in feedback on their performance at work and 84% believe informal feedback is of greater value than formal appraisals.
One in three say formal performance appraisals are not a genuine reflection of what they do at work, particularly of their long-term performance.
Here are some more fast facts on those who take part in performance appraisals:
- 47% feel they are rewarded for strong performance at work.
- 57% do a self-assessment.
- 62% receive feedback managed by objectives.
- 72% have review sessions annually or every six months, and 12% participate quarterly.
What do Australians think of the outcome of their formal performance appraisals?
- 58% says the process highlights areas in which they need to develop.
- 42% says it would help inform future goals.
- 30% believe it would impact whether they receive a pay increase.
- 25% said it would impact whether they would keep their job.
- 13% did not know of, or did not think there was, an actual outcome of their performance review.
Great performance appraisal processes that inspire better performance and that do not leave people “bitter, crushed, bruised, battered, desolate, despondent…” etc, are absolutely possible to implement. Some organisations have got it right, the SEEK research suggests. It takes a careful mix of management training, conversation planning and an acceptance of the fact that performance appraisal is a year-round priority owned by managers and staff equally.