The performance review isn't dead. Sure, it's been given a bad rap, but only because it was allowed to lurk like a ghoul from last century; a musty Halloween outfit that was rolled out once a year. All constricted by laborious process and staggering around in a stupor of preoccupation and retrospection.
The thing is, performance reviews (or performance appraisals) actually work. They can be an invaluable tool for bringing out the best in your people, strengthening the employment relationship and boosting achievement, morale, and productivity across the business.
They just have to be done well.
So banish that old deadweight zombie process and join us on an exploration of the oft-maligned performance review and see how it can best serve your people and your company.
"Time for your performance review"
Many managers, bosses, and business-owners will know this one. It starts with the simple words: “It's time for your performance review.” Your employee stops in her tracks. You can't work out if the reaction is nervousness, trepidation, apathy, or something more hostile.
Perhaps you were giving her a heads-up and asked her to prepare with some form of self-evaluation. Fill in some scores. Write some notes. Meanwhile, you waded through a long analysis of her performance for the past year, poring over a ratings system while trying to remember details of wins, positive action you want to encourage, or examples of behaviour you'd like to improve.
One main upshot was finding justification for approving or denying her a pay increase, but by the time the review meeting came around, you were both so bogged down by the process the only thing you really cared about was getting it over with.
Or perhaps you took a more unbuttoned approach. No worries about preparation. Just get together and muddle through an ad-hoc review that leaves neither person any wiser, or worse, exasperated and even a bit resentful.
Either way, you had to wonder why you bothered. Boo to the performance review.
Death of the performance review
HR commentators have been ringing the performance review's death knell for years, and these sorts of experiences are symbolic of the evidence they cite. Confronting, stressful, aimless, costly, onerous, but above all – the theory goes – performance reviews are ultimately ineffectual at delivering on their basic raison d'être: improving employee performance.
If managers and employees unanimously hate doing performance reviews, then it's a pretty good sign that something is out of whack. So why not ditch the whole pointless process altogether (and there's no legal obligation to do them, anyway)?
Some companies have. Some business – especially small ones – have never done performance reviews to begin with.
But there is evidence from NZ and abroad that employees don't perform as well at companies that don't do them. A SEEK survey of 4000 New Zealanders found that 57% of respondents participate in some form of performance review process. 58% of those that don't do performance reviews believed their workplace should implement some sort of system and 51% felt not getting performance feedback was detrimental to their development.
The NZ results support a global study of nearly 10,000 employees by research and advisory company CEB (now Gartner) that found employee performance and engagement drops when performance ratings and reviews are removed. Not exactly good news for any business that wants a team of motivated, loyal people.
Why performance reviews are so important
Everyone wants to succeed and improve. Just as you want your business to flourish, your employees want to grow too. But in the busy, daily work environment, it can be hard to get an accurate gauge of how you