The performance review has traditionally been a labour- and time-intensive exercise conducted by managers once a year for all employees. Typically, the review is tied directly to annual salary increases and often it’s perceived to be very one-sided — a manager gives feedback and there is often no opportunity for an employee to respond or be involved. So does the performance review hold any value for organizations?
The answer is not a simple yes or no. The rapid advance of technology has radically changed how we conduct business. Add to this the fact multiple generations are working together, each with different values, goals and communication styles, and there is no longer a one-size-fits-all type of performance review that meets everyone’s needs.
But the main areas of focus for HR are the development of leadership capability and performance management, according to the June 2010 report HR Trends in B.C. published by the British Columbia Human Resources Management Association.
“After the staff reductions and restructuring of 2009, the goal of most HR functions is to enhance the overall performance and contribution of their existing staff groups. Leadership and performance are… two key elements where an improvement in individual performance will lead to an improvement in organizational results,” states the report.
“Better leadership leads to better employee contribution, and improved performance management provides tools and resources to support and monitor this contribution. In keeping with tight economic recovery, the data indicates a strong focus on growing through achieving more with the people and resources at hand.”
Many companies have done away with annual performance reviews and developed a more customized approach to the performance management program. Some have chosen to eliminate the formal review process altogether.
If a company opts to eliminate any form of performance management, it potentially risks a workforce that is “flying blind” without a clear understanding of what is expected, how they are doing and benchmarks by which to measure their performance. The ultimate cost may be a higher than normal turnover rate, loss of productivity and, as a result, loss of revenue.
However, if an organization clearly and regularly communicates its vision and goals and provides a “painted picture” to employees on how to get there, the need for formal, one-on-one reviews could be mitigated.
Factors to consider
If an organization does have a formal performance management program, there are a number of factors to consider. First, it is critical to ensure the program is equitable to all employees and delivered consistently. If not, the program will offer no value to anyone and, ultimately, could create confusion and morale issues within the organization.
Second, employers should recognize and understand the different communication styles as well as the needs and preferences of each generation working within the organization. When it comes to feedback, recognition and rewards, each generation has its differences:
Baby boomers: Many baby boomers are at a stage in their careers where they don’t need or want continuous feedback from their managers. They are clear on what their roles are within the organization, how they add value and what they need to do to fulfill the requirements of their position. They are most likely employees who prefer the more traditional style of performance review: “Once a year, tell me what I’m doing right, where I need to improve and then give me my raise.” They expect their annual review to be tied to an annual increase. Many are no longer looking at career development but focused on career maintenance and retirement — they have the “finish line” in sight.
Generations X and Y: While the boomer generation has made an average of three job switches in their lifetime, it’s not unusual for generations X and Y to change jobs on a yearly basis, at an enormous cost to employers. These younger generations are reinventing the performance review. They don’t believe semi-annual or annual performance reviews work — they want immediate and constant feedback. If they’re only going to work for a company for two years, they can’t wait for a one-year review to find out how they’re doing — they want an on-the-spot performance review.
For these younger generations, companies should train managers on how to give frequent feedback. Spot reviews lead to consistent improvement which is what truly matters to these generations. They also prefer to have a choice in how they are rewarded — it is not always about the money. They are also very focused on career growth, so including a career planning component in the performance review is critical to keep them engaged.
There are a number of gen-X and -Y-friendly programs to evaluate, review and reward employee performance. For example, one company has created a software product that functions as a sort of Facebook for feedback, whereby managers and staff can comment on the performance of their peers in both public and private forums on a continuous basis.
There are also a number of employers that provide fully integrated online recognition and rewards programs. These give employee points that can be redeemed online for gifts, cash or travel rewards. This type of rewards program is used to recognize everything from exceptional performance or a solid safety record to length of service at a company.
Mentoring, peer mentoring and reverse mentoring programs are also a key factor in any performance management program. The coaching component in these relationships is viewed by generations X and Y as extremely valuable since they are keen to learn and to grow their careers.
Most employees want to receive some form of feedback, communication and acknowledgement on how they are doing. Not doing this can cost an organization dearly, especially with the younger generations, when some kind of performance review can make the difference between a stable, engaged workforce and a workforce with low morale, higher turnover and lost productivity.
Sandra Reder is president of Vertical Bridge Corporate Consulting in Vancouver. She can be reached at (604) 682-2262 or email@example.com.