Changing gears to get results

DIALOG sees immediate results in abandoning annual performance reviews
By Tania Oppedisano
|Canadian HR Reporter|Last Updated: 02/21/2017
DIALOG Employees
DIALOG employees are benefitting from their employer’s decision to abandon annual performance reviews and the five-point rating system in favour of developmental conversations. Credit: DIALOG

As employers evolve, HR is becoming increasingly recognized as a crucial player in ensuring a corporation’s longevity and success.

And as employers vie for top talent on a global scale, there is a growing evidence that employee engagement, satisfaction and well-being directly affect employee retention rates and performance. As a result, it’s slowly becoming easier to justify the desire of HR executives to push boundaries, be creative and innovate long-standing, out-of-date organizational and performance management tools.

One of the most common systems used to measure employee satisfaction and rate performance management behaviour is the awkward, anxiety-inducing annual performance reviews. Employers spend a significant amount of time and money on these reviews, but is all the effort worth it if they don’t really create behavioural changes, improve retention or impact the bottom line?

Is the system worth salvaging?

Leading the HR team at DIALOG, I could see the five-point rating system was not complex enough to accurately review our dynamic talent. An integrated design firm, DIALOG employs more than 500 people from various backgrounds: engineering, design, urban planning, architecture, to name a few.

And under the performance rating system, 80 per cent of employees achieved the rating “meets expectations.” Realizing there is no way 80 per cent of people are performing at the exact same level, the question became: What does “meets expectations” mean? Every manager had his own definition and reason for the rating, and it became apparent the rating itself was more a reflection of the manager than the employee. 

The standard performance reviews seemed to be rating the employer more than the employee. For this reason, ratings are often skewed to be too high (for fear the result would be a bad reflection on themselves) or too low (to avoid hurting employees’ feelings and any work that might be required for a disciplinary process), as seen in the 2016 article “Getting Rid of Performance Ratings: Genius or Folly?” in Industrial and Organizational Psychology.

As a result, eliminating the reviews entirely and focusing on programs that encouraged conversation and collaboration seemed like the better, most viable option.

Gaining senior support

I decided to focus my research on performance management while completing a master’s degree in HR management at York University in Toronto. We realized that focusing on employee engagement and retention strategies would indicate to employees DIALOG was committed to them and cared about their future and well-being, leading to higher engagement and increased performance.

To effectively implement this new performance management program, it was crucial for the HR team to have full support from its partners. Offering statistical data from extensive research, we clearly outlined how an overhaul of performance reviews and a focus on employee development would have a direct impact not only on the company’s bottom line but on employee satisfaction and engagement, which made the program overhaul a priority.

With York University as a partner, and by positioning a performance management overhaul as an investment in DIALOG’s future, we gained the support needed from senior leadership to effectively implement the program.

We then spearheaded training sessions with employees at each office and selected designated advocates or “coaches” who would assist with the program rollout. We walked through the new program strategy, the benefits and the techniques with coaches and HR managers responsible for owning the program.

Like the program itself, the implementation process encouraged face-time between employees and partners, which allowed for transparency and the ability to deal with possible issues as they arose.

The benefits of conversation

The program focused on developmental conversations that would accurately take into consideration the nuances of different job descriptions, experience levels, behaviours and personalities.

Employees, direct managers and dedicated senior leaders would have a development conversation once a year where they would identify a goal that was realistic and attainable within 12 months. This would followed up by check-ins each quarter, where managers would ensure employees were staying on track, and offer advice and encouragement on next steps.

By encouraging employees to create obtainable goals — with the understanding their objectives would be monitored and supported throughout the year — employees are encouraged to consistently work on improving. This leads to increased engagement and overall satisfaction. The real conversations between employees and managers also allow for greater accountability, resulting in a genuine desire from employees to focus on their personal development.

Since their implementation in 2016, individual development plans have proven to have the highest impact on employee engagement, performance and retention — all of which have already dramatically improved. Developmental conversations increased visibility among managers, partners and employees. This has allowed performance issues to be dealt with as they arise, rather than waiting until performance review season to address them.

This means performance issues are dealt with more quickly, and are now separated from performance management and goal-setting. And principals, HR professionals and partners have ongoing face-to-face time with their employees, which has led to improved productivity and employee satisfaction. Employees book and drive the conversations, which also leads to increased accountability.

Assessing effectiveness

The program overhaul is by no means a definite solution; it’s organic and constantly evolving.

After the first year wraps, we’ll be able to look at the data and measure how much of an impact the program has had on performance and retention.

Perhaps most importantly, the program rollout has positioned the HR team as key players in improving the company’s bottom line and as a voice in the decision-making process.

Tania Oppedisano is national director of HR at DIALOG in Toronto. She can be reached at TOppedisano@dialogdesign.ca or for more information, visit www.dialogdesign.ca.

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