“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…”
Chris Till, Chief Executive of the Human Resources Institute of New Zealand, subscribes to this view. “I am not a great fan of most current performance review systems,” he says. “That might sound strange coming from an HR person, but I think performance appraisal systems focus a huge amount of effort on the 5% rather than the 95%.”
Till is referring to research by Deming which showed that 95% of an individual’s performance at work is governed by the system within which they work – the workplace itself, its systems and processes, the people around the individual and their management, etc.
"The problem with appraisals is the convenient assumption that people can be held accountable for their own performance,” Till explains. “But when is the last time you achieved something really worthwhile at work purely on your own? Performance is governed primarily by the system, not by the individual.”
But what if the system itself could be changed by the performance review process? What if performance reviews, conducted regularly, consistently, transparently and with ownership equally spread between staff and management, could make a real, positive difference. Some companies are discovering that they can.
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.
“We changed our strategy and instead of immediately reacting to the issue, engaged around 400 employees globally in face-to-face focus groups,” says Michael Vavakis, Group Head of Human Resources. “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 to get rid of ratings; they simply wanted the process to work better. They wanted greater transparency around how ratings were determined, as well as more involvement. They wanted managers trained to offer input in an objective, continuous and fair way. 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,” Vavakis says.
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 4000 New Zealanders (that are representative of the workforce) per year, has shone a fascinating light on the topic.
Of the respondents, 57% participate in a performance review process. Despite the negative reputation of the performance appraisal process, 58% of those not appraised believe their company should implement some sort of appraisal system. It would help them to better understand their own performance and how they could improve, they argue.
Of the non-appraised group, 51% feel the lack of performance feedback is detrimental to their progression and development.
Of those that participate in appraisals, 36% receive a mix of both formal and informal feedback, 45% receive appraisals only through formal channels and 19% receive only informal feedback.
While 41% don’t look forward to performance appraisal processes and one in five disagree that such processes are valuable, 91% see value in feedback on their performance at work and 94% believe informal feedback is of greater value than formal appraisals.
In fact, one in three (31%) say formal performance appraisals are not even a genuine reflection of their performance at work, particularly of their long-term, positive performance.
Here are some more fast facts on those who take part in performance appraisals:
- 54% feel they are rewarded for strong performance at work.
- 54% do a self-assessment.
- 70% receive feedback managed by objectives.
- 72% have review sessions annually (49%) or every six months (23%).
What do New Zealanders think of the outcome of their formal performance appraisals?
- Two in three say the process highlights areas in which they need to develop.
- 60% say it would help inform future goals.
- 38% believe it would impact whether they receive a pay increase.
- One in four said it would impact whether they would earn a promotion.
- 7% 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 in staff 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.
