In the world of organisations, what single conversation causes the most dread and fear on the managers side and anxiety and resentment on the employees side?

The performance review!

Second only to firing an employee, managers rate performance appraisals as the task they dislike the most.

The Ghost of Performance Reviews Past

Giving staff annual performance evaluations has for decades been widely accepted as an essential and valuable management tool, and there are a lot of books and materials out there about this topic (just check out Amazon).

Doing more harm than good

But, there is a growing body of research finding that performance reviews may do more harm than good, certainly in the way it has been and still is used in most organisations.

In a national study by People IQ, 87% of employers and managers felt performance reviews were neither useful nor effective.

In an analysis published by Psychologists A. Kluger and A. Denisi they concluded that at least 30% of the performance reviews ended up in decreased employee performance.

A study by the Society of Human Resource Management, found that 90% of performance appraisals are both painful and dont work; and further, produce an extremely low percentage of top performance.

This resonates with my colleagues and my own sense of the impact of performance appraisals as they are practiced in the majority of organisations.

The Ghost of Performance Reviews Present

Our experience working with some of the biggest organisations in the UK and Europe, whether they are in financial services, petrochemical, utilities or other industries is that compared to 10 years ago, today they all have impressive performance and appraisal systems in place. They are describing all the best practices, linking personal objectives to organisational objectives, using competency frameworks, looking at both deliverables as well as behaviours etc.

Significant investment has gone into this, so does it work better for them now? Well no, not much in my opinion.

The main improvements I have observed is mostly just that the compulsory annual performance appraisal conversations are now actually taking place, because managers get monitored on this. But they are not delivering great performance improvements. They are too often seen as cumbersome and time consuming tick-box exercises to be endured.

The Ghost of Performance Reviews Future

So what should be changed? I believe there are two aspects that need to be addressed (1) the feedback and conversations happening in between appraisals (2) the quality of the appraisal conversation itself.

Managers too often avoid giving timely feedback and are very poor at delivering the message. Positive feedback is often neglected or doesn’t come across as genuine. Negative feedback ends up being confrontational.

Basically Im of the opinion that in terms of review of performance during the previous year, there should be no surprises at the appraisal conversations. Ongoing regular feedback and conversations about performance and expectations creates clarity and a sense of security, it enables adjustment of expectations and objectives if conditions change and it fosters continuous improvement.

By the time the formal appraisal conversation comes around it becomes more of a summary of experiences over the preceding period so the conversation can focus on development coaching.

Coaching and Performance

Bersin & Associates has done some research around linking coaching and performance management. They demonstrated that

Organisations in which senior leaders Very frequently coach had 21% higher business results and

Organisations with excellent cultural support for coaching had 13% stronger business results.

This is not great surprise to me.

When leaders are trained as coaches they skilled and confident in giving feedback (at least on our courses). A coaching leaders mindset is different from a directive leader or manager. A coaching leader, when giving feedback, is focused on building capability and helping staff develop and learn. Their attention on the performance feedback and appraisal parts of their role is just so much higher.

The quality of the appraisal conversations themselves will also improve massively when the managers have good coaching competencies. Their ability to listen and build trust will be better and their ability to create the open positive learning environment much enhanced.

Merry Christmas and a Happy and Prosperous New Year to all our readers.