One aim of the annual review is to have employees look forward to the process with hopes of recognition, reward and possibly even a promotion. With an increase in earnings and more responsibility they feel valued and are more likely to remain loyal and engaged. However, oftentimes the performance review process falls short. Employees don’t set goals and performance is only evaluated once a year, so it’s difficult to justify promotions for high achievers.
Typically, managers scramble at the last minute to document achievements and areas of improvement for each team member in order to provide an objective evaluation. They then struggle to find individual performance information. Ultimately, they come ill-prepared to the annual review and take a check-the-box approach without realizing the bad impression it gives the employee. It’s a very time-consuming process each year and does little to improve performance.
HR managers then wind up pushing documents and due date reminders through email, manually read each version of a performance review and the whole process is inconsistent and inefficient. As a result of all these manual processes, it not only takes longer to complete the reviews, but all that valuable performance information is hidden in documents in folders that are difficult to search through. As these problems persist, year over year, employees become disengaged, produce work of poorer quality and are more likely to leave. Leaders can see evidence of ineffective performance management when these key performance indicators are lower than industry averages:
- Retention rates
- Employee job referral rates
- Internal promotion rates
- Employee satisfaction
- Revenue per employee
- Average employee tenure
Businesses can improve these important workforce KPIs with a different approach to employee performance management. If any of these nine situations apply to you, your current process is ineffective.
- Performance is only evaluated once year – This approach has proven ineffective in study after study. It’s simply not frequent enough to help employees achieve their goals because of the rapid pace of change in business. An annual review winds up more reactive than proactive.
- Employees receive a single grade for performance – Whether it’s a five-point or star scale, or a rating of ‘Meets Expectations,’ employees don’t value a single assessment of performance. In order to develop them and improve performance, they need to be coached throughout the review period, evaluated and recognized on smaller accomplishments. Coaching provides a better opportunity to improve performance because employees can see how evaluation of smaller achievements add up to the overall evaluation.
- Merit increases are only provided as the result of a review – For the most part, this is the only reason employees value the performance review process. The mindset is if I do what my manager asks, I will earn more money each year. This, by in large, will keep employees producing at the same level each year. To make them produce and achieve more, reward them outside of a formal review.
- Employees don’t play an active role in setting their own goals – While this may vary by role (sorry salespeople you are always going to be given your annual quota), you can take a more a collaborative approach to goal setting. When employees participate in and drive the goal-setting process, they take more ownership and are more likely to achieve or even overachieve their goals. Managers still need to approve goals, but getting employees involved in this critical step will improve performance.
- Employees are held to goals that are no longer relevant – Things change constantly. If you only set goals once a year, it’s likely your business needs will change before goals are measured. Without the flexibility to reprioritize, or dare I say introduce, new goals during a review period, employees will become disengaged and not perform well.
- Employee engagement is difficult to measure – Employee engagement is critical to the success of every company, but it can be difficult to measure for even the most forward-thinking companies. Businesses need to do more than measure when employees show up for work. Instead, measure how connected the employee feels to their work, managers, peers and the company.
- Your performance management process is manual and generic – In some companies, the HR department makes one performance evaluation document available to employees and managers via email or hard copy with a list of instructions and due dates. Then, they wait for completed reviews to be delivered on time. But that doesn’t happen because no one else looks at the email or document until the end of the review period draws near. Further complicating the issue, not every job should be evaluated the same way. Email was not designed to be a performance review tool.
- Visibility into workforce performance is limited – With performance data stored in documents in various places, you can’t know if one manager gives their whole team stellar ratings because it’s easy and fast. You also can’t know how one department is performing compared to others. You may not even know which managers are always late with reviews. Normalized employee performance data is often not available to inform hiring, retention, promotion and employee development plans.
- Goal progress and achievement is difficult to assess – Goals that are stored in documents or email are difficult to access. Managers and employees struggle to provide quantitative evidence of goal achievement and have little to no visibility into goal progress throughout the review period.
Make Performance Management Part of Every Day
There is a better, more effective way to evaluate, recognize and reward employee performance and make the process easier for everyone involved. NetSuite’s SuitePeople Performance Management solution makes performance management part of the employee experience every day. Employees create their goals and work with their managers to refine and approve them. NetSuite adds these goals to the Employee Center for both the manager and employee for better visibility and engagement. NetSuite provides goal metrics with operational data that are automatically updated each day for more fact-based assessment of progress and achievement.
Continuous Performance Conversations
Throughout the goal lifecycle and review period managers and employees can discuss performance through threaded conversations and reprioritize goals based on business needs. Conversely, managers use these capabilities to identify employees who are disengaged and can take proactive measures to get their employees back on the right track. Peers can provide performance feedback using the Kudos feature. All goals and peer feedback are automatically added to the employee performance review, saving the manager time preparing an evaluation.
Using Business Intelligence for Easier Administration
With SuitePeople Performance Management, HR leaders have a more structured way to administer the entire review process. Embedded analytical charts provide HR teams with monitoring tools to track performance review completion progress by status. Within the solution, they have the added flexibility to create performance review documents from templates by job, location or subsidiary, thereby providing a more consistent and relevant performance evaluation to the entire workforce. Having employee performance data all in one lets HR leaders provide workforce performance reports and analysis to other leaders to improve overall company performance and productivity.
To learn more about and see a demo of SuitePeople HR and Performance Management solutions, view this on-demand webinar.