Most employees want an honest evaluation of what they do well and what they need to improve, but few employees believe performance reviews are objective. Recent research from Gallup shows that 71% of employees believe their performance reviews are unfair.
With end-of-year reviews coming up, what can your HR team do to make employees feel like their reviews are fair? In analyzing your company’s approach to reviews, you may find you’re inadvertently giving employees the impression that their evaluations are skewed, irrelevant, or unrealistic.
As a result, you may be jeopardizing the productivity and success of your teams. Research shows that when employees perceive reviews to be fair, they are far more likely to show performance improvement. On the contrary, performance tends to drop when performance ratings are seen as unfair.
Can the performance review be redeemed? We think so. Here’s how.
Why Employees Think Performance Reviews Are Unfair
In addition to believing performance reviews are unfair, Gallup’s research revealed that workers aren’t very motivated by their reviews. Only 14% of employees strongly agree that the performance reviews they receive inspire them to improve, and 65% of employees believe that performance evaluations are irrelevant to their jobs.
An unfair evaluation is inherently demotivating. Why work hard for a company that doesn’t recognize its employees’ efforts?
Employees are more likely to believe evaluations are unfair if they:
- Evaluate employees against performance standards that are unrealistic given available time and resources.
- Are based solely on what a single manager observes, as a manager may be unaware of work an employee does for her coworkers, other departments, or customers.
- Employ a “forced curve” ranking system which grades employees against each other, rather than providing an objective review of an individual employee’s performance.
- Evaluate employee performance against goals that have become irrelevant as the company’s priorities have changed.
- Tell employees what they need to improve but do not provide mechanisms for employees to receive coaching or training to do so.
Assess your company’s process for performance reviews, and identify whether any of the above points apply to your current process. If so, your employees may feel distrust or resentment towards their evaluations, resulting in a lack of motivation to improve or grow. To redeem the performance review, your company needs to address each of these areas.
The good news is that, according to a study by McKinsey & Company, 60% of employees who believed a performance management system is fair also believed it was effective. When your performance reviews are fairer, they’ll be more effective too.
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4 Ways to Improve Performance Reviews
There isn’t one silver bullet to make your performance reviews fairer. Your company should take numerous actions to improve how evaluations are framed, how and when they’re conducted, and how rigid they are. Here are five strategies to make performance reviews a more positive experience — and far more effective.
1. Change the Framing
Gallup recommends instituting “progress reviews” instead of “performance reviews.” Performance reviews can seem punitive — and stressful — if employees and managers believe the goal is to assess whether performance makes the cut or not. While managers do need to consider whether an employee’s performance meets expectations, the review itself can be framed strategically to avoid making employees feel defensive.
Flip the script. Differing from performance reviews, progress reviews are oriented towards employee growth and development rather than assessing whether employees should be worried about keeping their job. This improves relationships between managers and employees, as it opens a conversation where the manager can serve as a coach rather than a disciplinarian. Such a conversation is likely to feel fairer to employees than a perceived judgment coming down from on high.
2. Conduct Evaluations on a More Regular Basis
Don’t consider reviews a one-time event at the end of each year, with no feedback or evaluation in between. Conduct mid-year reviews. Encourage managers to have regular one-on-ones with their employees. Make talking about progress and performance a consistent part of your company’s culture.
Gallup’s research found that when managers provide daily feedback, their employees are more likely to be engaged at work. When managers and employees meet to review progress frequently, managers can receive a fuller picture of what employees’ roles entail, employees receive more regular coaching, and reviews are more accurate. It’s a win-win-win.
Making a habit of continuous reviews also means that when end-of-year reviews come around, there are no surprises for either party. An employee is much less likely to be blindsided by a negative review when they have been regularly meeting with their manager about areas that need improvement and working to grow in those areas. This turns the end-of-year review into an opportunity to reflect on an employee’s progress and patterns throughout the year, and set goals for the coming year; rather than dumping an entire year’s worth of feedback on your employee in one hour.
3. Involve Employees in Adapting Their Goals
It’s silly and unfair to ask employees to rate progress on goals they established last January that have since ceased to be relevant. Perhaps the company adjusted its priorities in February. Maybe the employee moved to a new department, changing their professional goals. This happens all the time. Opportunities come up, unexpected situations arise, and priorities shift at the highest levels of the organization, but the changes don’t get reflected in individual work plans.
Adapt individual employee goals as often as needed, and involve employees in this process. This will be easy if you’ve instituted a culture of frequent progress reviews, giving managers and employees plenty of opportunities to pivot goals as needed. McKinsey’s study showed that of the employees who believe their companies effectively manage performance, 62% say those companies revisit and adapt goals frequently. Some of these companies course-correct twice a year or more, while others revisit goals on an ad-hoc basis.
4. Use Different Evaluation Techniques
Performance reviews can take many forms beyond the traditional manager-employee review. Consider adopting some of the following evaluation types at your company:
- 360 Feedback. In a 360 feedback format, employees offer feedback about each other and about their managers. Clients or customers may also offer feedback if applicable to the nature of the work, giving a well-rounded perspective of performance. Gathering feedback from surrounding sources is proven to make companies more efficient —managers who receive feedback from employees and clients are 8.9% more profitable.
- Peer reviews. Peer reviews are a great way to solicit practical insights that managers can’t get on their own, especially if many of your employees work in teams. Peer reviews should always be anonymous, to ensure employees feel comfortable speaking honestly about their coworkers.
- Continuous feedback and annual reviews. Adopting a culture of continuous feedback doesn’t mean you have to abandon the annual review. A blended approach generally works better than choosing one or the other. Continuous feedback can serve as the quick oil change to keep the car on the road, while annual reviews have the depth of a comprehensive tune-up. With both, the car keeps running at its best.
Fairer — and more effective — performance reviews are within your company’s grasp. Consider each of our five suggestions. Which can your company adopt in the new year?