Everybody hates them, but performance reviews aren’t going away: Survey
You’d think, with all the complaining both employers and employees do about performance reviews, that companies would be scrapping the bloody things altogether. You’d be wrong.
Most North American employers have no intention of eliminating their use of performance ratings, according to a recent survey from HR consulting giant Towers Watson.
Instead, many are making significant changes to fix the overall process, such as replacing annual performance review cycles with more frequent employee and manager interactions, applying a more future-oriented definition of performance and potential, and implementing new technology.
Not a surprise: The Towers Watson survey found that less than four in 10 (37%) North American companies say their performance management programs are effective. And only a quarter (26%) say their managers and employees are satisfied with the process. Half of the respondents agree that employees and managers just don’t spend enough time on performance management.
Only 8% of respondents have eliminated performance ratings, although 29% are either planning to or are considering eliminating them. Half of respondents (50%) said they have either changed or eliminated the annual performance review cycle in favor of more frequent interactions between employees and managers, or are planning or considering this change.
New tech tools
Nearly three-quarters (72%) have implemented new performance management technology, plan to, or will consider doing so. Only 18% of organizations indicated they are making or considering these changes in response to a change in their business model or business strategy. The most frequently cited reasons are feedback from managers (77%) or employees (61%), and the need to increase the frequency of employee and manager touch points (60%).
Other survey findings indicate that many companies are rethinking the purpose and business alignment of performance management altogether. Nearly a fourth of companies are taking a more future-oriented approach, changing the focus to include performance achievement and future potential.
Hurdles to jump
The survey also identified several barriers contributing to ineffective performance management programs. Almost two-thirds (64%) of respondents don’t believe their managers and supervisors have the necessary skills, while just over a half (56%) say there is a lack of effective feedback. One half (51%) think managers don’t have the time to do performance management well.
According to the survey, 81% of employers say managers spend too little time in ongoing conversations with employees about their performance. More than six in 10 (62%) also say that managers spend insufficient time helping employees set goals. Interestingly, 63% of employers say their managers spend four hours or less per employee on performance management each year.
The survey was conducted in late 2015. A total of 169 large and midsize U.S. and Canadian employers representing a cross section of industries participated. Respondents were primarily HR executives.
