Effective Performance Management

Ditch the excuses. Why just measure performance when you can promote it.

The Modern Approach to Feedback.

Free flowing feedback. It drives employee performance, workplace culture and business outcomes. It’s way more effective than the dreaded annual appraisal with less effort and less cost. We studied the common excuses made by over 1000 HR pros for keeping expensive and disengaging processes and identified solutions for every last one of them. They found that reinventing and replacing performance reviews with continuous employee feedback was so easy they should’ve done it years ago.

Download the Whitepaper: 75 Reasons to Innovate Performance Management. Why you haven't and crazy not to.

Introduction

At ReviewCloud, we believe feedback makes us grow. If you want to improve employee performance, you have to provide feedback and act on what you learn. Our mission is to make performance feedback easy. Enabling communication among leaders, managers and employees is the quickest route to improve employee performance and earn an engaging culture. We’ll be successful if we help you get more out of your workplace experience. So, here’s to you – the sky’s the limit!In this paper, we describe what makes a successful performance management (PM) program. We investigate the mistakes companies make over and over again. Smart work and employee engagement are joined at the hip. You’ll see how making simple changes today will yield big returns tomorrow.

Charts about ineffective performance management programs

The Facts

Leadership-consulting firm DDI found in 2015 that nine out of ten organizations used some kind of performance management process. The bad news? Employees rated nearly three in four (71%) of them “ineffective”.Findings like this are ominously persistent over the course of the 20 years! In 2013, Bloomberg re-reported a 1997 national SHRM survey that found only five-percent of employees were satisfied with their companies’ PM processes. Nearly half were dissatisfied!

Even more demoralizing is that HR, the presumptive PM innovators, rather readily admit defeat. Sibson Consulting found that 58% of HR managers “dislike” their own review systems. Josh Bersin of Bersin by Deloitte put it mildly in a 2013 Forbes article when he said, “This topic has been controversial for a long time”.

Controversial? It’s scary. The worst part is you’re not even surprised. We face a fundamental problem in the workplace. We know employee engagement is necessary to improve employee performance. We know that improving employee performance is necessary to promote better business outcomes. We have to manage employee performance. We’re not very good at it and we’ve seemingly accepted the status quo.

It’s like we live in a world full of drivers and destinations, but all the cars have flats and no one has a tire iron. We need to improve. So, why don’t we? What’s holding us back?

 

Five Reasons You Fail to Improve Employee Performance.

Lack of “buy-in” organization-wide


It’s not just HR. Apathy represents a tremendous loss of real money and missed opportunity. DecisionWise reports that a disengaged employee costs an organization about $3,400 for every $10,000 in annual salary. They estimate that disengaged employees cost the American economy up to $350 billion per year in lost productivity. Gallup paints an even more dire picture. They estimate that active disengagement cost U.S. employers between $450 and $550 billion.

Like many “talent-management” strategies, performance management and employee engagement are often seen strictly as “top-down” initiatives: Valued by leadership, but barely tolerated by everyone else. Aon Hewitt found that half of all managers spend only two to five days a year on activity related to their company’s annual engagement survey. Nearly a third of employees think they are pointless.

Considering the investment that companies make in their employees, it’s not hard to see why leadership and human resources readily buy-in. However, for employees the connection between performance management and company success is far less direct. Engagement strategies are a great idea – but, as a great business guru once said, “You ain’t selling if nobody is buying.”

To drive employee engagement and improve employee performance is the same damn thing.

Engagement and Performance are not separate initiatives

When leaders want to improve employee performance, who do they call on? Managers and human resource. Who’d they forget? You guessed it. The employees. They typically out number managers 7 to 1 and human resources 200 to 1. We’ve enabled an apathetic workforce. Apathy represents a tremendous loss of real money and missed opportunity.

DecisionWise reports that a disengaged employee costs an organization about $3,400 for every $10,000 in annual salary. They estimate that disengaged employees cost the American economy up to $350 billion per year in lost productivity. Gallup paints an even more dire picture. They estimate that active disengagement cost U.S. employers between $450 and $550 billion. Companies must improve employee performance if they want to succeed.

Like many “talent-management” strategies, performance management and employee engagement are often seen strictly as “top-down” initiatives: Valued by leadership, but barely tolerated by everyone else. Aon Hewitt found that half of all managers spend only two to five days a year on activity related to their company’s annual engagement survey. Nearly a third of employees think they are pointless.

Considering the investment that companies make in their employees, it’s not hard to see why leadership and human resources readily buy-in. However, for employees the connection between performance management and company success is far less direct. Engagement strategies are a great idea – but, as a great business guru once said, “You ain’t selling if nobody is buying.”

Appraisals and development. Just not at the same time!


If the shared goal of survey and PM processes is to improve employee performance and create high performance cultures, and both miss the conversation train, we have to ask why. According to SIS International Research, companies who employ 100 employees or more stand to lose $525,000 annually due to ineffective manager-employee communication.

Traditionally, appraisals have relied on performance ratings. However, an over-reliance on ratings stifles conversation. Appraisals alone, without development, just aren’t that engaging. No one would argue that talent development isn’t important. Making sure “the job gets done” is equally so. Though this isn’t very popular with the millennial version of the workplace, performance appraisals are valuable to comprehensive talent management strategies.

Organizations need both top-down talent assessment as well as an employee-driven commitment to ongoing development and innovation. HR and Leadership need data to make wise workforce-planning decisions. Managers and employees need tools to support ongoing, goal-oriented conversations. Engagement research is rooted in employee development. There’s been an emergence of nouveau sales collateral promising revamped PM practices. This has led vendors to make impassioned pleas to “ditch performance reviews” altogether.

And why not?

According to Bersin & Associates’ research, 71% of organizations measure employee engagement, and in 2012, the U.S. spent about $720 Million doing it. Bersin forecasts this to grow to about $1.5 billion annually. In addition, 57% of HR practitioners said their employee engagement metric is the most important indicator of talent management success. It makes good business sense for a new generation of PM marketeers simply to “ride the tide”.

Performance conversations remain important and necessary. They ensure managers engage the vital and most difficult part of their jobs: connecting their employees’ behavior to actual results. In the words of Andy Grove, former Intel CEO, “Ninety minutes of your time can enhance the quality of your subordinate’s work for two weeks, or for some eighty-plus hours.” Talk about return on investment!

Hey, Where’s the rest?

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Learn why organizations find it so difficult to give feedback with enough frequency to amount to anything meaningful.
Over half of employees who feel their managers fail to hold teams accountable for performance were disengaged. Are you doing enough to help your managers improve employee performance?

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