Revamping Performance Management Practices

by Crystel Robbins Rynne, Chief Operating Officer at HRLocker

The annual performance review has long been a staple in performance management practices. Not because it worked – but because businesses didn’t know what to do instead. Fortunately, people are wising up to a better alternative – continuous performance management.

The problem with annual reviews

During World War II, the US Army developed a ranking system to assess and promote officers to decide who received certain assignments and who deserved to climb the ranks. Naturally, it wasn’t long before the corporate world jumped on the bandwagon. But that was nearly one hundred years ago, and the working world has changed dramatically.

Our jobs are more dynamic, technology is more sophisticated and fast-evolving, and businesses are pivoting more frequently to meet modern customers’ needs. In short, annual reviews are an institution that no longer fits our modern working practices.

Yet, performance reviews play an integral role in helping leaders decide who to promote, what learning and development should take place, and what talent is missing from the company. But they also make people feel terrible. The practice is anxiety-inducing and may force employees to shut down about their real feelings and experiences. When just 14% of employees are motivated by their performance reviews, the process isn’t generating better outcomes for companies either.

Leaders can’t depend on annual reviews for honest communication or significant progress. The quality of feedback hinges on the environment. Without a sense of psychological safety, teams and leaders are unlikely to feel confident giving and receiving feedback. Moreover, the practice quickly becomes stigmatised, especially if feedback mechanisms only deliver bad news.

You can’t rely on annual reviews for standardised outcomes either since personal biases easily obscure the quality of the assessment. Leaders are at risk of visibility bias, where they rate the employees they have the most contact with more highly. And let’s not ignore the aspects of performance that are harder to see, for example, the individual who knows how to keep the peace in a team full of dynamic personalities or provides emotional support to their colleagues.

What’s more, the events of an entire year are far too diverse and far-reaching to judge in a single annual meeting. The crucial details and opportunities for learning are far easier to capitalise on if they’re acknowledged as they happen.

Communication

Performance management demands openness and honesty from leaders and teams. Leaders need to be constructive and truthful when providing feedback. And individual employees need to be honest about the opportunities and obstacles they face.

Organisations can’t achieve this level of trust and transparency without psychological safety. Making sure your people feel supported, empowered, trusted, and respected helps them open up about their experience and take feedback on board.

In a communicative culture, it’s easier to set clear expectations. If teams feel safe, individuals will soon pipe up if something doesn’t make sense. They’ll also be more inclined to take calculated risks and think innovatively. Psychological safety isn’t just about performance, though – it’s about wellbeing.

Leaders must make space for sensitive conversations and provide judgment-free zones. Displays of vulnerability from leaders demonstrate that it’s okay if things don’t go to plan. In regular check-ins, encourage everyone – regardless of their seniority – to share their struggles.

It’s also essential to ensure ‘feedback’ isn’t synonymous with ‘criticism’. Use regular check-ins, debriefs and team meetings to deliver positive feedback and recognise what went well. As important as it is to dissuade employees from the things that don’t work, you also need to encourage the things that do.

Real-time feedback

In the last 12 months, generative AI has taken the world by storm. Although many companies were already experimenting with the technology, it’s safe to say the adoption rate was unprecedented for most. Given the pace of change in businesses today, feedback must be delivered and actioned quickly for it to have an impact. Real-time feedback helps businesses move with the times by taking an iterative approach to performance and development.

Delivering constructive feedback is paramount. Training teams helps them feel more confident with the process.  And supporting software and apps improve the quality of real-time feedback. Platforms that collect and analyse performance metrics help leaders pinpoint who needs support. Collaborative tools let leaders and team members review each other to aid in performance assessments at all levels.

But real-time feedback isn’t just about what happens between leaders and their teams. Research has shown that peer feedback also boosts employee performance. In supportive teams, peer feedback occurs organically. However, it can also be embedded into performance management practices through team meetings and peer-review processes.

Goal setting

Team goals set the tone for the months and years ahead. To elevate approaches to goal setting and aligning teams with organisational priorities start with SMART goals. That is, targets that are Specific, Measurable, Achievable, Relevant, and Time-bound (SMART). After all, it’s much easier for employees to deliver if they know what’s expected.

Don’t overlook the value of collaborative goal setting, either. Your people may be able to see their unique strengths and weaknesses in greater detail than you – so talk with them to unearth goals that energise and challenge them.

Whether goals are weekly, monthly, or quarterly, checking in regularly is essential. Circumstances and dependencies change – plus, you might find individuals need an extra steer or support to get things right. It’s important not to be too rigid. Recognise the need to adjust goals when things change because they almost certainly will.

Personal goals matter, but collaborative ones are equally important.  Having shared goals is a reminder that everyone is working towards a common mission, which helps with your team’s sense of purpose and connection to each other.

Employee development practices

Development plans should be personalised, tailored, and collaborative. Work with your people to outline their career aspirations, identify their learning requirements, and establish how they learn best.

Training and learning opportunities should be personalised to employee learning styles and requirements and aligned with organisational goals. Provide multiple formats and educational resource types to support people’s individual needs – think workshops, online courses, and practical activities.

You might also use mentoring and coaching as part of your development practices– it’s a great way to capitalise on the knowledge of more experienced people and pass on hard-to-find skills.

You don’t need to focus employees on single areas of development. Cross-training is facing a resurgence – in light of a constricted talent market and tight budgets – and everyone benefits. Your people get a more varied workload and the opportunity to develop new skills. Businesses benefit from employees who can move around different specialisms as and when skills gaps arise.

Recognition and rewards

Recognition and rewards are integral to performance management, and companies that overlook this fail to support their employees’ emotional needs. You must celebrate workers’ achievements.

It all starts with clear performance metrics. Setting clear and measurable goals communicates expectations. It tells your people what you value as a company and clues them on how they should act within that framework.

Next, be on time– every time. Don’t withhold compliments and rewards until the next big event – celebrate your people in the moment. Immediate recognition reinforces desired behaviours. Your team can only do more of the good stuff if they know what the good stuff is.

Not everyone likes to receive recognition in the same way. Some prefer private acknowledgement, whereas others enjoy public celebration. Chat with team members individually and take note of their preferences. That way, rewards won’t accidentally come across as punishments.

Recognition can and should be a team-wide initiative. Encourage the whole team to recognise and reward colleagues’ achievements through a peer nomination programme.

Build a continuous feedback culture

The strategies outlined above are the beginnings of a continuous feedback culture. Continuous feedback culture prioritises real-time feedback between all team members. Frequent informal discussions and feedback sessions replace the annual performance review, where specific, actionable, and timely feedback is the priority.

It’s an approach to feedback aligned more with modern approaches to work. For starters, Gen Z wants more feedback from their employers and the opportunity to learn and develop. The talent market has changed dramatically, too – it’s much harder to find talent, making it all the more important for businesses to get the best out of existing teams. Companies are constantly in flux, and regular feedback keeps people aligned with organisational changes.

The technology to support continuous feedback is well-established. There are countless ways to collect and analyse performance data, and teams should put this to good use. Performance management software helps track employees’ progress over time, identify areas for improvement, and even make recommendations on skills to improve.

But remember – data only tells part of the story. Combining it with open and honest conversations, where employees feel safe to share their experiences, is essential for a continuous feedback culture.

About the author

Crystel Robbins Rynne has worked with HRLocker since its inception. As COO, she is responsible for maintaining and driving operational results within the company. She is part of the executive management team and is also an Employee Experience advocate and host of the popular HRLocker Podcast.