Are Performance-Review Processes Really That Bad?

Recent research suggests the performance-review process is not quite dead, but certainly has room for improvement. Experts urge HR to continue shifting toward the type of frequent and instant feedback that makes the process truly valuable for employees.

Thursday, February 7, 2013
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We've heard a lot in recent years about the death of the performance review as a useful appraisal tool. Managers spend too much time, the thinking goes, on a process that employees don't feel helps them improve, anyway.

Recent research from Cornerstore OnDemand, however, suggests that, while performance reviews aren't exactly loved by one and all, nearly half of seem to still get something out of them.

In the Cornerstone OnDemand 2013 U.S. Employee Report, 47 percent of 494 employees reported their employer's review process is a fair and accurate representation of their performance. Another 40 percent said the feedback they receive helps them improve their performance and succeed in their jobs.

While these findings may be somewhat of a surprise, the performance-review process still has plenty of room for improvement, says Jason Corsello, vice president of corporate strategy and marketing for Cornerstone OnDemand.

"The 'performance reviews suck' rhetoric has been so consistent that some people may have thought these numbers would have been much lower," says Corsello. "That said, they still validate what everyone suspects - for the majority of employees, performance reviews just aren't as effective as they could be."

Cornerstone's findings are "broadly in line" with additional research on performance reviews, and underscore the need for companies to re-evaluate how they approach performance appraisal, adds Sayed Sadjady, a New York-based PwC principal and human capital solution leader with the consultancy.

"Studies identify that [more than] 90 percent of organizations use some form of performance appraisal, review or management process," says Sadjady. "Given how pervasive performance-management processes are in corporate settings and the level of investment as a result of employee time alone, PwC would anticipate these results should be cause for alarm, not celebration."

Sadjady points out that more than half of respondents to the Cornerstone survey (53 percent) don't agree their performance reviews are a fair and accurate representation of their performance. Similarly, he says, 60 percent indicate the process did not help them improve performance.

In addition, Sadjady cites PwC's October 2012 analysis of performance management, which found "performance objectives and evaluation" are a foundational element for any successful performance- management process.

"We also identified that many organizations are attempting to position their performance management processes as core drivers of talent improvement and development," he continues. "Therefore, the most alarming finding from [Cornerstone's] survey results is that a significant number of organizations are failing to execute a foundational success measure of the performance-management process, and those broader attempts to use performance reviews as a tool for employee development may be predestined for failure."

The first step toward improving performance reviews is "shifting from a once-a-year event to a process that is more fluid and continuous," says Corsello. "It's also about enabling and encouraging managers to provide that kind of real-time coaching and feedback today's workers need to truly meet performance expectations, succeed in their roles and stay aligned with the goals of the business."

Indeed, instant and frequent feedback continues to be critical to the success of today's performance-review processes. In the Cornerstone survey, 21 percent said they receive feedback annually, with the same percentage saying they receive feedback on a weekly basis.

That number should serve as an indicator of how the workplace is "already naturally shifting to this idea of continuous feedback," says Corsello. "Maybe people don't think of just-in-time feedback in the same ways they perceive formal performance appraisals, but ultimately, it can have the same impact - which is helping to encourage and motivate employees, course-correct job performance, and increase effectiveness and productivity."

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When feedback is delivered is as crucial as how often it's provided, adds Laura Sejen, global practice leader of rewards for New York-based professional-services firm Towers Watson.

"Timeliness is really pretty important," she says. "The best time is right after a big performance event; at the conclusion of a major initiative or project the employee was involved in," for example.

"It's easy for a manager to give positive feedback," she continues. "It's easy to do that the day after X event happened. The challenge, though, is giving feedback when there's improvement required. And the closer to the event that's done, the easier it is for the manager or HR to do. Otherwise, the employees are left to wonder what they did wrong, and what they did right, too."

In terms of formal processes, "the prevalent approach to performance appraisal for many companies is probably the annual, formal review -- the one-time, sit-down-with-the-door-shut, really focused conversation," augmented by the aforementioned periodic discussions to monitor overall progress, review specific projects and identify the need for mid-course corrections, says Sejen.

Indeed, the frequency at which employees receive feedback seems to be increasing, "oftentimes appearing as 'everyday coaching' supported by quarterly, semi-annual feedback sessions," adds Sadjady. "Additionally, the increasing frequency has been supported by emerging social performance-management technologies."

Whatever the organization's approach, it's critical for employers and HR leaders to "clearly define and communicate the rationale for the performance-management program," he says. "Lofty messaging about transformation and culture, coupled with a seemingly arbitrary evaluation process and poorly delivered coaching and feedback, may lead the workforce to distrust both the program and the organization's commitment to their progress."

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