My most rewarding yet least satisfying performance review was…

After I had done my self-assessment, I was eagerly waiting for my managing partner to arrive for my first performance review in my new job. I felt I was prepared. I had done plenty of performance reviews in the past, but now I was in a whole new league. I waited with some nervousness but also positive anticipation for the feedback I was about to receive on how I was doing and where I could improve.

I had always been fascinated by consulting as a profession, so when the opportunity came to join one of the world’s largest consulting firms (Price Waterhouse, as it was known then and now PWC), I jumped at it. After more than 8 years in the oil industry (BP), working my way up the management ranks, I was ready for a new challenge. Not that I was dissatisfied with my career so far. Working for a major oil company taught me a lot, especially about managing people, so I felt ready for a new challenge as a management consultant.

The first year was full of exciting new assignments, from assessing a commercial venture for an Aboriginal (First Nations) corporation to designing the organisational structure for a new government enterprise. I was being stretched to the limit, and I was loving it. But how did my boss think I was going? I was keen to hear his feedback. The time had come. His EA told me he was ready, and I approached his office. I must admit, I am now a little more nervous.

I sat down. I was ready. My managing partner looked at me and said, “You know, we have to do these performance reviews every year. It’s what HR wants us to do. And I’ve got this form I need to fill out. But first of all, how’s it been going?” Oh great, I thought enthusiastically, this is the way performance reviews should be done. Get the person to give their own feedback before you give yours. So, I started to explain my version of the first 12 months, and after about a minute, he said, “Good, good. Sounds like you’re enjoying it then.”

From there, he proceeded to refer to the form in front of him, and it went something like this: “Good, good, excellent, wonderful!” “All right then, that’s it. Carry on”. And with that, my first performance review as a new consultant was over! Done and dusted. Two days later, I was promoted to Senior Consultant with a generous salary increase. I was obviously thrilled with the promotion and the positive feedback but strangely disappointed at the same time that I had not learned more. Maybe, I thought, that will be for next year’s review.

I wonder how this experience compares with yours. Rewarding or dissatisfying? Or, like mine, a bit of both.

When was performance management pioneered?

Performance reviews or career development discussions have been around for quite some time now. Some say these assessments originated in ancient Egypt, while many claim that they started over a century ago. If you’re guessing in the military, well, you got it right! In the 1950s, this tool was formally adopted to evaluate the work of federal government workers across the United States.

How has the definition of performance management evolved?

After undergoing significant changes over the years, in 2023, Performance Management is defined as a continuous, collaborative process. Its primary focus is to implement a strengths-based, forward-looking approach by setting short-term goals and providing regular feedback and coaching. When properly executed by Small and Mid-size Enterprises (SMEs), leaders can support both employees’ development and improve their performance.

From traditional to modern: a breakdown of a Deloitte case study

Today, there is a renewed interest in and a push towards modernising the performance review process. I was reminded of this when I was asked to give a presentation on Performance Management to a group of business owners at the CEO Institute. I was curious to know why, of all the topics they could choose, they would pick performance management. And their answer was quite straightforward and pragmatic. We want to attract the best people to our organisations, and the best people want feedback. So, we have to know how to do this in the most professional and effective way possible.

There have been some well-documented case studies of the new approach to performance management, one of which is from Deloitte.

58% of executives who participated in a public study said they were unsatisfied with their existing performance management systems. From this research, Deloitte, a business consulting and services firm, decided to revamp its performance review structure.

We all know that no matter how hard we try, the past can never be undone. However, we can always create a more prosperous tomorrow, right? Well, this same mentality was applied by the firm as they built a more business and people-focused approach.

Challenged by spending precious hours looking back at what their people did and rating them, Deloitte decided to focus on how to boost performance for future work. They also found that their processes were not bias-proof, were too complex, and weren’t timely.

To overcome this bottleneck, they embraced frequent, informal, and flexible check-ins that focused on ongoing feedback and coaching among leaders and peers. Simple right? However, this small but consistent step saved Deloitte 2 million hours per year! Plus, employee engagement and satisfaction increased. As a result, the company witnessed how both productivity and employee retention simultaneously increased.

What are the latest trends in performance management for 2023?

• Apart from the tangible results shared by Deloitte, here are some of the latest figures on Performance Management that you need to know:
• 80% of team members prefer receiving prompt feedback rather than waiting for a long period. (Adobe)
• 64% of employees are not happy with the quality of feedback they receive. Their thoughts? It must be improved. Additionally, only 1 out of 3 workers think that their assessments are fair. (OfficeVibe)
• Only 5% of managers say they are satisfied with traditional performance management evaluations. (TruQu)
• Only 2% of companies believe performance management is not crucial. (ClearCompany)
• 81% of HR managers are currently modifying the established performance management system. (Gartner)

Formal vs informal: how often must performance reviews be carried out?

When it comes to performance reviews, there are frequent disagreements about how often these assessments should take place in a work setting. Some leaders think that small, regular check-ins, via in-person meetings or team apps, are sufficient. On the other hand, traditional managers prefer not to let go of the quarterly or biannual reviews.

But why choose when you can get the best out of both?

According to Howardco consultants, both strategies have their benefits, and combining them can lead to the most effective performance management system. While yearly or biannual evaluations might offer a more thorough picture of people’s performance over time, regular reviews offer quick feedback and corrections. However, managers must keep in mind that there isn’t a one-size-fits-all approach when it comes to performance reviews. By taking a flexible and adaptable approach, you can find the best review system that works for you. Through this, you can potentially unlock better outcomes for employees and the organisation as a whole.

The real ROI of performance reviews: a closer look

• Contrary to the business leaders who doubted its efficiency, studies have shown that well-implemented performance reviews can improve a workplace and are worth the investment of time. To demonstrate, here are a few examples of how they can positively impact both the employees and the company:
• Leaders who aligned people’s personal goals with organisational needs witnessed a 56% increase in workplace productivity. (Culture Amp)
• Firms are 3X more likely to be successful at change when their employees are happier with the company’s performance management strategy. (Bersin)
• 59.4% of the people are more likely to recommend their company as an ideal place to work due to receiving evaluations more frequently. (Glassdoor)
• Organisations that carry out effective performance evaluations have a 30% higher chance of achieving their financial goals. (Bersin)

Must-try performance management approach for SME’s

• In conclusion, a well-planned and executed performance management system is essential for SMEs to achieve their business goals and maximise the abilities of their people. Here are some practical pointers for organisational leaders to manage performance:
• Set measurable goals for and with your employees. This ensures that expectations are clear and people can take ownership of what they need to achieve.
• Deliver consistent, high-quality, yet “in the moment” feedback. Doing so can help people understand how well they are doing and what they need to improve on.
• Conduct formal regular reviews (yearly, biannually, or quarterly) to discuss work productivity, provide feedback, set new goals, and plan for development.
• Offer training and growth opportunities to help employees thrive in their roles and give back to the business.
• Recognise and reward good performance to motivate people and show them that their contributions matter.

To wrap it up, the world of performance management is evolving rapidly, and more SMEs are recognising the benefits of a modernised and tailored approach. Be it the traditional way or the contemporary approach, businesses must stay updated and align their performance management strategies with their overall goals and values.

If you’re interested in reinventing your performance management process, don’t hesitate to reach out to us! We, at Howardco, are committed to providing tailored, expert HR solutions to organisations aiming to enhance their performance management practices.

With the right tools and strategies, you can transform your performance management processes and tap into the full potential of your workforce.