How many hours would you wager that the average manager spends on activities related to performance reviews a year? Here’s a number to wrap your head around: 200.
Yes, nearly 25 business days a year are spent by managers on annual performance assessments; an investment that, according to the Corporate Executive Board, 90 percent of HR leaders say doesn’t even yield accurate information.
A practice that has been seemingly frozen in time since the 1960s, the performance management process does one thing really well: Stress employees out. So companies are trying a new approach that implements a more fluid system, in which employees receive timely feedback from their managers on an ongoing basis following assignments.
Among the first to lead the charge are some major names – GE, Accenture, Microsoft, Gap, Adobe and Google. Replacing the antiquated assessment, employees are rejoicing. In fact, 49 percent of them agreed with a statement in an Eagle Hill survey that deemed it a good idea to eliminate annual performance reviews and replace them with a system of regular feedback from supervisors.
Aside from the obvious waste of both time and money, companies and organizations are now taking note of the psychological impact these yearly assessments have on employees. Researchers at the Neuroleadership Institute found that the element of surprise in annual ratings is detrimental to employee happiness and engagement, 90 percent of employees reporting that they were discouraged with their evaluation results and often leading to a significant decrease in engagement.
And then there’s the millennials.
The most prevalent generation in the workforce, they’re a group who yearns for instant feedback and communication in their personal lives. So it’s no surprise that they’ll seek it out in their professional ones as well. A 2015 TriNet survey revealed that an imminent performance review drove one in four millennials to search for a new job, or call in sick.
That’s right: One in four millennials would rather change jobs than undergo the yearly performance evaluation.
Yet what would they like to learn? Nine out of 10 respondents would feel more confident in their current position if they had more frequent performance conversations with their manager where they were able to engage in an open dialog and have the opportunity to express their thoughts on their own performance.
If left unchanged, well, it’s risky business. Companies unwilling to read the writing on the annual performance review wall are gambling with retaining top talent and staying competitive in today’s job market. Though many companies have yet to take the plunge, most are aware of the flaws that a yearly fill-out-forms-and-talk-about-them system review method carries.
The cost to overhaul your organization’s performance evaluation program might be a lot less than you think. After all, what’s more expensive: To keep doing the same thing and lose good people, or to retool your employee feedback system so that your staff are more engaged and enriched than ever before?
It’s a win-win. And updating performance review processes is just the kind of thing we help clients with all the time at Smart HR.