Is it time to shelf traditional employee performance management?

Author: Tim Dive, Director – May, 2024.

Workplaces today are fast paced, demanding, and heavily influenced by rapidly changing competitive markets. Those dynamics in a workplace create an absolute necessity for leaders to be in touch with performance levels, and how people are delivering.

Alarmingly – the traditional employee performance management and review processes that have become relics of a bygone era are still being practiced in countless businesses of all sizes.

These relics, characterised by annual reviews, rigid rating systems, and employer to employee  based commentary, are driving disconnection from value based performance and continuous improvement most businesses must receive.

After roughly twenty years in HR, I’ve witnessed enough train wreck performance review systems to know these outdated practices simply fail to serve employees and employers alike.

Here’s what employers should have learned by now, and why a rethink is due.

Infrequent Feedback is Ineffective

The old annual performance review is the cornerstone of traditional performance management, but feedback given once a year is far too infrequent to have any impactful outcome. Employees (like all humans) benefit from continuous feedback that allows them to make adjustments that result in secondary, favourable feedback (continuous improvement).

The modern workforce, especially the portion of younger employees (millennials and Gen Z), thrive on regular feedback and open communication. Failing to move with that shift in preference (i.e. waiting a year to discuss performance) hinders development and can lead to disengagement and frustration.

Rigid Rating Systems are Demoralising

Traditional performance reviews often involve rating employees on a numerical scale. I would anecdotally suggest that 75% of the time, these ratings can feel arbitrary and demoralising for the employee being scored.

Instead of recognising individual contributions and unique strengths, rigid rating systems reduce employees to mere numbers. Leaders (by default of the system) end up failing to acknowledge the good performance and deliverables the employee knows were beneficial to the business.

This, more often than not, will foster a competitive environment, one-up-man-ship – removing the motivation to collaborate, and impact morale.

One-size-fits-all Approach is Outdated

Traditional performance management relies on a one-size-fits-all approach that fails to account for the issues that matter to employees. It’s not only a one-size-fits-all issue, but also, a one-way-conversation issue.

This standardisation also negatively impacts the business, because just like for employees, the system does not reflect the varied influences, outputs, outcomes and wants needed across the organisation.

More customised performance management strategies, tailored to individual, positional, and team needs, are far more effective. Personalised development plans and goal setting can better align with both organisational objectives and employees’ career aspirations.

Lack of Future Focus

Traditional reviews tend to emphasise past performance over future opportunities. The best system will incorporate both, prioritising the future performance, while acknowledging the past for what it’s worth.

The traditional processes often prioritise conversations around what employees have done wrong rather than how they can perform in a manner to achieve the business’ strategic objectives.

This rear-view-mirror-focus can stifle innovation and risk taking, whereas a forward-thinking approach can drive better performance and greater job satisfaction.

Time-consuming and Bureaucratic

The traditional performance review process is notoriously time-consuming and bureaucratic. Managers spend countless hours filling out forms, conducting meetings, and justifying ratings.

This administrative burden can detract from more meaningful management activities, such as coaching and mentoring. Streamlining the process and focusing on real-time feedback can free up valuable time and resources.

Inequity and Bias

Traditional performance reviews are susceptible to bias and subjectivity, and all employees can see when managers favour certain employees. These biases undermine trust in the review process and the organisation as a whole.

A Call for Change

The traditional employee performance management and review processes are no longer fit for purpose in any modern workplace. Even the ones that believe they’re too small to give this stuff too much thought!

Moving away from these antiquated methods and adopting a more continuous, personalised (to employees AND the business), and strategy-focused approach is essential.

Organisations should prioritise regular feedback, focused on quarterly metrics and check ins with additional check ins along the way, to create a genuine, high-performing workforce. It’s time to embrace change and reimagine performance management for the future.

With almost 20 years in frontline HR, I’ve witnessed employers consistently demonstrating a lack of innovation with performance management processes.

Our preferred method brings in three (3) elements to align people and their employer to drive relevant performance, strategically.

1. The cares/needs/wants of the people;
2. Our own version of the ‘Conversation Model’ published by Tim Baker and Aubrey Warren; and
3. The One Page Strategic Plan developed for your business/workplace.

We find enormous enhancements and outcomes are possible with this type of approach, a far more engaging process, focused on future opportunities with high-value conversations occurring frequently.

Thank you for reading! If you have any questions or need further assistance, our team is here to help. Don’t hesitate to call us on 1300 138 211 or visit our contact page to get in touch. We’re looking forward to connecting with you!