The traditional process of performance reviews is clearly losing ground to more unconventional methods. In fact, only 8 percent of businesses think their performance reviews are highly effectively driving business value. There’s clearly a need for new ways of thinking on this issue, but it can be tough to determine how to start meaningful change.
While it’s always easier to stick with your existing approach or simply make minor changes, the statistics tell a very different story. If you’re willing to make structural adjustments to your performance review protocols by implementing something like a continuous performance management system, you could see significant improvements in company culture and the bottom line.
Performance Reviews Are Time-Consuming
Your time is valuable, so you should always try to minimize time spent on activities that don’t add clear value to your company. The average manager spends over 200 hours on performance management and related tasks every year. That’s the equivalent of five full-time work weeks.
If leaders could start using even just half of that time working toward more important goals, they would contribute much more to their businesses and significantly reduce inefficiency. This is one reason why many companies are moving away from the traditional model of formal performance reviews and looking for new ways to gauge employee effectiveness.
Performance Reviews Don’t Help Employees
An ideal performance review benefits both parties. Management has the opportunity to measure each worker’s strengths and weaknesses and provide ideas for growth, while employees get valuable feedback and recognition for their accomplishments. However, this doesn’t always go according to plan.
Rather than having an understanding of their performance, nearly three-quarters of millennials reported being in the dark about their own performance. This means that in spite of spending roughly 10 percent of their working hours on performance reviews, managers aren’t able to communicate effectively with their employees.
They Don’t Help Management, Either
Far from being happy with the current state of affairs, 95 percent of managers are dissatisfied with the way their company handles performance reviews. Given the overwhelmingly negative opinion surrounding this issue, you would expect to see universal change. Unfortunately, this process has been relatively slow as businesses look to learn how to improve their performance reviews.
Rather than setting aside time for regular performance reviews, many companies have found success by making performance management a continuous, real-time process. Rather than being evaluated generally on a year of work, employees get feedback on a smaller scale and work toward short-term objectives.
There are many exciting new methods for approaching performance management, but one thing is clear: the old way is less effective than first thought. If you’re still spending the time to conduct traditional, annual performance reviews, you’re losing money and falling behind the countless businesses that have already streamlined this process.
