The future of performance reviews at Learned.io
— 10 minute read.
Not only for Dutch HR management, but for almost every employee and manager who has ever had to deal with a performance review, it is clear: we need a new way of assessing. Learned replaces the performance reviews by frequently exchanging 360° feedback on relevant skills for the employee’s role profile. Read here why Learned’s method is so successful.
What is wrong with the current performance review?
Over the past few years, the headline “Stop with the performance review” and the term “Condemnation review” have been created. And not without reason. There is great discontent with all parties involved in the performance review. But what exactly is wrong about it?
1. Frustrated employees: a study by Wakefield Research (2015) shows that 59% of all employees find their manager insufficiently prepared for the performance review. In addition, the assessment is seen as unilateral since it is only based on an opinion of the manager and a personal evaluation and the opinion of colleagues is not taken into account.
2. High costs and time expenditure: despite the dissatisfaction of the employees, a manager spends on average 210 hours per year on these interviews (HBR, 2016). That is more than 5 weeks per manager per year! The result: frustration for both parties and very high costs in both time and money.
3. Current assessments are focused on the past: in addition to underestimating the current performance of the employee, the future ambition is often not even discussed. Managers are afraid of requests they cannot comply with and therefore avoid the subject. This is a shame because in more than ⅔ of the cases that an employee starts working somewhere else, he would have liked to stay if there would have been sufficient guidance from management to the next step (Rigoni, 2016).
Do we have to stop with performance review?
Stopping with the performance review has apparently been a hot topic for years. But if this has been going on for so long, why hasn’t everyone stopped yet? It appears that with companies that have completely stopped with the performance reviews, the need for managers to coach their employees also disappeared. As a result, fewer conversations were held and employees felt even less involved with the company (Gartner, 2018).
Progressive companies such as Microsoft, Deloitte and Accenture have since opted for a different approach. These companies did not just stop assessing, but instead looked at an appropriate alternative assessment method (Volkskrant, 2015). At Accenture, for example, they switched from a method in which only a measurement of performance was done, to a method based on behaviour and trust (Parool, 2019). In short, simply stopping is too short-sighted. We have to keep assessing, but in a different way.
How does the new performance review work?
What should the new assessment look like? Given the breadth of the issues concerning the old way of assessing, there are many opinions about this topic. Business economist Jacco van den Berg even wrote a book about it that contains 5 principles that address the current shortcomings. Hereby a short summary:
1. Focus on talent: see what people are good at and how you can make them better.
2. Place responsibility with the employee: step away from the one-way traffic in assessing and let employees come up with concrete plans themselves.
3. Request feedback: not just an opinion from your manager, but also asking other colleagues and external parties for feedback.
4. Continuous dialogue: no longer a conversation once or twice a year to hear what you could have done better 3 months ago. Conduct more conversations and focus on what is important.
5. Servant leadership: the manager is placed in the background. Fewer top-down decisions and more support on an equal level.
The great thing about these 5 points is that they acknowledge that the problem of current performance reviews lies with outdated processes that are determined from the top of the organisation. An article from HR Praktijk (2019) states that because those organisational processes are changing, the assessment method must also change. Consider for example the shift from jobs to tasks and roles. An employee can simultaneously perform multiple roles within the company with different durations. As a manager you must, if necessary, be able to support someone more often and more flexibly in a certain role. At least more than once or twice a year.
In addition, we now see more and more self-managing organisations in which the role of the manager disappears and the role of the coach arises. In these flat organisations, conversations and feedback exchange occur at higher frequency, whereby the 5 principles of Jacco van den Berg are fully integrated into the operational management. Now the only question is how these new ways of working can be applied within your company. This is where talent management comes in.
Talent management and the new performance review
At Learned, we define talent management by making your employees better with the aim of increasing their contribution to the organisation and by retaining them longer. Applying talent management entails certain ways of working that are often reflected in the way employees are assessed. We believe that assessments should be relevant and personal and not just based on current performance, but rather at the potential and ambition of the employee. We do this by giving each employee, at several times a year, a personalised questionnaire based on the skills that are important for the role of that employee.
Here a brief impression of what the new way of assessing looks like with Learned.
1. Every employee starts with 1 or more personal role profiles that are compiled with skills at the relevant level for that specific role.
2. Determine as a company a minimum structure of assessments by planning 1 or more 360° feedback rounds.
3. Employees are also in the lead themselves and can request extra feedback on their own initiative for their current role or potential future role. Employees can see which skills are required for all roles within the company.
4. Conduct frequent 1-1 conversations to discuss the exchanged feedback, performance and career perspective. Translate the conversations to new goals and development opportunities within the company.
The results of the new performance review
We strive for less frustration, better performance and higher retention. By working with 360° feedback on skills that are relevant to the employee, a substantive and useful assessment can always be made that actually says something about the performance. In addition, managers are able to conduct frequent short conversations with minimal preparation time because the input mostly stems from the employees themselves. Finally, the current role, the desired future role and the skills required for this are continuously examined. As a result, career prospects are no longer an avoided topic, but rather something that can be worked on together.
Talent management for your organisation
Are you thinking about switching to the new assessment method? With a simple and fast implementation you can get started with the first step immediately. You will then work together with one of our customer success managers to expand your talent management process step by step. Together we will make sure that it succeeds. Feel free to contact us for a demonstration and introduction.