As Halloween is over, Strictly Come Dancing has started and the nights are drawing in, it can only mean that it’s the time for end-of-year reviews to take centre stage. As HR professionals, this is where we see the good, the bad, and the ugly with the review process. The end-of-year review has been hotly debated and is possibly the most criticised aspect of performance management. However, it is still the most widely used practice of performance management. So, let’s unpick why it remains the cornerstone of the Performance Management process and how we can bring out the great in its purpose.
The Godfather of HR, David Ulrich references the concept of Positive Performance Accountability to resolve the performance management paradox. A SHRM survey found that 90% are dissatisfied with appraisal systems and only 55% of HR professionals felt that the annual performance reviews are an accurate appraisal for employees’ work (Ulrich, 2019). The concept of Positive Performance Accountability may have been slightly neglected in his favour of Dave Ulrich’s other great work. However, it is one of the most powerful concepts for us to consider in our Performance Management frameworks.
Recently, Dave Ulrich suggested that while the old days of uninspiring ratings and stack ranking may be over, there is still a real place for people to know where they stand. Talking about the transparency and accountability that means we are clear on how we’re doing. The end-of-year review is the ideal place to do that. But perhaps there’s so much more to it than even that.
A time for reflection
The end of the year is a time of reflection. A time to take a step back and consider what went well for you – and what not so well. This is such a human moment of reflection to consider where we were at our best, what brings out the best for us. What environment, what type of work, and what way of working helps us be at our best. Exploring all of this gives us signposting to where our strengths lie and how we can bring out the best in ourselves. Equally, where did we believe we had some gaps and what does that mean for our future development.
What hasn’t inspired us as humans, and a topic that often gets criticised is the application of ratings. Including the uninspiring titles and the idea that after a hard year’s work, commitment and dedication, someone labels you as ‘fully meeting expectations’ or something akin to that. Agreed, you’ll hardly run home to your partner to tell them your good news of how you fully met expectations. And let’s face it, 70-80% of your organisation face that scenario. However, unravelling ratings isn’t as easy as it looks and it’s not for every organisation.
Consider the implications of removing ratings
There are countless examples of organisations that have removed ratings and suffered poor consequences, and it can be particularly damning if you trigger too early. If you are on a journey to remove ratings, consider the compensation and talent management implications. It’s surprising how many organisations rushed into the removal of ratings. Doing so without considering the impact on the other key HR processes. And that’s before we meet the employee relations team, where this can be built into works council agreements and in some cases contractual commitments with employees. Having said that, many organisations have removed ratings successfully and seen huge benefits from it. Including increased collaboration, greater levels of engagement, and a more high trust environment.
Committing to a world without ratings
As former HR professionals and creators of a progressive performance management platform, we hear client and organisational needs every day. Here’s our advice: if you are on a journey to remove ratings, build up the maturity of your organisation so that they no longer even want ratings and they feel ready for a world without ratings. This is not an overnight journey and needs commitment to the following:
- Building a sustainable feedback culture. If your employees have regular feedback, there’s less need for the crutch of ratings and labels
- Help managers navigate high-quality check-in conversations. It’s not enough to ask managers to have regular one to one’s with their people. We need to help them have the right quality of conversation to build those trusted relationships.
- Introduce performance check-ins. Performance check-ins are a softer form of review. They facilitate frequent moments of check-in without the burden of a full performance review. Living up to David Ulrich’s positive performance accountability concept.
- Take a longer-term view of phasing out. If you are on a 5-point rating scale, move to a 3-point rating scale, with a longer-term view of phasing it out. It helps get managers used to less reliance on rating scales to have good performance conversations.
When you have hit a culture of regular sustainable feedback practices, frequent and high-quality conversations, you’re ready to review your compensation and talent management practices.
What steps can you take next?
At this point, you can start to change the compensation structures in a phased way. It doesn’t have to be a big bang, you can gradually lessen the reliance on a direct link with ratings. But compensation strategy is a whole other blog! You’ll also need to ensure your talent management practices don’t have a direct link to ratings. But again, another blog!
In essence, it’s not an easy journey to remove ratings and it’s certainly not right for every organisation. Some cultures really shouldn’t take this step. But if you believe it’s the right move for your culture, it’s a very doable and exciting journey for you to take on. To find out how other Our Tandem clients have progressed on this journey, please feel free to book a chat with a member of our team.