People-First HR, Part 3: Rethinking Performance Reviews
ICYMI, you can read part 1 of this series to catch up on why a cohesive, people-first HR strategy is such a game-changer and part 2 that lays the groundwork for our hiring and interviewing strategy.
In this part, we’re going to look at why traditional performance reviews no longer work, and how re-centering them on your people will increase three very important stats: productivity, employee engagement, and retention.
1) Out with the old…
So what’s wrong with the old way? Where a manager fills in a bunch of boxes with ratings. 1-5, 1-10, or maybe some number of stars? Maybe it’s a list of “stop, continue, start” directives.
The biggest problem is that all of this comes off as an evaluation of “are you doing enough for the company?” When CEOs hear this, a lot of them respond that that’s what a performance review is supposed to be: a literal review of how good the employee’s performance is.
What they don’t see is how this approach frames the situation, and the effect on the person: the employee is being hauled in front of their manager and examined for their worth. How can that be a good feeling? That’s why people so often dread going into their annual reviews (and it’s usually annual, a point we’ll return to shortly).
Ok so employees understandably dread this experience. What about the managers? They’re clearly not set up for success either. They’re the ones being asked to orchestrate the whole ordeal!
And lastly—the final straw—is that the outcome of old style reviews is focused heavily on how much of a raise the employee will get this year. So it feels both really important and really bad—not a motivating combination.
For all these reasons, it’s time to do away with outdated and universally unpleasant performance reviews!
2) …and in with the new!
This is the good part. How are we going to replace this old, broken system? As you might have suspected, we’re starting over and putting people first in a motivating way that gives them value.
First, we’re changing the narrative from a tally of contributions to one of professional development. Already we’re making things about investing in them. At the design level of a new system, the reframe takes the form of 3 key questions:
1. Does the person have all the skills they need to perform well in their current role?
If you’re already operating in line with this series, you are hiring people into roles for which they have the necessary skills. But unless you’re starting from scratch, you already have people in roles and they may not have everything needed. You’re not usually going to terminate them and hire a replacement, so this filter catches everyone up to speed.
You also might have made an exception, and hired or promoted someone with a lot of potential knowing they could pick up that one missing piece on the job.
2. What skills or knowledge is the person going to need as their role evolves?
This is going to help people keep up with the times. It could be upgrading soft skills to make them more effective in-role, training for new technologies, or maybe some leadership skills to help with onboarding new team members.
3. What skills is the person going to need for their next role?
When you’re thinking about your talent management as one cohesive process, you have an idea of where a person is and what career paths are open to them. Recall that in part 2 we touched on having each role’s requirements laid out (with the promise of a deep dive in part 4). When you can compare an employee’s current skills and competencies to a list of requirements across the organization, it becomes much easier to make a development plan.
A good performance review system will make the employee the centre of the story. Our narrative is now, “do you have what you need for this role? If anything’s missing, how can we support you in learning it? And how can we prepare you for what’s next?”
3) A big payoff
Pretty big difference from where we started! It should be no surprise that people find this dynamic positive and more motivating. So much so that the old cadence of once a year no longer fits—it turns out people crave useful feedback. We’re now doing quarterly check-ins to ensure that all the information at hand is current and relevant, and employees are here for it.
The end result is that employees feel a reciprocal investment with the company. They buy-in and start caring more—another way of saying they are more engaged. And we all know engaged employees do better work, and have higher retention rates.
Putting it all Together
We’ve talked about the theoretical approach—changing the narrative—but how you implement a performance review system still takes a lot of nuance. This is where Hello HR as a consultancy comes in—we’ve helped companies everywhere from 5 to 200 employees shift their thinking around performance reviews.
It’s not as easy as just asking the three questions above. What you do with the answers, and how you get the employees what they need matters a lot. And the real magic is in getting them invested in the process.
This stuff is exciting, and it’s tempting to dive in and get started! Before you do, chat with us—we like to get excited too!—and we’ll help you launch your successful people-first performance reviews.
How to Get Started
Moving to a people-first HR strategy is not a small feat. It’s an investment and it will take time. Even if you have an entire HR team, they’ve already got daily ops on their plates. Hello HR provides expert strategic consulting and insight. We’re like a superpower both for leadership and HR teams!
Drop us a line and we can get the ball rolling with a free discovery call.
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