88% of organizations have formal annual performance evaluations, but far fewer organizations take other actions associated with an objective and instructive performance-management process, according to Brandon Hall Group research.
Percentage of Organizations That See Each Definition As Valid
Performance evaluations usually focus on the past, not on an employee’s potential, the Brandon Hall Group research shows, and most organizations say managers are not objective raters of employees’ performance or potential and do not consistently provide helpful feedback and coaching to their employees.
Only 32% of organizations believe there is a high correlation between the highest performance scores and the highest performing individuals. Combined with other weaknesses, this indicates annual performance evaluations have little or no business value.
- How can we reduce the bias inherent in performance evaluations?
- How can we get a better picture of an employee’s future value to the organization?
- How can we reinvent performance evaluation so it has business value?
Despite the data above, there is no downside to an annual performance evaluation — if it is used to summarize ongoing performance conversations, feedback and coaching and is forward-looking.
The problem with the traditional evaluation is that it’s often the only report on performance during a year. In addition, most evaluations don’t address future goals and how performance affects employees’ career aspirations. Traditional reviews are also based on just a few milestones or specific projects that are not necessarily reflective of overall performance or potential.
An employee’s performance is dynamic. There are highs and lows, and strengths and development areas that must be addressed regularly during check-ins and coaching sessions. And though modern performance-management technology can document all conversations, goal updates, learning experiences and other elements of continuous performance development, an objective, fact-driven annual summary of all activity can be very helpful. But it shouldn’t be the sole or primary tool to judge an employee’s overall performance. It should be one piece in an ongoing series on interactions. Ideally, more people ought to be involved (peers, team members, etc.) than just the manager and the employee. Like any type of evaluation, the more data points available for analysis, the better.
The most important point, though, is that information should be used, not to judge what employees have done right or wrong, but what the performance says about their potential value to the organization going forward. The evaluation process –— including any formal year-end evaluation — should be used to answer questions such as:
- What future roles does this employee have the potential to move into?
- Would I promote this individual today if I had the opportunity?
- How difficult would it be to replace this employee?
- Do I consider this employee a key contributor to the team?
- Would I give the highest salary increase and/or bonus to this individual?
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