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Ian Rawlings

SumTotal Systems


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Hey Presto! How to transform performance reviews and retain staff

Rethinking your approach to performance reviews can keep staff motivated and engaged while boosting retention.
Boost retention

As if it’s not hard enough to find the right talent during the Great Resignation – and possibly the biggest ever labour shortage – keeping it is becoming a greater challenge still.

A 2021 McKinsey report predicts attrition will worsen; 36% of employees they surveyed had quit in the prior six months without a new job in hand. The challenges of employee retention have sent HR scrambling for ideas to build a sense of belonging that will stop workers from moving.

With remote and hybrid workers wanting more flexibility and personal growth opportunities, a revised approach to performance reviews will enable hiring managers to engage more effectively with staff to boost talent retention.

Why do employee performance reviews matter?

As workers are physically disconnected from managers, a formal evaluation process is critical to make sure employees are healthy and comfortable at work, and to assess their performance against role-defined objectives to keep things on track.

Often lacking clarity about their skills and careers, many employees are struggling to understand their worth to their employers. Particularly the new tech-savvy Gen Z workers, who appreciate a less formal and more regular style of feedback and an employer who prioritises their physical and mental wellbeing.

With an outdated one-off annual meeting that dwells on past performance, employees don’t stand a chance of making steady improvements or overcome any issues within a reasonable timescale

In 2021, almost 90% of organisations had annual performance reviews in place, yet many lacked a defined career path with clear and measurable objectives to keep employees motivated, fulfilled, and happy in their work.

Employees need to be able to take ownership of their learning and career tracks, and with the right tools it’s easy to do so. Here are some key elements to creating effective employee performance reviews which will directly support employee retention objectives:

1. Ditch the annual review – make feedback continuous

Performance reviews are often relegated to an annual meeting, often lacking balance of input and focus on the future. With an outdated one-off annual meeting that dwells on past performance, employees don’t stand a chance of making steady improvements or overcome any issues within a reasonable timescale. More regular and interactive meetings keep employees engaged and allow them to track their progress.

A 2019 Gallup blog reported that a staggering 51% of employees had no meeting with  their manager or other leader within the last three months. Since a 2021 employee can find a new job in as little as five weeks, it’s a risky strategy to allow this radio silence without constructive feedback and more importantly, managerial support. In an employees’ market  where two out of three employees are prepared to jump ship, workers need a continual connection to promote their confidence and skills development.

2. Involve the employee ecosystem: Adopt a 360-degree approach

Static feedback forums with a single manager don’t offer feedback from varying perspectives. More likely to promote working improvements is a 360-degree feedback approach, which involves a wider collection of peers, direct reports, and managers. Not all work is the same, and relationships, particularly poor ones, can have a direct impact on an individual worker’s productivity. Rather than a biased view, a full scope of strengths and struggles delivers real value.

One advantage of 360-degree feedback is that it can be garnered anonymously and monitored regularly. Using dedicated tools, review data can be evaluated for the long-term to avoid manual and time-consuming effort.

3. Stay future-focused

Flipping the review approach to focus on an employee’s future potential, rather than past problems, also generates greater value. An overwhelming majority of performance reviews (81%) focus on an employee’s past while only 19% make their future potential a priority.

People who live in the past are frequently told to ‘be present’ or to consider future goals, therefore performance reviews need to reflect this future focus, with an increased emphasis on signposting for future improvement. It’s a mutual responsibility of the employee and employer to seek these ways to improve. Employees progress much faster with constructive feedback.

4. Remember even leaders can improve

This process is for all employees, whether they are under or over-achieving, and irrespective of rank or position. Performance improvement plans are designed as a motivational tool which will improve productivity, and are suitable for all employees – even and especially business leaders. Some valuable elements of these include a clear path, regular feedback, and positive reinforcement. Demonstrating a keen interest in employees’ learning and development makes them feel valued and will deliver that employee engagement and loyalty business leaders are so desperately seeking.

5. Keep the process positive

While completely avoiding addressing negative issues with an employee in a review is not a best practice, maintaining a positive overall process will reap rewards. Constructive criticism is vital but managers who focus on their employees’ strengths engage two-thirds of their workforce whereas those who target weaknesses end up with an engagement rate of just 31%.

Hiring managers can’t afford to overlook this vital mechanic for staff engagement

First steps to making change

  • Keeping feedback as part of regular dialogue rather than only at review points, employees feel noticed and appreciated
  • Know the individuals in the team  – identifying employee strengths will bring skills on faster
  • Keep an inventory of those workers who should be involved in each worker’s 360-degree performance evaluations so feedback is consistent
  • Continue to build out learning opportunities and keep employees reminded of these. This offers employees the opportunity to learn where and when they want using familiar, online, and interactive tools
  • Dedicated performance management solutions can professionally manage the team and make this process easier to run

Boost employee retention

Redesigning the approach to performance reviews is vital to keeping employees inspired, fulfilled and on track with their personal development. Creating a regular employee performance review system that reflects achievements and progress, is clearly signposted and sets agreed measurable future goals will be the most valuable.

Hiring managers can’t afford to overlook this vital mechanic for staff engagement to deliver a stronger connection with their workers which will keep them supported, motivated, valued – and in the business. 

Interested in this topic? Read Please don’t go: Making the case for employee retention in 2021.

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Ian Rawlings


Read more from Ian Rawlings

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