Conducting Performance Reviews for Millenials
IN BRIEF: The traditional approach to reviewing performance has been placed under the microscope recently, appearing to some to be a waste of time and resources that offers too little, too late.
The annual appraisal meeting between manager and employee often results in long periods of time passing without any discussions about performance – good or bad. While this approach has obvious negative impacts on the organisation, employees are also affected as they are not made aware of key competencies that could be improved.
Companies are slowly but surely recognising the benefits of regular, informal conversations and understanding that continuous feedback is critical to improved performance and business success.
The move away from traditional approaches to performance reviews is gaining traction, but just how vital is this to business success when considering the composition of today’s workforce?
Millennials in the Workforce
A survey by PricewaterhouseCoopers estimated that by 2020, 50% of the global workforce would comprise of Millennials. Also known as Gen Y, one of the standout characteristics of this generation is their relationship with technology. Loosely defined as those born between 1981 and 1996, Millennials have grown up in an era of social media and the internet, and have become accustomed to real-time sharing of information and feedback. With constant contact with friends and family around the world through technology, this has transferred to the workplace, where Millennials are most comfortable when they feel connected with their managers.
Millennials are strongly motivated by work that provides personal fulfilment, collaboration, teamwork, professional growth and development opportunities. For many, these factors are more important than financial reward – and for this desire to learn and grow to be satisfied, there is a need for meaningful and frequent conversations with their managers. Although this is imperative to Millennials, a Gallup research poll revealed that only 19% of Millennials receive routine feedback at work. Interestingly, despite the desire for feedback, only 15% of Millennials routinely sought feedback from their manager.
Frequent Informal Feedback
Traditional performance reviews are often tied to compensation and are not aligned with the values and expectations of the Millennial workforce. Reviews focus too heavily on individualised performance as opposed to collaboration and are scheduled too infrequently to provide meaningful feedback. Worse, some approaches require managers to mainly focus on the evaluation of individuals by comparing their contributions to those of their colleagues to come up with a grade, rank or rating. This can generate internal competition and destructive behaviours between employees, leading to a reluctance to be honest, share knowledge and collaborate.
Millennials want to approach their work with flexibility, but also desire regular feedback and encouragement. They want to feel their effort is worthwhile and that the work they produce is being recognised and valued. This approach is proving to be a more successful way to drive high performance and motivate this cohort of employees through continuous, honest feedback that managers want to give and employees really want to hear.
Say Goodbye to Annual Appraisals?
Not necessarily. Some large organisations, such as Deloitte – who approximated that 2 million hours per year were being allocated to activities relating to performance reviews – no longer require employees to undergo annual appraisals. And while several other large organisations have taken a similar approach, the annual performance review may still hold value depending on the size and culture of an organisation.
A 12-month performance review process may still offer benefits, such as gauging development opportunities and accountability over a specified period of time, which is generally the purpose of annual reviews.
Benefits of Annual Reviews on Accountability
- They can identify strong and weak performers and provide a framework to help managers ‘manage’ – providing guidance, goal setting and tracking
- They provide a rationale for making decisions about pay, promotion and termination
- They produce documentation to support HR decisions, including defences for any unfair dismissal and adverse action claims
Benefits of Annual Reviews on Development
- They provide employees with structured feedback on their performance and information on strengths and weaknesses
- They identify gaps where learning and development is required
- They can help to align organisational and employee goals, and the career development of employees.
Some organisations may still find value in formally documenting and evaluating work performance over a particular time frame. As the above illustrates, there are some benefits of annual performance reviews, although given their infrequency if used as a management tool in isolation, they largely deal with past performance. As demonstrated by Gallup research, only 14% of employees strongly agree that their performance reviews inspire improvement in their work. Managers seeking to improve productivity and performance, and recognising this as an ongoing activity, are replacing performance reviews with less formal and more frequent check-ins.
Check-ins are essentially conversations between employees and management to set and revise goals, clarify expectations, improve key competencies, praise good performance, and identify strategies for future growth and development. Check-ins should be scheduled at least quarterly, however more benefit may be gained from more frequent check-ins or even at the request of an employee. Given the reluctance of Millennials to ask for feedback however, it is important to create a culture that allows for two-way conversations.
Organisations that continue to benefit from the annual performance review process, should complement this approach with frequent check-ins, to ensure benefits are being gained from ongoing, real-time feedback and coaching, which helps to improve current and future performance.
Join CCER’s Conducting Performance Reviews Webinar on 17 September 2020, where Emma Howden and I will discuss the tradition and contemporary approaches to performance reviews, the dangers of linking pay to performance, and what to consider when appraising performance in a constantly changing world, impacted by COVID-19.
If you have any questions, please feel free to get in touch and speak with any of our Employment Relations Specialists at (02) 9390 5255 or email us at firstname.lastname@example.org.
Disclaimer: CCER does not give legal advice and this information should not be taken as such.