Are Performance Reviews Poor Indicators of Performance?

According to a survey conducted by Globoforce and SHRM, which polled nearly 800 HR leaders, four in ten traditional performance reviews are poor indicators of actual performance.

Having been involved with employee performance improvement for decades, this result does not come as much of a surprise.  These reviews have never been consistent; they rarely contain solid measurable objectives and are always too subjective. They can destroy teamwork; they tend to be a solution looking for a problem; they rarely document what they are supposed to document; they’re backward looking when they should be facing forward.  And frankly speaking everyone (well almost everyone) hates them. Actually we are surprised that the survey didn’t find more than four of ten that were poor indicators. 

So what do you do in place of them?  This survey suggests that investing “1% or more of payroll in values-based recognition programs.”  60% of the HR professionals said their companies actually have these types of programs and those who dedicate the 1% (or more) of payroll said their programs are:

• Three times more likely to rate their programs as “excellent” compared to HR leaders whose companies do not spend that amount

• Three and a half times more likely to say their programs help to attract new job candidates 

• Nearly twice as likely to say their programs deliver a strong return on investment 

• Twice as likely to say their programs help retain employees.

Unfortunately, most companies do not spend 1% of payroll.  And that’s too bad, because the return on this investment, according to a growing body of data that supports incremental profit gained from employee engagement is mounting.  Take the time to look at your payroll data at 1% and then divide by the number of your employees.  That number may be relatively smaller than you imagine.  In many cases it’s less than $600 per employee per year ($50 a month.)  Is that too much to allocate to recognize those who really deserve it?

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