Performance reviews may be a necessary evil of tracking employee productivity and setting goals. But there is a growing consensus among HR leaders that it’s time to focus less on micro-managing employees and instead focus more on what the company is doing to improve the employee experience.
Employees are disengaged in the workplace. How do you keep employees connected to the mission?
The 2016 SHRM/Globoforce Employee Recognition Survey attempts to address this problem with evidence that suggests fair and unbiased recognition during the recruitment phase can have a greater impact than performance reviews.
The survey, conducted by The Society for Human Resource Management and Globoforce, a leading provider of social recognition solutions, surveyed nearly 800 HR leaders. The survey found nearly half (46%) of organizations mention employee retention as a serious workforce management challenge, and 36% see employee engagement as one of their top challenges.
Interestingly enough, 40% of the HR leaders mentioned that they don’t think performance reviews are useful because they do not provide an accurate representation of an employee’s work. Almost 20% said that they were not confident that their performance reviews were even accurate at all. This brings into consideration that most organizations use outdated performance review systems that are less than objective and can be biased – which defeats the entire purpose.
If employee engagement and retention are serious issues and performance reviews are ineffective, what then is the alternative?
The Globoforce and SHRM study found that in 2016, 60% of organizations had some form of a values-based recognition program, which is a 50% increase from 2012. When HR leaders dedicated just 1% or more of payroll to recognition programs, this is when the magic happened. The companies with an investment in values-based recognition were nearly three times more likely to rate their program as excellent.
Another 88% of the organizations with values-based recognition programs in place indicated they believed they were getting a strong return on investment in the form of employee retention and performance.
"As our study shows, HR leaders with values-based recognition programs with a budget of 1% or more of payroll are two times more likely to help retain employees," Chris French, Vice President of Customer Success at Globoforce, told HR Dive. "To better retain and recruit employees, organizations need to focus on winning their hearts and minds. Instilling more humanity in the workplace, where employees are treated as people rather than as human capital goes a long way toward creating more positive employee experiences.”
French also mentioned, “With values-based recognition having a direct impact on employee experience and company growth, it’s become crucial for HR leaders to thoroughly examine existing compensation structures and determine the value and fairness they bring to employees and their respective companies.”
Other evidence backs up the Globoforce data. According to the Incentive Research Foundation, a Corporate Leadership Council study showed that only around 11% of today’s workforce demonstrates a strong commitment to their organization, and around 13% are actively disengaged or poor performers who do the bare minimum. Yet this leaves another 76% of the workforce that can be influenced to become more engaged to improve performance and retention – with some incentive given by the company.
The trouble with performance reviews for new hires
In terms of performance reviews for new hires, this is not an effective way to encourage them to ramp up their performance fast or even to encourage them. In fact, it can have the opposite effect. When performance reviews are poorly conducted with new hires, it can lead to increased stress with few other benefits. This is a negative experience for them, and it can contribute to low retention rates.
Instead, new hires can and should be focusing on honing their skills in a supportive environment, and getting plugged into the corporate culture and values of their new job. Using a values-based recognition approach that measures how well they are integrating and embracing the mission of the company is much more effective. As employees meet certain professional milestones, these moments can be recognized by management and by peers. This is a more natural way to get a solid return on recruitment.