Employee Promotions: 4 Alternatives to Traditional Manager Reviews
When you have team members under promotion consideration, it's natural to look at employee performance reviews. Yet this time of year raises an important question: is the traditional model for employee reviews the most effective? Increasingly, companies suggest that the answer might be no. While many businesses now collect feedback from colleagues and customers to provide a 360-degree view of worker performance, many argue that it's not enough. According to a recent piece from the Society for Human Resource Management (SHRM) posing the question, "Is the annual performance review dead?", approximately 10% of companies have gotten rid of the annual review process. Here's a closer look at some alternatives that companies are using instead to better assess performance.
Quarterly Reviews and Ongoing Feedback
Rather than making feedback an annual event, many companies are moving to make these critical performance conversations more frequent. With traditional annual reviews, employees and managers fill out forms that look back over the last twelve months and set goals for the year ahead. When more frequent evaluations are put in place, managers and employees meet at regular intervals to discuss performance, look at progress toward goals, and make any needed adjustments. The benefits of quarterly reviews and ongoing feedback include better recall to provide specific examples during conversations and better guidance on performance in the moment.
Key Performance Indicators
Many companies are looking at using key performance indicators – which are very specific and measurable goals – to evaluate employee performance. For example, key performance indicators for a sales position might include reaching a target number of cold calls or emails each week and closing a certain target dollar value in sales each quarter; where the indicator of an employee reaching their goals is tied to concrete metrics, rather than the subjective evaluation of one manager. Key performance indicators make it easier for employees to understand what they are being evaluated on and it can simplifies the process for managers to determine whether employees are performing to company standards.
Tying Compensation to Monetary Results and Market Value
One of the key components managers consider during the review process is employee compensation. However, some experts would argue that the annual review process is not an effective way to establish compensation. Employees may come in with a low starting salary but generate disproportionate value for the company. Conversely, a recent hire from a large company may have commanded a larger starting salary but only be delivering average value. Instead, companies are tying compensation discussions to two objective factors: the market value of specific skills and positions, and the monetary results that they generate for the company. In other words, companies are working hard to ensure that their compensation is competitive with the market, and rewarding employees for contributions like sales made and/or money saved through operational improvements.
Personalized Coaching and Development Plans
Employee reviews help highlight where your employees are performing well, what gaps may exist, and how best to support their opportunities for future growth. Some businesses are looking toward personalized coaching and professional development plans to help their employees reach their goals, and measuring their progress as an alternative to traditional performance reviews. For example, personalized coaching sessions might focus on an employee's fear of public speaking or target professional development training that helps build analytic skills. The advantage of this approach is that plans are highly personalized and help support stronger performance in real-time.
Performance evaluations play several roles in the workplace, from promotion consideration to establishing compensation raises. However, companies are increasingly looking at new models for gathering information, assessing contributions, and providing guidance to their workforce. It may be time to evaluate whether your current approach to employee assessments is effective.