Building a High-Performance Organizational Culture

On the heels of new research findings, performance reviews can cost managers an average of $3,000 per year, per employee. The process is costly, and many employees feel it’s an unfair way of monitoring performance. In this article, workplace culture expert David Hassell shares improved performance review methods that companies can implement

Over the last several years, the death of the annual performance review has been touted by business leaders, human resources publications, management magazines, and online outlets. The span of a year is too large to accurately assess someone’s work, employee performance metrics are often processed by HR departments who have had very few direct interactions with the employees, and the grading system is flawed, if not entirely inconsequential.

And yet, despite 95% of managers being dissatisfied with their organizations’ performance management system, the annual review continues to be the main tool used by companies to determine performance and eligibility for advancement. While arguments of efficiency and value may not convince business leaders to reconsider their evaluation technique, perhaps money will.

According to a recent survey of Fortune 1,000 companies conducted by the Corporate Executive Board, performance reviews cost managers an average of $3,000 per year, per employee. From a wider scope, a 2017 Gallup study concluded that poor management and lost productivity from employees is costing companies in the U.S. between $860 billion and $1.2 trillion per year.

In order to save money, establish a healthy culture, and outpace competitors, companies need to establish a comprehensive performance management system that roots itself in goal-setting, encourages important conversations to happen continuously, and incorporates technology that propagates positivity. And to truly influence performance, rather than simply grading it, this system should ideally be focused on an employees future, what some are calling feed-forward (rather than traditional feedback.)

Keeping objectives top of mind
Businesses need a way to visualize the progress of individual, department, and company-wide goals in order to meet and manage their objectives and key results (OKRs). By setting up a system that allows anyone to quickly create, track, and update the status of their top-priority actions, companies introduce a workflow that consistently moves in a positive direction.

OKRs allow everyone in the organization to know how their collective efforts propel the company forward, and according to Gallup, employees whose managers involve them in goal setting are 3.6x more likely than other employees to be engaged. Equally important is goal progress monitoring, with research showing that the ability to see the distance from the goal is just as important to achievement as goal setting. When individual employees are aware of their colleagues’ progress, not only are all parties are held accountable, but it makes it easier to work together to achieve larger team objectives.

Coaching should be weekly, not yearly
Companies can no longer rely on high-level conversations between managers and employees occurring only once or twice a year; they need to invest in their employee’s growth. Some of the world’s most successful companies like Microsoft and GE use automated weekly check-ins for their performance reviews.

By holding 15-minute, one-on-one check-ins at the end of each week to discuss progress and challenges, managers can replace long reports, email threads, and spreadsheets with a handful of valuable feedback questions. This communication rhythm between managers and employees seats information in the driver’s seat, allowing businesses to make better decisions and make any adjustments before any issues get out of hand.

Adapting a software that underscores connectivity
Fortune’s “Great Place to Work For” ranking recently shifted its methodology to include a few new metrics, including looking at how well companies create a consistently positive experience for all employees, stating that “every employee matters in an economy that is about connectivity, innovation, and human qualities like passion, character, and collaboration.”

Creating a truly unique employee experience includes using software to communicate, support employee progress, and make employee recognition and appreciation a daily activity. By celebrating all wins—both big and small—visibly for the whole company to see, team communication is increased, and company-wide morale is boosted. And companies with more engaged employees are 22% more profitable and 21% more productive.

The Global Leadership Forecast 2018 from DDI, the Conference Board, and EY, found that only 20% of the 25,800 companies included had dropped annual performance ratings. However, with further research and promotion of concepts like goal-setting, continuous performance dialogue, and daily employee recognition—along with the threat of losing hundreds of thousands, even millions, of dollars—companies can finally rid themselves of this archaic institution and build high-performing cultures that propel them towards success.


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