The Benefits of More Frequent Performance Review Cycles
Creating a performance review cycle that yields meaningful insights into the strengths and focuses of a workforce is a difficult task, especially for one person. (I’m talking to you, HR leaders.) Not only that, these reviews must also help align employees’ goals with the organization’s broader direction, quantify who their high and low performers are, and keep engagement high.
But because reviews have become so ineffective that nearly 50% of HR professionals don’t even think they’re accurate, many leaders are scrapping the formal, annual review and pivoting towards more informal, frequent review cycles. Doing this creates space for open, honest talks about wins and losses, goal alignment, and long-term development plans. Here are three benefits of instituting more frequent and consistent performance reviews.
1. Boosted engagement and reduced stress
Companies that still subscribe to annual review cycles may actually be reducing performance for over 30% of employees. Too often, this one-shot approach leads to stress and inauthentic results because employees feel their career trajectory hinges on answers they think their managers want to hear.
Frequent reviews conducted a few times a year can remedy this by making performance reviews a conversation, not an endpoint. Whether managers speak with their team two, three, or four times per year, employees will feel more at ease when receiving feedback, talking about goals, and discussing projects that didn’t turn out as intended. They’ll know that their honesty will be used as an impetus for change and growth, rather than being used to disqualify them from future opportunities.
How critical are more frequent performance reviews to company health? Stressed employees drain over $500 billion per year from the collective bottom line. Perhaps this is why the number of companies doing quarterly check-ins rose from 42% to 50% year-over-year.
2. Employees have a chance to align their goals with the company’s mission
A Career Builder study found that 58% of managers have never received management training. This means that despite being tasked with year-end reviews, they’ve never been trained on how to conduct them. More directly, they’ve never learned how to ask the right questions or uncover off-the-books insights into their team. As a result, they don’t know what their employees’ goals are or how they can align them to the company’s objectives.
HR leaders can empower managers by ensuring they have the tools they need to have these important conversations. Doing this will provide more value than just surfacing what employees are thinking; they can help managers set up employees for success by aligning their goals with the company’s mission. The end result will be employees and companies that cross the finish line together.
While reimagining the purpose and frequency of performance reviews might require going back to the drawing board, the numbers justify the effort: employees whose managers regularly communicate with them are 3x more engaged than those who don’t.
3. HR leaders can more accurately measure employee performance
More frequent reviews should focus on goals and feedback, but performance still matters. A Harvard Business School study found that companies without a performance management culture increased net income by 1% over 11 years, but teams who focused on it grew by 756% over the same time period.
HR leaders can help managers measure goals and performance against KPIs with the right performance management solution in place. The benefits to quantifying employee performance do more than provide objective results, they protect the bottom line.
All in all, more frequent performance reviews not only benefit managers and employees, but they give HR leaders a true strategy for strengthening the company’s future by empowering their employees in the present. They open up the lines of communication and boost engagement by ensuring employees and companies can reach their goals together, and because of each other.
Learn more about how you can develop a winning performance review culture with 15Five.
Baili Bigham is the Content Manager at 15Five, continuous performance management software that includes weekly check-ins, OKR tracking, peer recognition, 1-on-1s, and 360° reviews. When Baili isn’t writing, you can find her binge-reading a new book or strategizing ways to pet every dog in San Francisco.