Annual performance reviews take a lot of flak.
Are they effective? Worthwhile? Valuable? No one appears to agree on the subject, from industry experts to C-level executives, to those two guys sharing a cubicle at the end of the hall.
A recent survey found that 94 percent of CFOs believe formal evaluations positively affect performance. On the other side of the table, only 62 percent of workers felt formal evaluations were effective.
Why do employees feel this way about performance appraisals? The majority of studies point to a common problem – paper-based systems.
Replacing an antiquated, paper-based system is the easiest way to change the opinion of managers and employees regarding the effectiveness of performance appraisals.
Let’s take a look at four major, recurring problem areas of paper-based reviews and how performance appraisal software solves each of them.
1. It takes too long and is difficult to complete
A paper-based system requires a company’s HR department to spend countless hours emailing documents, entering data, and tracking forms throughout the review process. Manual appraisals and goal sheets tend to be a huge drain on employees’ time, as well. A 180-degree feedback (or similar) system is a great way to engage a company’s employees, but because the entire paper-based process is such a drag, it’s actually disengaging them.
Using 180-degree feedback for reviews is much easier with a performance appraisal system. The difference is that forms in the software are much quicker to fill out. They’re also in one central location, freeing the HR department from having to email multiple word documents to all of its managers and employees.
With performance appraisal software, some companies claim their employees and managers really invest in the review process and see it as an asset to their development. Automation also saves companies time by reducing administrative tasks for all parties involved in the review.
Employees and managers can also log accomplishments during the year as they happen. Performance appraisals shouldn’t contain new information. By logging these events, the employee and manager can provide specific examples of behavior to use during the review.
2. It’s only done once a year
Because the manual, paper review process is so difficult, it leads to less frequent reviews. But an annual appraisal has the weight of salary compensation hanging over it, and does not allow for enough constructive feedback like monthly, quarterly, or semi-annual reviews. Reviewing 2,080+ hours of work in one hour doesn’t make a lot of sense.
A paper-based system can be very time-consuming, and doing it more than once a year is a near impossibility for larger businesses. Performance appraisal software increases the ability to give employees quarterly or semi-annual reviews. This means half or three-quarters of a year’s reviews focus solely on performance and how an employee can improve. The final, formal review of the year can be reserved for compensation, without taking away from an employee’s development and goal setting.
3. It’s difficult to analyze the data
Performance appraisal software can aggregate data collected from the entire company’s performance reviews, allowing you to analyze and gather meaning from this data. The software collects both manager and employee responses from the electronic forms and shows you trends and problem areas that need to be addressed. Companies with a paper-based system can’t really access and make meaning out of this data because the review process is already so tedious that it’s unlikely they’ll have time to input each response into some central spreadsheet. Even if they do, aren’t there better ways they could be spending that time?
Performance appraisal software also increases the transparency of performance data and goals. Everyone, from executives and HR personnel to managers and employees, can see the status of employee performance and development. This level of transparency enables a company to make better business decisions and reward top performers. Performance appraisal software also improves internal accountability by making it easier to set objectives and monitor results.
4. It’s difficult to share and compare reviews
When companies conduct reviews using a paper-based system, employees discuss and sign forms, and then those forms get filed and stored in a filing cabinet. There’s a good chance no one sees them again until it’s time for next year’s review. This appraisal strategy kills productivity.
A software-based appraisal system stores all of its reviews within the program. Using the software’s dashboard, managers and employees are able to easily recall any past appraisals and documents.
For employees who have been with a company for many years, it can be challenging to compare past reviews to the latest review. If you maintain appraisals and forms electronically, it’s easy to view an employee’s progress and development from one review to the next, as well as conduct more reviews throughout the year. Archiving and storing so many old documents with a paper-based system is inefficient. In fact, switching to performance appraisal software is probably worth the time saved in paper shuffling alone!
The performance review process varies from company to company. However, your ideal review system should address the above complaints. By investing in performance software, it’ll make standardizing your company’s system a breeze.