Working Capital - Mission Blog

<<Mission Blog Home Posted: 02-21-2019
a woman has a casual discussion with her supervisor

It’s a blessing and a curse.

It is important for every employer to provide regular, documented feedback on each employee’s performance. This helps employees grow and thrive in an organization and have a clearer understanding of what is expected of them.

At the same time, it can be a difficult process to maintain. Essentially, employee evaluations are a form of confrontation. They need to be honest and honesty can often be painful. In a perfect world everything is perfect, the trains are running on time and the form is stamped with “satisfactory”.

As we researched this topic we found an alarming number of articles and opinion pieces that all said essentially the same thing – employee evaluations (or performance reviews) are dead, they are a thing of the past. It seems the main thinking behind this is that – historically – employee reviews have been an annual affair. You meet with your employee, go through a list of prepared (and often generic) statements and check the box by each that best reflects the employee’s status. It reminds of those evaluations we received in elementary school that said we “work and play well with others. A nice sentiment but not really grounds for personal growth.

In today’s world of big data, it is not surprising that most HR departments in larger companies have turned the process over the algorithms. From data points like “met budget goals” to “collaborates well with others” the process can be increasingly complex. It is also especially burdensome on managers as it forces them to convert real-world experiences and observations into a spreadsheet of numbers.

It can also be confusing for the employee as they are unsure where they should focus their efforts on improvement. Do they need to do a better job “achieving client success” or do they need to work on their communication skills? And, how do you evaluate this once a year?

Apparently, the trend is moving away from these reviews. According to an article published by The Society For Human Resource Management, the number of companies who conduct formal employee reviews dropped to 91% in 2018 (down three points from 2017).

While the overwhelming majority still conduct them, some – like Adobe – have instituted a process known as “check-ins”. This is a more informal process that has managers and their direct reports engage in an ongoing dialogue about performance. The overall approach here is that it is better to give feedback “in the moment” than waiting for the formal review time which could be months away.

At Deloitte, the process has been simplified, as well. Each quarter team leaders are asked to evaluate – on a 1 to 5 scale – each of their employees based on two statements: “I would award the employee the highest possible pay increase “ and “I would always want the employee on my team”. They are then asked if they are at risk for low performance (yes/no) and if they were ready for a promotion (also yes/no). It is even more direct at Netflix. Managers are asked a simple question: Would you fight to keep this employee?” Pretty direct, no?

However, most companies are not the size of a Deloitte or Netflix. With smaller staffs and more personal contact, the evaluation process can be more important (check out this article from Workopolis). The essential point for smaller businesses to remember is – good employees are hard to find and even harder to retain. The evaluation process can be a key element in long term continuity.

This is a vast and complex issue that will continue to evolve over time as the needs of employers change. As the job market tightens and competition for the best and brightest gets more intense employers will need to continue to find ways to grow and promote from within. And, employees will tend to gravitate to companies that hold those values.

Working Capital, Goodwill mission blog author
This article was written by: Steve Allan

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