Employee morale is incredibly important and affects multiple areas of business including productivity, profitability, retention and turnover. The problem is that many companies are shooting themselves in the foot by latching onto a particularly antiquated HR policy. By eliminating this policy, you can improve morale dramatically.
Performance Reviews – A Source of Fear and Loathing
At first glance, performance reviews probably seem like a positive thing. They’re a time-tested means of providing employees with feedback and addressing problem areas. Their roots can be traced all the way back to the Industrial Revolution when there was the ongoing need for improved work methods to boost productivity and product quality.
Fast-forward to the 21st century and performance reviews are still practiced by plenty of companies across a variety of industries. However, multiple studies show that it’s time to rethink performance reviews.
An Outdated Practice
One particular study from Adobe found that performance reviews do more harm than good and can have a tremendously negative impact on employee morale. Here are some highlights:
- Nearly two-thirds of employees and managers believe performance reviews are an outdated practice.
- Managers spend an average of 17 hours planning for each individual employee’s review.
- One in five workers admit to crying after a review.
- 37 percent say they have looked for another job.
- 20 percent say they have quit.
- To avoid the stress and heartache, more than 60 percent of millennial workers say they would switch to another company with no performance reviews.
- Both office workers (55 percent) and managers (66 percent) say it’s time to change or get rid of reviews.
These statistics tell us three main things. First, performance reviews have become old-fashioned and are out of touch with the modern workforce. While they may have been viable in the 1950’s, it’s clear that they simply don’t have a place in the twenty-teens.
Second, they’re time-consuming. Although not every manager will spend 17 hours planning a performance review, this study suggests that they can be a major time drainer.
Third and most importantly, employees hate them. If performance reviews lead to your employees crying, looking for a new job or quitting, this obviously isn’t doing any favors for morale. In some cases, it can be the catalyst for excessive turnover and even damage your brand reputation.
So what should you do if performance reviews are your company’s primary means of providing feedback?
The answer is surprisingly simple. Switch to on-the-job feedback. Rather than using a rigid, antiquated system like performance reviews, you’re far better off providing feedback in real-time.
Not only should this improve morale, it tends to be more effective because it’s easier for your employees to understand and implement information when it’s presented in this manner. According to Adobe’s study, this is the preferred mode of feedback with 80 percent of office workers preferring feedback in the moment.
It’s amazing to think that you can dramatically improve morale by ditching just a single HR policy. Eliminating performance reviews and opting for on-the-job feedback is a smart move that can pay dividends for your company.