Only 2% of CHROs say performance management systems work as intended

Dive Brief:

  • Only 2% of Fortune 500 CHROs said they “strongly agree” that their performance management system inspires employees to improve at their jobs, according to a May 7 report from Gallup.
  • Similarly, a separate Gallup survey of more than 18,600 U.S. employees found that just over 20% said that their employer’s performance review process is “fair and transparent,” indicating a disconnect between what is considered “expected” and the work actually being performed, Gallup said.
  • More than half of employees surveyed also said they formally review their goals with their managers only once a year or less. “The folly of traditional annual performance reviews is that people receive goals at the beginning of the year that they do not formally discuss with their manager until the end of the year — if those goals are even still relevant,” Gallup said.

Dive Insight:

Employers have been scrutinizing their performance management systems in the wake of the pandemic, which revealed a number of weaknesses in how reviews were done, Gallup noted. After employers stepped back from performance reviews in 2020 amid the upheaval, “[w]hat they discovered, perhaps unwittingly, was that their way of managing performance did not coincide with a disrupted, dynamic and digital business environment,” Gallup said.

Workers desire more in-the-moment feedback, and hybrid work may make it more difficult for employees to obtain it, according to a 2022 Eagle Hill Consulting report. Nearly 40% of hybrid workers surveyed by Eagle Hill said that getting constructive feedback was a challenge, compared to 21% of remote workers and 19% of on-site workers.

While it is unlikely that the annual review will disappear entirely, experts and analysts — including Gallup — have suggested employers separate manager feedback sessions from pay and promotion conversations.

“A separate pay and promotion conversation allows managers to spend more time explaining how these decisions are made and what it takes to get to the next level,” Gallup’s report said.

To find success, some experts have suggested focusing on psychological safety during the process, especially for that year-end meeting. Manager feedback should not come as a surprise, Reggie Willis, chief diversity officer at Ally, wrote in HR Dive last year, and any performance concerns should be provided actionable support and approached with compassion.