Despite the movement calling for the abolition of performance reviews, many organisations are still using them in some way, shape or form. But in the midst of all this work a golden opportunity is often lost by organisations - the chance to turn performance review data into strategic information.
So the organisation's people have invested time and hard work in performance reviews - how can the organisation capitalise on that investment beyond the manager-team member relationship? Firstly, through analysis, including:
- Examining the overall distribution of performance ratings (across the whole business, each department, demographic groups etc);
- Identifying the higher and lower performing departments, teams etc based upon average performance ratings and achievement against objectives;
- Identifying in broad groupings (e.g. sales, financial etc) which performance objectives the organisation is performing exceptionally or poorly against; and
- Identifying those broad competency/behaviour areas for which the data indicates the organisation's people are strongest in and conversely the weakest areas of competency.
Of course, this task will be much easier for those using an online performance management system compared with a paper-based process, where aggregate data is much harder to access, compile and utilise.
Now that the analysis is complete we need to try and reconcile the performance review data and real world results. Does the data reflect the actual performance of the business, department etc this year? For example, if the business failed to meet most of its targets for the year yet recorded very high average performance ratings for its people, something is clearly amiss. Also, is your performance review process driving or highlighting bias experienced by certain demographic groups (i.e part-time employees less likely to be rated as a high performer than full-time employees)?
If the performance review data doesn't reflect the organisation's performance then it is likely that people's performance objectives weren't well aligned with the business strategy in the first place or managers are rating people's performance higher than is warranted (avoiding difficult conversations). While not an ideal outcome, it does provide some great learnings that can be improved upon immediately for the start of the new cycle and therefore help make an organisation's performance management process more effective in driving business results.
If the performance review data does generally reflect the organisation's performance then you have a wealth of data to utilise including:
- Look for the lower performing competencies/behaviours across the organisation and feed this into high level development planning in order to drive improvement.
- Further analyse the reason for lower performance in certain performance objective categories (e.g. customer service) and then develop and implement a strategy to turn things around - this is where improved business performance will come from.
- Examine the correlation between performance against competencies and performance objectives - if you have identified those competencies which are predictive of strong job performance then people who rate highly against role competencies should also generally be top performers (if the data doesn't support this then you have more analysis to do).
- Promote and celebrate the success/high performance in key performance areas and continue to focus on them - you want to maintain (and even improve) these aspects which are helping drive your organisation's current performance.
So there is a wealth of information available to organisations which undertake performance reviews linked to their business strategy. There is a great opportunity for HR to add value to a business by undertaking the analysis of performance review data, presenting key findings and recommendations to the Executive Team, facilitating the discussion about the implications of the data, and driving improved business performance. Strategic HR!