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AGENDA
By Robert Schork
ISSUE
A GREAT REVIEW
Employee performance reviews might seem like a bureaucratic waste, but, in fact, doing them wrong could cost you big-time.
Deborah Hilden, human resources manager at a Hawthorne-based medi- cal billing company, values employee performance reviews very highly. Still, last April, she suspended them, at least temporarily.
Why? Hilden says it’s because she believed the review process was flawed— and of little value to either the employees or the company—as it lacked a formal program for employees who needed
help boosting one or more levels of their performance. “The process was just an exercise,” Hilden says.
Hilden feels that good performance reviews give companies a way to keep their employees in step with the firm’s vision, while also offering workers a roadmap for improvement, and even a little morale boost, if warranted.
But is that just one HR manager’s stance, or a genuine reflection of the power of performance reviews? Well, it turns out Hilden might be in good company.
For slightly more than half of the 500 companies surveyed in 2011 by CEB, a research and advisory firm, employee reviews remain an annual rite of passage. Some 41 percent of companies perform semi-annual appraisals, while an even larger amount, 51 percent, conduct formal performance reviews annually.
The US Employee Report, a 2012 sur- vey by Cornerstone OnDemand (which provides talent management and learning and performance-management software) and the research firm Kelton, shows that the way a company manages performance reviews and feedback is closely tied to employee satisfaction. And satisfaction among your employees is no small matter.
“A 2012 survey... shows that the way a company manages performance reviews and feedback is closely tied to employee satisfaction.”
According to a 2013 survey by the same two companies, more than 19 mil- lion employed Americans are planning to leave their jobs within the next year. With the average cost to recruit and train one employee estimated at 2.5 times an employ -
ee’s salary according to the same survey, this employee churn could potentially cost US employers $2 trillion.
It can be inferred from the 2013 survey that one effective way to keep employees is to conduct better performance reviews, reviews that offer feedback that can help them know what they’re doing great, and which parts of their jobs they can perform better—and how.
In addition to helping stem the outflow of workers (and valuable experience with them), such reviews seem to positively affect the bottom line. Analyst Josh Bersin, of Bersin by Deloitte, who’s done extensive research on the question, says that organiza- tions with high-quality development plans for employees have 26 percent higher rev- enues than companies with no program in place. (Sadly enough for the American econ- omy, companies with such programs appar- ently are in the minority: Only three in 10
of the employees surveyed by Cornerstone OnDemand and Kelton said they’d received training and development in the previous six months to better perform their job.)
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