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Performance matters: How digital is changing employee reviews

Key takeaways

  • Usually conducted annually, employee performance reviews remain notoriously bureaucratic and inaccurate.
  • The key to improving the performance review accuracy may lie in capturing data, more regularly, by more people.
  • Significant investment in performance management technology includes web-based feedback, enterprise social networking and mobile apps.

Is it any coincidence that employee performance reviews in Australia coincide with the darkest day of the year? Equal parts complexity and drudgery, the stereotypical annualised performance review recalls images of workers typing out stacks of self-reflective essays, vying against each other for higher rankings, or pitching themselves – ‘Dragon’s Den’ style – for promotion before a board of managers.

To combat this perception, organisations have been experimenting with reinvigorating their internal appraisal systems – many of which use digital technology. But will digital prove to be the remedy for an issue that penetrates every element of a company’s structure and culture?

The inadequate status quo

The ineffectiveness of traditional performance reviews has dominated business headlines and search results for the past several years. This air of change has not gone unnoticed by Australian businesses. Last year, PwC Australia’s Performance management: Change is on the way but will it be enough? surveyed 27 companies listed on the ASX150 about their performance management practices. The report found that an overwhelming 96% of companies had recently changed their performance management structure, or were planning to in the next 12-18 months.

This commitment to change is necessary, as the status quo is inadequate for many businesses. In 2014, a survey sampling almost 400 members of the Society of Human Resource Management revealed almost three-quarters of HR professionals graded their organisation’s review processes ‘B’ or below, with 21% assigning a marginal ‘C’ grade. Only 2% rated their organisation’s process ‘A’.

Part of this dissatisfaction lies in timing. The Performance management report also noted that while companies were beginning to change their systems, more radical shifts — such as abandoning the annual or semi-annual review structure, were rare. By continuing to concentrate the process to a single annual event, both employees and management are likely to focus on projects and milestones that occurred in the more recent past.

A recent New Yorker article also noted traditional performance review processes were prone to considerable bias, especially when overseen by a small number of managers on an irregular basis and with limited sources of information.

Digitising performance measurement

If more employee data delivered at more regular intervals is a sound bet for overcoming the flaws of the current system, then digitisation promises to be an effective tool. There’s been significant investment in performance management technology by ASX 150 companies, particularly web-based feedback, enterprise social networking (such as the Microsoft-owned Yammer), and mobile apps.

One noteworthy investment in mobile performance review apps comes from GE. In 2015, it introduced PD@GE in a bid to evolve its (historically notorious) performance review systems. PD@GE allows employees and managers to collaborate on setting and reviewing short-term goals and projects, with an emphasis on real-time feedback. This feedback can be exchanged through the app as typed notes, digitised photographs of handwritten notebooks, or voice recordings, unlocking the flexibility to cater to individual workflows.

Another business digitising its review processes is IBM, which recently introduced a mobile app-based performance review system of its own. IBM went one step further, digitising the performance review overhaul itself. Opening up the refresh to suggestions from staff, it scraped thousands of comments and discussions posted on the company’s internal social media platform, then took this crowdsourced data and mined it for key themes and sentiments, shaping the final digital product.

Aligning the digital with the cultural

Digital technology opens up new avenues to receive, process and analyse performance review data – and to do it more frequently. However, it is not an overnight solution. Organisations should not expect to be able to instantly move employees from a highly structured annual process to a fluid, ongoing and real-time system.

Instead, the business’s structure should pro-actively evolve alongside these new systems, supporting them from the ground up by embedding collaboration and fast feedback into the organisation’s DNA. By laying this foundation, a company can begin to foster a more open workforce and have their performances captured more frequently and accurately, especially as feedback-seeking millennials continue to make up an ever-increasing proportion of the workforce.