How to Identify Improvements in the Performance Review Process?

What is the goal of your performance review?

This is a question we ask all our clients in the phase of constructing the review model. To be clearer, we go further: we always ask, "What is the purpose of your performance review: decision-making or the development of your employees?"

Regardless of your goal with the review model, which can also be a combination of both, you should be concerned with two crucial questions when the review is completed, having spent so much time and effort measuring the team's performance:

1. Has my objective been achieved?

If the goal is development, is it clearer to people what and how they can develop?

If the goal is decision-making, did the review results provide inputs for a fairer decision-making process?

Performance reviews with the purpose of decision-making and those with the purpose of employee development have different end clients. You can explore this topic more in another article.

Therefore, identifying if the goal has been achieved is basically checking if the process has generated real value for your end customer, and if not, it brings greater clarity about what needs to be adjusted to actually add value in the next application.

2. What was the employees' experience with the process?

Concern for the employees' experience is important because the more detractors there are, the greater the chances that the project will lose priority or become a purely bureaucratic process.

Factors such as time dedicated to filling out the form, questions, insecurities, experiences with calibration meetings, in short, all the effort made by end clients should be evaluated, always thinking about the best possible experience for everyone.

Seeking answers to these questions through a survey is an excellent way to continuously apply a review model that really bears fruit and justifies all the investment allocated to make it happen.

Still not convinced of the importance of this survey?

Organizations where employees are more satisfied with the performance review approach are 1.3 times more likely to achieve their financial goals, three times more likely to manage changes effectively, 3.2 times more likely to encourage employees to take risks, and more than twice as likely to innovate¹.

Moreover, research shows that measuring the impact of performance review, providing this data to leaders, and then allowing them to take action is associated with a +94 increase in satisfaction with the practice¹.

However, if you're still unsure where to start, you're not alone. Performance review practices have an average Net Promoter Score (NPS) score of -60².

How and when to do it?

At the end of each review cycle, administer a questionnaire to gather the opinions of your end clients. In addition to a general survey, it's also possible to segment the survey into two distinct audiences: leaders and team members.

The benefit of segmentation is the opportunity to understand the perspective of each side of the process, as leadership typically invests much more effort than team members.

Important reminder: Ensure the anonymity of the survey! If you require respondents to identify themselves, there's a great chance of compromising the results, as people tend to be less honest in their responses.

Survey Scale

For this survey model, we recommend using a 5-point Likert scale. Likert scales are excellent for obtaining a more detailed understanding of people's opinions on a particular topic.

One of the pros of the Likert scale is that it helps avoid some common pitfalls in surveys, such as creating overly broad questions that are generally much harder to answer, compromising the results.

Collected Results, Now What?

It's important to pay attention to how the data will be analyzed. Responses can be read individually or combined with a set of questions (blocks). The value assigned to each point should also be established in advance.

Analysis and Interpretation of Results

To analyze the results collected using a Likert scale, values are assigned to each of the items, starting at zero for the neutral item (3) and increasing or decreasing by 1 for each item above or below, respectively, and then obtaining the average of the total evaluated values.

For a better illustration:

Why use the calculation rule in this way? This model makes it easier to visualize the negative or positive perception of each question, as questions with a score higher than zero generally had a more positive perception, and questions with a negative score had a more negative perception by most people.

For example, let's first analyze the raw responses (without including the calculation rule yet) to two questions, Z and X, considering that the number "1" means "Strongly Disagree," and so on, according to the table above:

Converting responses according to the calculation rule:

It's also important to calculate the standard deviation of the responses for each question to assess the variation in responses for each item among different respondents.

The standard deviation³ is an indicator that shows the difference in the average of each value in a given set. It starts from 0 (indicating that there was no variation in the responses) and the higher its value, the more responses differed from the average.

Standard deviation can be easily calculated in Excel, as described in this article. Using the example above, these were the standard deviations we found for questions Z and X.

We can interpret that, on average, people selected more similar ratings for question Z than for question X. Therefore, we can use the standard deviation as an indicator of the convergence or divergence of responses.

In practice, responses with higher standard deviations should be analyzed more cautiously, perhaps even with a more in-depth investigation parallel to the original survey, as it indicates that people had very different opinions.

This may indicate, for example, that people in a certain area had very positive perceptions, while in another area, they had very negative perceptions. From this difference, we can think of some hypotheses of causes, such as the leadership of a specific team.

However, the area or leadership is not the only factors that can influence; there are numerous factors that can lead to these different perceptions. The challenge is to list the main hypotheses of the cause so that you can address them.

Improvement Actions

Finally, converting responses into practical actions measures the success of the survey application. Use the interpretation of the results to think about improvement actions for questions that were poorly rated.

We must adopt a mindset of continuous improvement in everything we do in HR; only then will we strive for the excellence needed to build reference processes and practices. The key point of a successful process is to listen to your customers!

References

How to Make Performance Management Less Hated, Bersin, Deloitte Consulting LLP / Kathi Enderes, PhD, 2019

Seven Top Findings for Enabling Performance in the Flow of Work, Bersin, Deloitte Consulting LLP / Kathi Enderes, PhD, and Matthew Deruntz, 2018.

TAKAHASHI, S., 2010. Guia Mangá de Estatística. São Paulo: Novatec Editora