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5 Ways to transform the annual performance review

© 2016 Halogen Software Inc. All rights reserved.

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Table of contentsIntroduction: Is the annual performance review dead? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

The state of traditional performance management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Goals: Quarterly goal setting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Development: Development discussions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Feedback: 360-degree feedback assessments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Reviews: Project reviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Check-ins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

Wrapping it up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19


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With over 2,100 customers worldwide, Halogen Software is a recognizedleader in talent management solutions and in customer satisfaction .Our mission is to help our customers “Win with Talent,” and make next-generationperformance management a part of their unique business rhythm.

Technology is altering how we do business,

knowledge is doubling every year andnew skills are outdated in

2.5 to 5 years.

50%of all employees indicatea signicant increase instakeholders neededto make a decision.

Many organizations recognizethat performance managementis no longer a

once-a-yearprocess and that employeeswho receive ongoing feedbackdeliver greater returns.

70%of organizations believe their

performance managementprograms are average or

below average.

57%of employees report an

increase in the number ofcoworkers they work with inother geographic locations.

Organizations that do goal reviewsquarterly – or even more often are:

50%more likely to

have above-averagecustomer satisfaction.

65%more likely to be effectiveat controlling costs thanorganizations that revisegoals only once a year.

50%of their time on

non-productive work.

Employees that don’t fullyunderstand their jobs, cost

US and UK companies$37 billion.

Nearly 50% of employees don’t know what is

expected of them at work.

For performancemanagement to beeffective, employees musthave a clear understandingof what is expected ofthem in their current andfuture roles, yet…

67%of employees report anincrease in work requiringactive collaboration.

The average employeespends


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INTRODUCTION

Introduction:Is the annual performance review dead?

Results from Brandon Hall Group’s 2015 1 research survey, uncoversomething quite revealing about how companies view theirperformance management programs:

of organizations believe their performance management programs are average orbelow average.

70 %

So, why the lack of condence in existing programs?For starters, the traditional once-a-year approach to performance management:

Is viewed as a negativeexperience by employeesand managers

Isn’t able to exwith changingbusiness goals

Doesn’t provideinsight into progressand gaps

By gathering information on performance once or twice annually, performance management becomes punitiverather than productive in the eyes of employees. Furthermore, traditional performance management is not tied tobusiness outcomes or overall organizational success. Finally, many companies use outdated technology that failsto align performance with overall company objectives.


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INTRODUCTION

Considering all these negatives, is it time to say “good-bye”to the annual performance review?It’s a valid question, so let’s explore.

In the last couple of years there’s been a fair amount of discussion and research on how dysfunctional the performanceappraisal has become including how it can lead to lower employee engagement and productivity.

But there’s no reason to bid farewell to the annual performance review completely. It can still serve a valuable purposeto organizations, which is why making it go away isn’t necessarily the only option.

The question is, “What can take its place?”

In this eBook, you’ll learn how to reinvent your old annual review process into something that’s more strategic andresponsive, and aligns and engages your entire organization.

More specically, you’ll:

Gain a deeper understanding of the current problems with a traditional performance appraisal process.

Learn about the 5 best practices to transform the annual employee performance review.

Find out how to implement these 5 practices using the Halogen TalentSpace™ suite.

Performance management is often a source of great frustration for employeeswho do not clearly understand their goals or what is expected of them at work.

For these employees, annual reviews and developmental conversations feelforced and supercial, and it is impossible for them to think about next year’sgoals when they are not even sure what tomorrow will throw at them.

State of the American Manager: Analytics and Advice for Leaders, Gallup 2015


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INTRODUCTION

The state of traditional performancemanagement

Many would agree that the common performance management practiceswe’ve followed for years are no longer effective for several reasons. They’reoften a heavily process-driven, rating and ranking exercise that takes arear-view mirror approach to performance management. The resultis additional stress on an already overburdened and disengaged workforce.

Good performance management about building the relationship betweenmanager and employee, ensuring open and honest conversation aroundexpectations, coaching and development and reinforcing behaviors throughfeedback and recognition.

Factors driving us to rethinkperformance management The organizational environment – where we work – haschanged signicantly from days gone by.

To stay competitive and protable today, companiesmust learn to navigate through today’s fast-paced,unpredictable work environment.

Technology is altering how we do business, knowledgeis doubling every year and new skills are outdated in2.5 to 5 years. 2 Demographic changes are having astrong impact on how businesses are run.

As workplaces become more complex, organizationsmust seek ways to simplify to prevent employees frombeing overwhelmed and disengaged. This requiresa change in how companies manage employeeperformance today. Performance must be redenedand simplied.

How we work together is changing

of employees report an increasein work requiring activecollaboration.

of all employees indicate asignicant increase in stakeholdersneeded to make a decision.

of employees report an increasein the number of coworkers theywork with in other geographiclocations .

of employees report working with10 or more people on a day-to-day basis (half of which reportneeding to work with more than

20 people).

67 %

1/2

57 %

60 %


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INTRODUCTION

Performance management redenedMany organizations recognize that performance management is no longer a once-a-year process and that employees whoreceive ongoing feedback deliver greater returns. For performance management to work (really work), it must undergosignicant changes and shift toward:

Ongoing, less formal performance conversations

Developing managers to be better coaches

Helping managers foster a development environment while encouraging employees to own theirdevelopment

This begs the question, “How can this shift happen?”. That’s where the 5 best practices come into play.

Organizations that want to mature their performance management practices need to adopt performance anddevelopment activities that happen throughout the year. Here are 5 examples of ongoing activities that can takeyour performance management process to the next level:

The purpose of performance management is to give employees an understanding of how they are performing, areas they are succeeding in, areas they can improve in, and a plan for how to improve.

Now, let’s look at these in more detail, including how you can implement them with theHalogen TalentSpace suite.

Quarterly goal setting

Check-ins

Development discussions

360 feedback assessments

Project reviews


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1 GOALS

Aligning, setting and managing goals are at the heart of performancemanagement. When it comes to setting goals, the best outcomes result fromgoals that are both meaningful and challenging for employees.

The problem is that traditional goal setting practices often fail to engageemployees, which is why organizations are now choosing a more collaborativeand agile approach to goal management.

Research shows that organizations that frequently review and revise their goalsrealize better business outcomes than those that do not. Specically,organizations that do these reviews quarterly – or even more often are:

more likely to have above-average customer satisfaction

more likely to be effective at controlling costs thanorganizations that revise goals only once a year 3

Looking at the what and how of goal settingUsually goal reviews look at what was achieved, but let’s not forget the how . Whether it’s via competencies oraccountability measures, it’s important to discuss the performance factors your employees are demonstrating or mightneed to develop. It’s ideal to have these discussions on a regular basis.

For performance management to be effective, employees must have a clear understanding of what is expected of themin their current and future roles, yet…

Less than 50% of employees know what is expected of them at work. 5

The average employee is spending 50% of their time on non-productive work ..6

Employees that don’t fully understand their job costs US and UK companies$37 billion USD each day. 7

Quarterly goal setting

A Bersin by Deloitte study suggests that executives revise goals almost three times asfrequently as employees 4. So if this is the case, why wouldn’t you want employee goalsto change too? If they don’t change with strategic goals, the alignment is lost.

50 %

50%

$37 BILLION

50 %

65 %


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1 GOALS

There should also be clear alignment between business objectives and what employees spend time doing. Make sure thatgoals are achievable both individually and as a group. Assigning too many goals, even though each one might be achievableon its own, sets the employee up for failure.

TIP Schedule a meeting at least once a quarter , where managers can discuss the what(i.e., goals they’re expected to achieve) and the how (the competencies that reectyour culture of high performance). If there are areas that need development,managers can create a separate development plan to address areas for improvement.Check out these employee goal setting templates that prompt managers for allthe information they should discuss and document when setting goals with employees.

How the Halogen TalentSpace suitesupports quarterly goal settingWith Halogen Performance – part of the Halogen TalentSpace suite – managers andemployees can set goals as part of a regular performance review process, part ofa separate goal setting process, or in the course of their day-to-day activities. Yourorganization can ensure goal setting is collaborative by including appropriate stepsin your performance review or goal setting process.

Aligning employees’ goals to strategic business goals provides necessary line-of-sightfor employees so they understand how meeting their objectives will contribute toorganization’s success. This results in higher employee engagement and betterbusiness results.

When managers and employees set quarterly goals withHalogen Performance, they’re able to view the list oforganizational goals, and select and link the employee’sindividual goal directly to the organizational goal it’sdesigned to support. Employees can easily see theirindividual goals and the organizational goal each onesupports at any time.

Adding Halogen 1:1 Exchange™ to the equation, ensuresmanagers and employees have an easy and effective way todiscuss and update goal progress and status in their regularone-on-one meetings.

http://www.halogensoftware.com/learn/forms-and-templates/employee-goal-setting-templatehttp://www.halogensoftware.com/learn/forms-and-templates/employee-goal-setting-templatehttp://www.halogensoftware.com/learn/forms-and-templates/employee-goal-setting-template


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2 DEVELOPMENT

Development discussions

Discussions about career progression drive employee engagementand productivity. They also play a fundamental role in creating adynamic workplace that engages managers and employees. Byfostering a culture of personal development and career progression,organizations can increase retention rates, reinforce theircommitment to employee learning and attract top talent.

The “but” is that development efforts are an often overlooked partof employee investment – or companies take a one-size-ts-allapproach to employee development. Given that no two employeesare the same, this approach has the potential to make some

development discussions go terribly wrong. For example, whilethe approach you take with Employee A might be highly successful,it could prove disastrous with Employee B . In fact, getting it wrongwith Employee B could lead to feelings of distress, anger anddisengagement – which can be costly to organizations.

Appreciating differences:It’s important to keep in mind that today’s workforce is diverse and

multigenerational, with each of four generations (soon to be ve)having a distinct set of values, attitudes and behaviors. Regardlessof generations or life experience, organizations must nd ways todrive optimal performance from everyone across the workforce.With each individual having their own expectations, priorities,approaches, and work and communication styles, it only makessense that development plans should consider these differences.

Whether creating unique, new challenging learning experiences forMillennials, or investing in the ongoing development of employeeswho have been with the organization for decades, employees have growth on their minds. Withholding these

development conversations presents a greater danger to the status quo than engaging in them. The key here is torecognize the differences and have the appropriate development discussions. Through regular career conversations,employees can share and rene their goals. With better understanding of their learning goals, managers and employeesare in a better position to spot developmental opportunities.

Employees have growth on theirminds, whether you address it

or not. Withholding theseconversations presents a greater

danger to the status quo thanengaging in them. 8


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2 DEVELOPMENT

Here are some questions for getting the conversation started: 9

Check out these checklists and templates to diagnose develop needs, create individualized development plans andtake steps to ensure employees will benet from the opportunities offered.

TIP Instead of a once-annual conversation about career goals at the time of theperformance review, have frequent brief conversations throughout the yearregarding employees’ career interests and aspirations . While some of thesemight be self-evident, others might not, which is exactly why you need to have

frequent discussions.

What’s your favoritepart of this job?

How could we betteruse your talents?

What else would youlike to be doing?

How can wechallenge you?

How the Halogen TalentSpace suitesupports development discussionsHalogen TalentSpace lets you create career and professional development plansas part of your employee performance management process whenever youidentify a learning need. You can tie development plans and activities directlyto competencies, for greater context, or set them independently to support

career aspirations and/or goal performance.

Managers and employees can discuss and identifydevelopment activities any time, not just during annualperformance reviews. With the click of a mouse, they canbrowse your online learning catalogue, select the rightactivity based on the competency they want to improve,update employee development plans, track progress,and see the impact training is having on performance.

http://www.halogensoftware.com/learn/forms-and-templates/employee-development-templateshttp://www.halogensoftware.com/learn/forms-and-templates/employee-development-templateshttp://www.halogensoftware.com/learn/forms-and-templates/employee-development-templates


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3 FEEDBACK

360-degree feedback assessments

Multisource feedback is essential for getting a broader, more objective perspective on employee performance,strengths and areas for development. When used effectively, multirater or 360-degree assessments:

Provide a more accurate, credible and reliable performance ratings

Increase employee acceptance of performance feedback

Improve employee performance

Lead to higher functioning work teams

360-degree feedback is also ideal when employees have morethan one manager supervising them directly throughout theyear, which is the case in matrix organizations where there aremultiple reporting lines, rather than one formal boss.

360-degree or multiraterfeedback is a system for

collecting feedback from anemployee’s work circle. This

typically includes condentialand anonymous feedback from

an employee’s manageror supervisor, peers and

direct reports.

How 360-degree feedback helps employees

Leads to increased self-awareness of strengths andareas for improvement

Offers a more well-rounded and balanced view ofskills and behaviors

Provides a starting point for employee developmentplanning

TIP Consider a full 360-feedback assessment on your employees in lieu of an annualreview or at least as a complement to it. Check out these 360-degree feedback

forms and templates to inspire you or guide you on designing multirater forms.

http://www.halogensoftware.com/learn/forms-and-templates/360-degree-feedback-forms-and-templateshttp://www.halogensoftware.com/learn/forms-and-templates/360-degree-feedback-forms-and-templateshttp://www.halogensoftware.com/learn/forms-and-templates/360-degree-feedback-forms-and-templateshttp://www.halogensoftware.com/learn/forms-and-templates/360-degree-feedback-forms-and-templateshttp://www.halogensoftware.com/learn/forms-and-templates/360-degree-feedback-forms-and-templates


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3 FEEDBACK

The danger of single-source feedback Gathering 360-degree or multisource feedback is important because, although managers may feel like they havethe complete picture of an employee’s performance at review time, their view can be skewed, blurred or distorted.Single- source feedback can become a real issue if an employee doesn’t agree with the feedback they receive.

When performance feedback comes from one person, or is perceived to come from one person, it’s easier for an employeeto ignore the message or believe that feedback isn’t an accurate representation of their performance.

They can dismiss it as, “That’s just your opinion.”

And if an employee doesn’t agree with or believe the feedback that they receive is accurate, they simply might not acceptit or make any effort to improve or change. And that’s a difficult situation for everyone – HR, managers and employees.

How the Halogen TalentSpace suitesupports 360-degree feedback Halogen 360 Multirater™, which is a seamlessly integrated part of the Halogen TalentSpacesuite, is ideal for collecting feedback during a performance review cycle, as part of aproject evaluation, or as part of a talent assessment for succession planning.

Employee feedback can come from virtually anyone – from managers, peers,subordinates, and even external contacts, such as customers, partners and suppliers.

Managers can launch a multirater review directly to solicitfeedback from other sources. Or, as a best practice, youradministrator can launch it and allow employees to selecttheir assessors – and make them part of the process.

Through Halogen 360 Multirater, HR can control all aspectsof the 360-assessment process from a central point –including email notications, assessment status, andchanges to the reporting structure.


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4 REVIEWS

The work environment is changing , which has led many companies to trade inthe traditional organizational structure in favor of atter, more project-based,matrix-style one. In the latter scenario, employees are drawn to work ondifferent teams, report to different project managers and achieve differentobjectives throughout the year. Because work is project-based, involves variouspeople and scheduling, it doesn’t make sense to review employee performancefrom the perspective of a single manager at annual review time.

What does make sense is to hold regular project reviews, which providea valuable opportunity to inform managers how someone is performingthroughout the year. In this case, the project manager or team lead (who are

not necessarily the direct manager), can take an active role in the process.

Regular project reviews benet organizational performance by:

Giving employees the timely, fresh and continuous feedback they need to develop and succeed

Including feedback from “people in the know” so appraisals aren’t limited to direct managers

Providing managers with the documentation to make year-end employee reviews easier

Enabling the organization to react and respond to potential issues as they come up

Helping project managers reect on what went well, what can be improved and lessons learned

TIP Create a process whereby employees receive feedback – based on competencies –on a project-by-project basis, and tie this information in with the annual appraisalor performance summary.

Project reviews


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How the Halogen TalentSpace suitesupports project reviewsWithin the Halogen TalentSpace suite, project managers have exibility in how and

when each member’s project review will be launched (i.e., during or after project)rather than being tied to the end of the year.

Using Halogen Performance and Halogen 360 Multirater, project managers or teamleaders can easily gather performance feedback from team members during or aftereach project engagement, and then effortlessly roll it up into a summary review.Employees receive the timely feedback and development they need from engagementleaders and team members, and fairer, more comprehensive reviews.

Halogen Performance also gives projectmanagers and leaders the ability to control

who they want to be on their teams, add theminto the system and manage notications andfeedback independent of the direct manager.Within larger projects, team leaders and projectmanagers can create mini processes to quicklygather and present feedback in easy-to-viewand understandable format.


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5 CHECK-INS

An effective and easy way to build strong manager-employee relationships is through frequent check-inswhere communication is two-way, open and honest.

This check-in-style of performance managementprovides managers with an opportunity to reviewgoal status, provide feedback, and coach employeeson a regular basis, which can lead to higher engagementand performance.

For employees, check-ins are a great way to voice theiraspirations, thoughts and challenges, which can buildtrust, enhance communications and take the manager-employee relationship to an entirely new level.

Check-in conversation startersSometimes starting the conversation at one-on-one meetings can seem daunting. Here are some questions that canhelp managers get the dialogue going.

Check-ins

It’s a fundamental rule of managementthat to lead others you need to practicefrequent and open communication.The general wisdom is managers canbest accomplish this by holding regularone-on-one meetings with directs

reports, usually weekly or close to it.10

What isthe mostimportant thingwe should betalking about?

What’s onething I cando to bettersupport you?

What was mostchallengingabout a recentproject/experience?

What isn’tworking rightyet in ourorganization?

In which onearea do youthink theorganizationneeds todevelop most?


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5 CHECK-INS

How the Halogen TalentSpace suitesupports check-insWith Halogen Performance and Halogen 1:1 Exchange, managers and employeeshave an easy way to stay aligned, engaged and focused on achieving real-timeperformance outcomes.

Halogen 1:1 Exchange provides one interactive, centralized way to track and collaborateon goals and projects, exchange meaningful feedback, provide coaching, discuss careerdevelopment opportunities, or any issue that matters, on a regular, ongoing basis.

Offering built-in conversation starters, automatedagendas, instant access to goal progress, feedback,development activities, meeting minutes, Halogen 1:1Exchange improves communication, strengthens themanager-employee relationship and fosters a results-driven performance culture.

TIP Depending on the nature of your

business, have managers meet withtheir employees every one to twoweeks and denitely at least oncea month.

Independent of the common reactive approach to HR notications and deadlines, check-insare a proactive way to keep important employee-manager discussions about performanceand development, ongoing and relevant.

Watch this video featuring talent managementthought leader Jamie Resker to learn bestpractices in giving effective employee feedback .

http://www.halogensoftware.com/learn/videos/best-practices-in-giving-effective-employee-feedbackhttp://www.halogensoftware.com/learn/videos/best-practices-in-giving-effective-employee-feedbackhttp://www.halogensoftware.com/learn/videos/best-practices-in-giving-effective-employee-feedbackhttp://www.halogensoftware.com/learn/videos/best-practices-in-giving-effective-employee-feedbackhttp://www.halogensoftware.com/learn/videos/best-practices-in-giving-effective-employee-feedbackhttp://www.halogensoftware.com/learn/videos/best-practices-in-giving-effective-employee-feedbackhttp://www.halogensoftware.com/learn/videos/best-practices-in-giving-effective-employee-feedbackhttp://www.halogensoftware.com/learn/videos/best-practices-in-giving-effective-employee-feedbackhttp://www.halogensoftware.com/learn/videos/best-practices-in-giving-effective-employee-feedback


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WRAPPING IT UP

We hope you’ve found this eBook valuable in gaining a deeper understanding of thecurrent challenges with the traditional performance appraisal process and in learningabout 5 best practices that can take your performance management processes to thenext level. Now that you’ve read about these practices, where do you weigh in?

At Halogen, our vision is to help organizations like yours inspire your talent to realizeexceptional business outcomes every day.

Our performance management solution includes everything you need to establisha culture of ongoing feedback and coaching so you can align, engage and motivateyour people to achieve the results that matter to your business.

If you’d like to access the latest thinking on each of the talent management areasdiscussed in this resource, check out Halogen’s Talent Space Blog.

Wrapping it up

About Halogen SoftwareHalogen Software offers an integrated cloud-based talent management suite that reinforces and drives higher employeeperformance across all talent programs – whether that is performance management, learning and development,succession planning recruiting and onboarding, or compensation. With over 2,100 customers worldwide, HalogenSoftware has been recognized as a market leader by major business analysts and has garnered the highest customersatisfaction ratings in the industry. Halogen Software’s powerful, yet simple-to-use solutions, which also include industry-vertical editions, are used by organizations that want to build a world-class workforce that is aligned, inspired andfocused on delivering exceptional results.

Questions? Contact us!North America Toll-free: 1 866 566 7778Direct: +1 613 270 2011

[email protected] www.halogensoftware.com

Europe, Middle East, AfricaUK Freephone: 0800 587 4020NA Direct: +1 613 270 1011

[email protected] www.halogensoftware.co.uk

APACAU Toll-free: 1 800 048 060NA Direct: +1 613 270 1011

[email protected] www.halogensoftware.com.au

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WRAPPING IT UP

1 The value of ongoing performance management, Brandon Hall Group, March 2015

2 Global Human Capital Trends 2014 Engaging the 21st-century workforce, A report by Deloitte Consulting LLP andBersin by Deloitte 2015

3 Source: Bersin by Deloitte, Maximizing the Impact of Goal-Setting and Revising Webinar, August 2011

4 Source: “High-Impact Performance Management Using Goals to Focus the 21st-Century Workforce,” Stacia ShermanGarr / Bersin by Deloitte, December 2014

5 Human Capital Institute

6 Corporate Executive Board

7 IDC

8 Kaye, Beverly, Winkle Giulioni, Julie, Career Development Conversations: Overcoming Common Myths, May 2012

9 Kaye, Beverly, Winkle Giulioni, Julie, Career Development Conversations: Overcoming Common Myths, May 2012

10 Hedges, Kristi, “The Secret To Effective One-On-One Meetings With Direct Reports,” Forbes, November 2013

References

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