Why the Performance Review is Broken and How Social Recognition Can Help

Picture this scenario: you get excellent ratings on all aspects of your performance review. You receive positive comments from your manager who says you’re doing a great job.

Then you get fired.

That’s what happened to one Forbes contributor, calling into question the validity of these exercises. The performance reviews of today are often seen as pointless, time-consuming charades where both employee and employer go through the motions of filling out some meaningless forms that have very little relevance in today’s workplace and fail to help drive business goals.

Performance reviews have been under the spotlight recently, with companies such as Microsoft, Dell, GE, and Accenture overhauling and, in some cases, getting rid of these ratings and reviews. According to Gartner analysis, by 2020, 20% of large global enterprises will have abandoned the performance review rating score.

Rethink Not Remove

Following the example of these leading organisations and merely removing the rating or review altogether may have the adverse effect of driving down employee performance. According to data from corporate performance technology company CEB, the performance of employees drops by around 10% when ratings are removed. This is due to a fall in employee engagement and a decrease in the ability of managers to manage their workers.

The same CEB research also found that due to a lack of results, 84% of companies are making big changes to their HR performance management systems. This means that a better plan is needed to measure how your employees are performing. One way is through social recognition, which will be used to transform performance reviews into something meaningful and useful.

What does social recognition mean?

With social capabilities being embedded into many systems for different business functions including CRM, customer service, and project management, it makes sense that the performance review would take this approach. According to Gartner research, by 2018, 25% of large organizations will incorporate social employee recognition and rewards into their performance management processes.

Social recognition involves more informal, regular feedback not just from your manager, but also from your peers. This feedback can also be shared in different forms about a wide variety of areas of work rather than just the core goals and skills. Often this feedback is shared within company social feeds, intranets, or dashboards.

The corresponding recognition or rewards can be just as informal, and delivered at any time throughout the year as opposed to just after an annual performance review. The reward program may also harness gamification with tokens, badges, or points awarded as a way of recognizing achievements. Shopify, for example, uses crowdsourced information from peers to decide employee bonuses.

Other aspects of social recognition programs include more personalized goals and rewards, as well as frequent conversations regarding performance, and better visibility of goals achieved, with employees given the option to share results with their peers and the public.

What Are The Benefits?

Replacing your traditional performance management review with a social recognition program may seem like a giant leap into the unknown that requires a change in company culture. It can, however, help improve employee engagement, create a more open, creative and innovation company culture, and positively contribute to business goals. It also helps with talent management, as more feedback is unearthed on areas that managers may not be aware of, while the continuous and increasing volume of feedback boosts an individual’s personal reputation.

If you are using social recognition programs in tandem with traditional performance reviews, then you can harness the plethora of information gained across the quarter or year to have a more informed discussion and review. For employees, they also have more visibility of how well they are doing, including what their peers think of them, while fostering better relationships between co-workers. There are also fewer surprises when it comes to the annual review.

How Can I Implement A Social Recognition Program?

If you want to shake up your performance review process to take advantage of social recognition and rewards, it’s important to understand exactly how it will impact your business and its culture, as well as how it will affect any existing performance-related activity.

You’ll also need to look into the tools and technology necessary for making the transition. The good news is that many performance management and HR solutions come with social recognition capabilities built in or as optional extras, and you may find that it’s just a case of upgrading your solution. You can also invest in specialist social recognition solutions.

The important takeaway here is to ensure that any new performance-related program is fully supported and utilized by all levels of management.

With this approach and the right solution backing it up, you can bring the focus of the performance review away from a box-ticking, form-filling waste of time to a positive, regular conversation that focuses on the achievements of your entire workforce.

Why the Performance Review is Broken and How Social Recognition Can Help