Performance Review Statistics Every HR Leader Should Know
You can’t ignore performance review statistics if you want to keep your business running smoothly, spot the best talent and encourage employee engagement.
Reviewing your employee performance means much more than evaluating the teams’ performance based on some data for HR. It also included identifying the strengths and weaknesses of your employees, offering them constructive feedback, and setting goals for future performance.
According to a Gartner article, employee performance rates were found to be 10 percent lower in organizations that don’t conduct reviews.
You need performance reviews to Improve your teams’ performance and bring the best out of them. It is not just about gauging whether employees are producing the expected results. But also about offering guidance, and encouragement to your teams.
Here are 27 performance review statistics every HR leader should know. And how you can use these stats to improve the effectiveness of your performance review cycles-
1. Ditch The Traditional Way.
“The traditional performance-management approach has become outdated,” -Rosette Cataldo, vice president of performance and talent strategy of Workhuman.
Traditional Performance review methods are dead.
- According to an SHRM survey, 90% of HR leaders said that traditional performance reviews fail to gather accurate information.
- According to a Gartner article, 95% of managers were found to be “unhappy” with traditional performance review methods.
- Traditional performance reviews and traditional approaches of giving feedback make employee performance deteriorate about one-third of the time.
- Gallup’s study on performance management shows that traditional performance review methods can cost your company up to $2.4 million and $35 million for every 10,000 employees.
Performance Reviews are a tool used by HR leaders to help their employees understand their strengths and weaknesses.
But the traditional Performance review methods appraise employees based on their personal qualities and quantity of output. It includes Man to Man Comparison, paired comparison, grading and ranking, critical incidents, etc.
The next question is-
2. What should be the frequency?
How frequently should performance reviews be conducted to help employees stay focused and improve their performance? Should it be done annually, bi-annually, monthly, or weekly?
- A globeforce.com survey found that 51% of employees agree that annual performance reviews are inaccurate
- 53% of employees said that annual performance reviews fail to motivate them.
- According to a Workhuman Analytics & Research study conducted in 2019, 55 per cent of employees confirmed that annual performance reviews haven’t helped them in improving their performance.
- 45% of HR executives consider annual performance reviews as an inaccurate estimation of their teams’ performance.
- 69% of organizations use annual or bi-annual performance review cycles.
Annual Performance reviews are outdated and demotivating. It doesn’t nurture employee growth.
3. Time is Money.
Annual Performance Reviews are also time-consuming.
With the annual review system managers were overloaded by the end of the year. You will most probably find them scoring each employee on a grading scale or comparing employees with each other.
The process ends with a bunch of dissatisfied employees whose scope for improvement has been passed up.
- Managers, on average, spend 17 hours preparing performance reviews of the individual employees.
- An SHRM survey shows that 50% of employees’ performance reviews were pending over 30 days or more as managers keep struggling to complete them on time.
- According to a Workhuman report, 82 per cent of employees reported that their organization is conducting annual performance reviews in 2016. The number has reduced so far to 65 per cent in 2017, 58 per cent in 2018, and 54 per cent in 2019. It clearly showcases the growing unpopularity of annual performance reviews among organizations.
This is why many companies including Deloitte, Adobe, Accenture, and Netflix have ditched annual performance reviews altogether.
4. Surpass Annual Reviews
The system is flawed.
- Every 9 in 10 Managers aren’t satisfied with their organizational methods of conducting performance reviews.
- 77% of HR managers reported that their performance reviews don’t exactly reflect how employees are contributing to the organization.
- According to a YouGov survey conducted over 800 UK employees, only 26% of the employees believed that their performance reviews are useful.
- According to Gallup, only 14% of employees believe that performance reviews have inspired them to improve their performance.
It’s time to rethink the system and make a shift away from the annual performance review approach. Replace it with a modern performance management strategy.
5. Change Your Game With Real-Time Feedback
A feedback-based Performance review system can be an alternative to traditional Performance reviews.
“Employee turnover rates are 14.9% lower when employees are given feedback by their organization.”
When done the right way, a feedback system can create a stronger and more collaborative workplace.
- A Joblist survey conducted over 1,000 full-time employees shows that 33 per cent of the respondents desire regular feedback.
When company culture is built on feedbacks employee feel confident and encouraged. It creates an environment where employees feel nurtured.
Feedback is also directly liked with employee engagement.
6. Encourage ‘Live’ and Peer-to-peer Feedback.
“For companies to be agile, feedback must get closer to real-time.” Karen Crone
Make your feedback system spontaneous and regular. Encourage managers to offer real-time feedback to develop a rapport. Make feedback part of the daily work-life at your organization. Encourage feedback during day-to-day encounters.
- A study conducted by Lattice shows that 41% of organizations who used their review system have used peer reviews to assess their employees from April 2019 and April 2020.
- 45% of workers want feedback from their peers and customers, but less than 30% are actually getting it.
- In another study, 45% of respondents emphasized the importance of feedback from their peers, clients, or customers. On the other hand, only less than 30% of respondents receive it in their workplace.
- 89% of HRs emphasized the importance of ongoing peer feedback and regular check-ins as key to successful performance review cycles.
7. Feedback Drives Engagement.
Employee feedback and employee engagement are again directly related to each other. Thus when you are taking care of one, the other improves at the same time.
Let’s look at the following performance review statistics to understand better-
- 4 out of 10 employees were found to be actively disengaged when they didn’t receive feedback.
- 43% of employees were found to be highly engaged when they were offered feedback at least once a week. But only 58 per cent of managers offer enough feedback to their employees.
- A Gallup research shows that employees are 2.7x more likely to be engaged and 3.2x more likely to be motivated at work when they weekly feedback from their managers.
But feedbacks are not always positive. It can be negative too- what we call constructive feedback. While positive feedback highlights achievements and reinforces positive behaviour.
Constructive feedback helps your teams break bad habits, and ensure that they understand your expectations. At the same time, makes provision for your employees to ask questions for clarification.
8. “Feedback is Scary to Many
Negative feedbacks are difficult to deliver and are not always responded to well. The following performance review statistics revalidate this fact-
- As per a Gallup study, 10 per cent of employees in the United States felt engaged after receiving negative feedback at the workplace in 2019. While 30 per cent of employees started an active search for a new job when they received negative feedback at the workplace.
- In another research, 22% of employees felt disengaged after receiving negative feedback.
- In a Harvard Business Review survey, 92% of respondents said that negative feedback can effectively improve employee performance when delivered appropriately.
To make negative feedback effective, encourage your managers to give specific, actionable, and contextual feedback.
Avoid using negative phrases. As it is discouraging and often puts people on the defensive mode. Help your people understand that there is no ‘You vs. them’.
Be careful of the time and place while giving negative feedback. Deliver it in a private area if possible and use your language with care.
What’s Working For Others Might Not Work For You.
Don’t get afraid to try and test alternatives. Experiment and find out the right frequency. Have frequent assessments, one-on-ones, and check-ins. You can also consider adopting 360º feedback.
Get rid of manual paper documentation and find a performance management software solution that suits your company’s requirements. The right tool can save your time and effort while collecting, maintaining, and analyzing your people’s data. It makes keeping track of performance and goals effortless.
Don’t Take the Risk Of Ignoring The Data:
Utilize these Performance review statistics to encourage your employees to perform better, and stay engaged to help your organization flourish.