In a healthy workplace culture, performance reviews are a great way to build up your employees’ morale, increase employee engagement, and give real-time feedback on employee goals.

But in an unhealthy workplace culture, performance reviews can have a serious negative impact on employee happiness, turnover rate, and engagement. In this article, we’ll look at 12 scary statistics that prove you need to promote a more constructive, engaging, and regular performance review system.

1) Only 5% Of HR Leaders Are Satisfied With The Performance Reviews

According to CEB, 95% of managers are “unhappy” with traditional performance management, and feel that they could use improvement. In addition, a full 59% of employees think that traditional performance reviews have “no impact” on their personal performance.

2) More Than 5 Full-Work Weeks Per Year Are Spend On Performance Reviews By Managers

Think about what you can produce in those weeks! CEB estimates that the average time, management spends on annual reviews is around 210 hours per year – and that most employees spend about 40 hours per year on performance review-related activities.

Managers should not have to spend nearly 10% of their work-year on performance reviews, as this is very costly, and doesn’t necessarily improve employee engagement.

3) Of Employees That Have To Face Performance Reviews, 22% Would Prefer To Call In Sick

According to a survey by Trinet and Wakefield, 22 percent of millennials would rather call in sick than face a traditional job performance review. This reflects the pervasive feeling that job reviews are a “trial” where your performance is criticized – rather than an opportunity for personal growth.

4) 76% of all employees want feedback at least monthly

In most companies the traditional way of performance management is still in use, this means that employees receive feedback once or twice a year. Lucky employees might receive feedback quarterly, still this doesn’t match the demand of employees for feedback at least monthly. Research by TruQu shows that at least 76% of employees would like to have at least 12 times a year.

5) 58% Of All Organizations Isn’t Tracking Performance Automatically

The vast majority of companies with performance review systems still use Excel spreadsheets – or even physical paperwork – to track employee performance. This is one of the reasons that managers have to spend so much time on reviewing the performance of each employee!

6) 90% Of HR Managers Think Their Performance Review Results Aren’t Representive

According to the previously-referenced CEB study, 9 out of 10 HR managers don’t believe their performance review process is truly accurate. This is partly due to the traditional “rater” and “ratee” system.

When feedback is delivered from one manager to a single employee, biases and personal feelings taint the data – making it less accurate, useful, and actionable.

7) Employees And Managers Think Performance Management Needs Renewal

A study of TruQu showed that 77% of employees believe that the traditional performance management systems in organizations need to be revamped. Of the ones that are responsible for human resource within companies this number is even higher: 94% of HR staff think that the annual reviews are outdated and need to be renewed.

8) The Vast Majority (70%) Of International Companies Plan To Revamp Performance Reviews

Most major international companies are moving away from traditional yearly performance reviews in favor of real-time feedback, project-based performance reviews, and other modern HR best practices.

In fact, influencer Josh Bernsin has estimated that around 70% of all international companies are planning to revamp their traditional performance review systems – or have done so already.

9) 96% Of Employees Think a Tool Takes Performance Management Easier

In research done at 27 organizations by neuroleadership (David Rock, 2016) is stated that 96% of the participating employees think a tool helps them to receive continuous performance feedback. Next to that they say it is easier to use a tool to request and receive feedback than asking for face-to-face feedback.

10) 40% Of Workers Are Actively Disengaged Due To No/Negative Feedback

Workers who don’t get feedback are more likely to become actively disengaged, even in a healthy culture. According to HubSpot, about 40% of employees who do not get regular feedback on their performance and cannot share their opinions about workplace practices are likely to become disengaged.

11) Of Millennial Workers At Least 47% Started Looking For Work Opportunities Elsewhere after they’d seen their performance results

That’s right – 47 percent of millennials started looking for another job after receiving performance review results. If millennials don’t get the feeling that they can develop as a professional, or if they feel that their efforts are not appreciated, they’re likely to leave, which can deprive your organization of young, bright talent.

12) Millennial Workers Have No Clue On How They Perform

Millennials are uncomfortable with the traditional yearly performance review system. They expect real-time goals, and a structure of employee empowerment that allows them to get regular, timely feedback.

Because of this, 74 percent of millennials have no clue about their performance, and how they could improve. This leads to a poor workplace culture and more employees leaving the company.

Ditch That Traditional Performance Review – And Build A Healthy Culture In The Workplace!

As you can see from these 12 eye-openers, traditional performance reviews are no longer the best way for managers to communicate feedback to workers. The old systems of performance reviewing are outmoded and inefficient, and can lead to a poor workplace culture.

Instead of using annual performance reviews, we believe that companies should implement continuous feedback structures, where employees can get constructive feedback about their performance, regularly. This aids in boosting employee engagement, reducing the negative feelings associated with performance reviews, and can lead to happier, more effective employees.

So forget that yearly performance review. Think about how you can implement a new performance review structure that is based on culture and strategy, and will help you keep your employees happy and engaged.

Sources:
Performance Management Poll 2017. TruQu
David Rock, B. J. (2016). Is Transforming Performance Management Worth It? NeuroLeadership.