Low rating for performance reviews
Performance reviews are the most widely-used tool for forging a link between pay and individual performance. You might then have imagined that more than one in two managers would feel confident that they could explain their performance-related pay systems. But new research by the Institute for Employment Studies has discovered that all too often the link to pay lacks transparency and most managers are not well equipped to explain how it works.
IES also found that employers were seldom able to deliver meaningful awards. Indeed, the size of salary increases was considered to be the most demotivating aspect of the performance review process, particularly in the civil service. As Marie Strebler, the author of the report, comments:
These findings run contrary to those of previous studies, which suggest that performance-related awards were unpopular on the grounds of equity. This study suggests that many managers and staff want PRP to differentiate more, even though they claim it is not a motivator.
Developmental and pay aspects
Strebler reckons that separating the developmental and pay aspects of the performance review process is somewhat artificial . Employees want to talk about pay and/or development when they need to , rather than when best practice suggests or the system dictates, she argues.
We conclude that it is not the separation or integration that are the most important but rather individuals understanding of the various parts that form the whole 'performance management package' and their interdependencies (eg work roles, performance planning and assessment, performance development and reward). Employers should perhaps concentrate on equipping line managers so that they know — and are able to explain — how they integrate, but also how they can be used as 'standalone' and supported by other activities or processes.
Some simple rules
Introducing a performance review system represents a formidable challenge to management. So, how should your organisation approach introducing one? According to IES, transforming performance review from a beast of burden into a thoroughbred’ starts with the business strategy, followed by clarity about the roles, skills and behaviours required to deliver it.
IES then recommends some simple rules:
1. Have clear aims and measurable success criteria.
2. Involve employees in the system design and implementation.
3. Keep it simple to understand and operate.
4. Make its effective use one of managers’ core performance goals.
5. Make sure employees can always see the link between their performance goals and those of the organisation.
6. Use it to keep roles clear and focus on performance improvement.
7. Back it up with adequate training and development.
8. Make any direct link with reward crystal clear, with proper safeguards to guarantee equity.
9. Review it regularly and openly to make sure it’ s working.
Source: Institute for Employment Studies.
Want to know more?
Title: Performance review: balancing objectives and content , by Marie Strebler and Stephen Bevan, IES Report 370, February 2001.
Methodology: A total of 17 organisations took part in the study, including 11 civil service departments. As many as 926 managers from private and public sector organisations — a response rate of 42% — completed a survey. The research focused on both performance appraisers and appraisees.
Availability: contact the Institute for Employment Studies in Brighton, tel: 01273 873690
Take a look at the press release and report summary . . .