Performance reviews are well-intentioned. Done right, they offer the opportunity to guide employee development, increase engagement and improve business performance across functions. Too often, however, reviews are backward-looking discussions used to justify compensation decisions rather than a means to drive growth or recognize achievement. While industry-wide, many talent leaders recognize the need for change to a process that no longer adequately serves its purpose, few that I talk with are prepared to radically change in one fell swoop.
Earlier this year, I spoke with a group of talent leaders candidly about performance, and many of them echoed the need and desire for change – yet few were prepared to take the first step in what seemed like such an overwhelming initiative. But who says your performance management process needs a complete overhaul? It’s possible to find a middle ground that creates a ramp to get from where you are today to where you want to be. Modernizing your review process incrementally over time can have a powerful impact on employee performance and engagement. Thinking ahead of the curve, Regeneron Pharmaceuticals evolved their company’s review process gradually over the course of three years and saw compelling results.
“Regeneron had developed an overly complicated performance management process that was used to drive compensation decisions and did not provide employees the feedback they were expecting and wanting,” said Michelle Weitzman-Garcia, Regeneron’s Sr. Director, Learning and Organizational Development. As part of Regeneron’s shift, the company gave individual business units the flexibility to evolve the performance process to suit their business.
For many business units, this meant eliminating performance ratings – starting with 12 performance ratings, paring down to 4 and eventually shifting to a system where the majority of employees no longer receive ratings. For a company with a culture largely rooted in a pay-for-performance compensation model, this move to eliminate ratings altogether presented quite a hurdle.
“We had to work very closely with our compensation colleagues to come up with a solution to the no-rating problem,” said Weitzman-Garcia. “We eventually settled on a compensation rating that is not visible to employees, but does help [the compensation team] budget for year-end.”
Eliminating ratings, however, didn’t mean Regeneron nixed discussions about performance. Their HR staff knew that for the changes to the performance review process to work, they would have to equip managers to have conversations without relying on ratings.
“Employees still want to know how they are doing, and some are still struggling to understand that without a rating,” Weitzman-Garcia explained. Regeneron worked to ensure managers were prepared to provide their team members with meaningful, targeted feedback in a timely manner – even implementing programs that ensure every manager has a 30-minute development discussion with each of their direct reports every 30 days.
Regeneron also accepted that certain departments would take longer to change than others. “Some parts of the business were not ready to move to a no-rating system, and we needed to be able to adjust to that,” Weitzman-Garcia said. Now that those business units have seen others adopt the new system successfully, they’re ready to come on board.
Employees—and businesses—evolve at their own pace. Your performance review process can do the same. With a clear vision of what you want performance reviews to accomplish in your organization, you can create a plan to introduce change in phases, like Regeneron did.
Lessons from Regeneron’s performance review process makeover:
- Determine what you want to accomplish. Don’t broadly declare you need to change the performance process because it’s what the industry seems to be doing. Regeneron’s talent team set out with a clear goal in mind: Simplify a cumbersome process and shift to an approach that provided more value to both employees and managers.
- Identify the greatest barriers to change and develop a plan to address them. Whether you’re equipping managers to have different types of conversations with employees, rolling out new technology or asking business units to revamp familiar processes, proactive change management is crucial.
- Offer employees frequent feedback, coupled with actionable steps they can take to move ahead. We’ve seen many customers begin to embrace methods for supporting continuous feedback, some in conjunction with their existing annual performance process to create a first step towards modernizing their annual performance review process.
- Let technology support your journey. Today’s solutions support the evolving performance process, and recognize there isn’t a ‘one-size-fits-all’ approach. Technology can make the process easier for both HR and the employee, with tools like continuous performance feedback to capture peer and manager feedback and learning recommendations that make it simple for employees to adopt continuous individualized development.
