How much influence can one performance review have? If you ask your average employee, it may have a massive impact on their plans to stick around. In this article, we want to outline the case for focusing on performance as a means of boosting your retention.
What Drives Employee Retention?
There’s one inescapable truth about the modern workplace: top talent demands development. One study from LinkedIn found that 94% of employees would stay at a company longer if the business was actively investing in their careers.
Time and again, when you quiz employees on their priorities, career development and career progression are consistently at the top. In some cases, things like development may even outrank other factors like flexible working, salary and working hours.
Turning to Ruth Thomas, Personio’s Director of People & Organisational Development, the answer is clear: “The way people learn has evolved, and employee development needs to keep up. General training sessions alone simply won't fly anymore.”
And, if employee development in your organisation is not keeping pace, you may find yourself with a talent exodus on your hands. But, for your average busy organisation, what can be done to help employees feel their development?
Are Performance Fit for Purpose?
Let’s start by considering performance development reviews (PDRs). For many employees, a PDR is a universally-acknowledged step of the employee lifecycle focusing on development and career progression.
For organisations, it is also something that can be rolled out cyclically, en masse and as part of a standardised process. Doing it this way also opens up room for consistent improvements and iterations.
That sounds pretty mutually beneficial. A performance process can make an employee feel like their development is being prioritised, while an organisation can use it as an evaluative measure as part of a repeatable process.
That said, research from Deloitte uncovered three startling data points:
6% of companies surveyed think performance reviews are worth their time.
2% of HR executives say yearly evaluations are useful.
80% of workers are dissatisfied with their performance reviews.
And, according to research from The Harris Group on behalf of Yoh, around one quarter (24%) of workers would consider leaving their roles if their managers were to provide inadequate performance feedback.
There is a troubling realisation here. One that reveals that the modern performance review process is not fit for purpose, and it’s not making anyone happy.
A Thorough Rethink on Performance Processes
If performance reviews are fundamentally broken, many organisations need to rethink how they run them and why they run them. Especially as part of a development programme, your performance process should have a baked-in emphasis on learning and development (L&D).
Ruth explains: “This helps to create an ecosystem where people actively ‘opt-in’ to learn. You offer employees the opportunity to ‘create their own adventure’ in terms of the mix of which learning opportunities you value and which they value”.
The benefit of a performance process is that it is table stakes. Many organisations may not have the budget to supercharge their L&D efforts, but if they make a conscious effort to turn their performance growth process into an L&D one, they can do so more sustainably.
To help drive retention, by putting more focus on development as part of performance conversations, modern organisations should consider the following three things:
Growth Cycle Frequency – Focusing on the timing and quantity of conversations. Build in follow-ups and outline next steps.
Performance Conversation Quality – Design conversations that enable line managers to coach employees and help them solve problems.
Career Development Co-Creation - Give employees the agency to design the careers they want, so they feel actively invested in what they are doing.
Using Performance to Drive Retention
A missed performance review is like pushing your highest performers out the door of your organisation. Make sure you never miss a cycle again, while also allowing your organisation to host more qualitative, development-focused performance chats.
Personio’s Performance feature allows organisations to build automated performance cycles that scale alongside your entire company. You can build templates that help line managers host more productive and consistent performance reviews.
Turn results into rewards by connecting goals to bonus payments, and ensure that you never miss another cycle with follow-ups, deadlines and to-dos. Supercharge your performance management processes by speaking with an HR expert today.