For decades, there has been a constant tussle between HR, managers, and employees when it comes to performance reviews.
HR thinks they’re necessary, managers feel they’re a burden, and employees don’t think they receive fair reviews at all.
Until now, performance reviews remain ineffective, untrustworthy, and difficult to get employee or manager buy-in.
But the modern performance review approach aims to change all that.
It uses continuous performance enablement to ensure fair, meaningful, and real-time feedback comes when needed, not 6 months later.
In this article, we:
- Explain how performance reviews need to change to be effective
- Walk you through 5 key components of modern performance reviews
- Provide 3 best practice tips you want want to implement modern performance reviews without
Are Performance Reviews Completely Dead? Not Quite 🤔
The internet is buzzing with articles proclaiming the death of the traditional performance review.
But if that’s true, it’s a slow death.
SHRM reports 71% of companies still use once a year performance reviews in 2023. We’d argue it’s not dying at all, but instead transforming into and being supplemented by a version that better suits the needs of our 21st century workplace.
Our remote and hybrid work policies, with asynchronous schedules and less face time, make it tougher for managers to get a full picture of performance. And the rate of change in technology, structures, and processes needs a performance review system that supports rapid adoption and adaptability.
Plus, in a competitive talent market, employees (especially Gen Z) expect and want feedback that’s timely, collaborative, and empathetic.
Traditional performance reviews, which date back to the early 1900s, are just too infrequent and fail to drive growth.
On one Reddit thread commenters were sharing their ‘cynical’ performance review takes, a commenter wrote:
“Every time we do performance reviews I send our executives the most recent stack of literature that says that performance reviews are universally stupid. The very best reviews are useless and the worst can sink the company.”
To solve the issues that come with traditional reviews and meet the demands of our modern workplace we need an approach that includes:
- Continuous feedback delivered at the moment of need
- Weekly or biweekly 1:1 check-ins to build rapport and troubleshoot roadblocks in real-time
- Quarterly or biannual performance conversations to reflect on long-term growth and goals
- 360-degree input from peers, direct reports, and cross-functional partners for a holistic view
- Forward-looking coaching and career planning based on set competencies
- Goals that can be aligned to the development aims of the employee and to the objectives of the organization
If your organization is still relying solely on top-down, form-filling, twice-a-year evaluations, it’s time to embrace the modern performance review process. It’s time to pivot to enablement.
In the rest of this article, we'll explain the key components of this evolved approach and guide you on efficient implementation.
Modern Performance Reviews | 5 Key Components & How to Implement Them
Below we’ve listed the five key components an effective modern performance review system will have.
This table gives you a surface level understanding but you can scroll down for an explanation of the component and get tips on how to bring it into your organization.
1. Objectives Key Results (OKRs)
Objectives and Key Results (OKRs) are a goal-setting framework that helps organizations align their objectives with measurable outcomes.
The American retail giant, Sears, saw an increase in their average sales per hour from $14.44 per hour to $15.67, or an average increase of 8.5% after implementing OKRs.
OKRs work well because they promote transparency, accountability, and focus, leading to improved performance and engagement…but only if they avoid setting and forgetting their goals.
More often than not, people lack follow through with the goals they set. And without a robust system to track progress and provide regular feedback, these goals quickly become forgotten or deprioritized.
At Mesh, performance objective software helps organizations implement OKRs effectively, so that they’re set and met every quarter.
Here’s how.
Step 1: Employees set their goals or OKRs in collaboration with their manager.
Managers and employees on Mesh co-create their OKRs in a 1:1 call. They just need to open the Mesh platform and navigate to ‘Me’ and then ‘Goals’. If they click ‘Add’, as seen below, they can create a new goal or objective.
Step 2: Employees write the goal with AI assistance.
Employees don’t always know what ‘good’ looks like when it comes to writing goals. Mesh shows them by having AI assist the process.
Step 3: Update the goal on a weekly or bi-weekly cadence (and receive automated nudges from Mesh to ensure that you do).
HR can set up the nudges to be delivered on whatever schedule they want, whether that’s weekly, bi-weekly, or monthly.
From there, employees are sent reminders in the platform and in their workplace communication tool like Slack or Teams. This increases follow through and keeps goals top of mind.
See the Mesh platform in action by setting up a personalized demo with a member of our team.
🎙️Want to learn more about setting OKRs effectively?
Check out our podcast episode where we dive deep with Brett Knowles who owns a consulting firm that specializes in OKRs: Don't be Stupid with your OKRs
2. Competencies
While OKRs focus on what employees aim to achieve, competencies are the skills, knowledge, and behaviors that contribute to individual and organizational success. They outline how employees are expected to perform in their roles.
Defining clear competencies is crucial for both employees and managers:
- Employees gain a roadmap for success, understanding what's expected of them and how to excel in their roles.
- Managers have a consistent framework for assessing performance and providing targeted feedback and coaching.
- Organizations can align their talent management practices, from hiring to development to succession planning, around a common set of standards.
In fact, research shows better role clarity increases employee work performance by 25% and makes them 53% more efficient. So it’s an aspect of modern performance reviews worth doing.
With Mesh, implementing and tracking role defining competencies is straightforward:
Step 1: HR defines the competencies for each role, focusing on the skills and behaviors that drive results.
If you need help developing a competency framework, check out our article: How To Develop a Competency Framework in 2024
Step 2: Employees and managers collaborate to set development goals aligned with these competencies.
Step 3: Throughout the year, employees track their progress and collect examples of how they've demonstrated each competency.
Employees can even request feedback on a specific competency such as ‘collaboration’:
Step 4: In performance reviews and 1:1s, employees and managers discuss competency ratings and identify areas for growth.
3. Real-time Feedback
Employees crave timely, specific, and actionable feedback.
And Gallup research proves that employees who receive frequent feedback are more engaged, productive, and likely to stay with their organization.
This is why it works:
- Employees receive recognition for their successes and guidance on areas for improvement while the details are still fresh.
- Managers gain a more accurate picture of performance over time, rather than relying on a single snapshot.
- Organizations foster a culture of continuous learning, growth, and open communication.
But it’s the component of modern performance reviews that takes the most thought, care, and time.
With Mesh, providing real-time feedback is simple and intuitive:
Step 1: Users can request feedback or initiate giving feedback on their own
Step 2: Employees and managers get nudges from Mesh in their platform as well as Slack or Teams telling them feedback has been requested or it’s time to give feedback.
See what feedback requests you have:
Step 3: They select the recipient, choose the type of feedback (praise or advice), and enter their comments.
Step 4: Feedback is delivered to the recipient and saved in their Mesh profile for future reference.
Step 5: HR can track feedback patterns across the organization to identify top performers, skills gaps, and management best practices.
4. Regular 1:1s
One-on-one meetings between managers and their direct reports are a cornerstone of effective performance management.
These regular check-ins provide a dedicated space for employees to discuss their progress, challenges, and development needs, while also building stronger relationships with their managers.
We think a 1:1 every 30 days is a great cadence because it allows the manager to be present and offer support without turning these meetings into weekly status updates.
Implementing regular 1:1s with Mesh is easy:
Step 1: Managers can schedule recurring 1:1s with each team member, setting a cadence that works for their needs (e.g., weekly, bi-weekly, or as we suggest, monthly).
Step 2: Mesh sends automated reminders to both parties, ensuring 1:1s remain a priority even during busy periods.
Mesh integrates with your work calendar too making it easy to join and schedule work around these meetings.
Step 3: Agendas can be created with focused talking points ahead of time
Step 4: During the meeting, managers and employees can pull up talking points, goals, and feedback all within the Mesh platform, keeping the conversation focused and productive.
Step 5: HR leaders can track 1:1 completion rates across the organization, identifying which teams or managers may need additional support or training.
Want more insights? Check out our article on Best Practices for Running Effective One-on-One Meetings.
5. 360-degree Reviews
Bias negatively impacts the trust and effectiveness of performance reviews. And even in the most unbiased of manager’s, their review alone won’t offer a comprehensive depiction of performance.
360-degree reviews, also known as multi-rater feedback, provide a comprehensive view of an employee's performance by gathering input from their manager, peers, direct reports, and even customers or clients.
While it doesn’t eliminate potential bias from one party, it makes it so that one bias doesn’t dictate the entire rating.
Allan Church, Former SVP Global Talent Management at Pepsico shares with us his thoughts about the frequency and purpose of 360s in this podcast.
This holistic 360 approach offers several benefits:
- Increased self-awareness: Employees gain insights into how others perceive their strengths, weaknesses, and impact, helping them identify blind spots and areas for improvement.
- Balanced perspective: By combining feedback from multiple sources, 360-degree reviews mitigate the biases that can arise in traditional top-down evaluations.
- Enhanced team dynamics: Peer feedback fosters a sense of accountability and collaboration, as employees become more attuned to how their actions affect their colleagues.
- Leadership development: For managers, 360-degree reviews provide valuable insights into their leadership style and effectiveness, helping them grow as leaders.
These are benefits Tesco has seen firsthand. When they introduced diverse perspectives into their performance review process, Tesco was able to identify specific development needs and tailor their training programs accordingly.
Overall, this led to better leadership practices and a more cohesive work environment.
Need more support and information on running effective 360 reviews? Check out our article: 360-Degree Reviews: The Easy Guide
What does the 360 review process look like with Mesh? It’s as effortless as possible to give employees confidence in what they share:
Step 1: Employees nominate reviewers from different levels and functions within the organization.
This can be done in collaboration with their manager or on their own.
Step 2: Reviewers provide anonymous feedback through a user-friendly online survey and with the help of our AI co-pilot Maven.
Step 3: Managers and employees review the report together, setting development goals and action plans based on the insights gained.
See Mesh in action with a customized demo reflective of your organization’s needs.
3 Performance Appraisal Best Practices (Expert Opinion)
1. Conduct performance calibrations
Performance calibration is the process of ensuring the performance ratings given by managers are consistent across the organization.
Calibrations work because they promote a shared understanding of performance standards and ensure that all employees are evaluated based on the same criteria.
Companies should hold calibration meetings before finalizing annual or bi-annual performance reviews. This timing allows managers to discuss and align their evaluations before ratings are communicated to employees.
Be aware that calibration meetings, if not managed properly, can introduce new biases thanks to groupthink and the influence of dominant personalities can skew the process.
2. Supplement performance reviews with talent reviews
Talent reviews are comprehensive evaluations that go beyond individual performance to assess potential, readiness for promotion, and developmental needs.
This practice is beneficial because it provides a broader perspective on employee capabilities and future roles within the organization.
By integrating talent reviews with performance reviews, organizations can create a more holistic approach to employee development.
The comprehensive nature of talent reviews ensures that employees are recognized not just for their current performance but also for their potential to contribute in future roles.
Interested to know more about the talent review process? Check out our guide: How to Conduct Talent Reviews (Effectively) in 2024
3. Align individual goals with organizational objectives
Setting OKRs isn’t enough if they aren’t actively aligned to your organization’s goals.
Aligning individual goals with organizational objectives ensures that employees' efforts contribute directly to the company's strategic priorities.
This alignment fosters a sense of purpose and engagement among employees, as they can see how their work impacts the broader organization.
Deloitte’s research has led them to conclude:
“Creating a sense of belonging at work is the outcome of three mutually reinforcing attributes.
Workers should feel comfortable at work, including being treated fairly and respected by their colleagues. They should feel connected to the people they work with and the teams they are part of.
And they should feel that they contribute to meaningful work outcomes—understanding how their unique strengths are helping their teams and organizations achieve common goals.”
It’s that last one that business aligned OKRs can facilitate.
Modern Performance Reviews - FAQs
Below I’ve answered the most pressing questions we get on modern performance reviews.
What are modern performance reviews, and how do they differ from traditional reviews?
Modern performance reviews are a continuous, flexible, and development-focused approach to managing employee performance.
Unlike traditional reviews, which typically occur once or twice a year and focus on past performance, modern reviews emphasize ongoing feedback, goal-setting, and growth.
Key features of modern performance reviews include:
- Frequent check-ins and conversations between managers and employees
- Real-time feedback and recognition from peers and managers
- Emphasis on employee development and career growth
- Alignment of individual goals with organizational objectives
- Use of technology to facilitate continuous performance management
Why are companies moving away from performance reviews?
Many companies are moving away from traditional performance reviews due to several challenges and disadvantages:
- Infrequent feedback: Annual or semi-annual reviews don't provide employees with timely, actionable feedback to improve their performance.
- Recency bias: Traditional reviews often focus on an employee's most recent work, neglecting their contributions throughout the year.
- Lack of objectivity: Managers may have biases that influence their ratings, leading to unfair or inconsistent evaluations.
- Limited employee development: Traditional reviews often fail to provide employees with clear guidance on how to grow and advance in their careers.
- Reduced motivation and engagement: Infrequent, critical feedback can demotivate employees and damage their relationship with their manager.
- Time-consuming and burdensome: Preparing for and conducting annual reviews can be a significant drain on time and resources for both managers and HR.
What are the current trends in performance management?
Organizations are adopting several trends to modernize their performance management processes:
- Continuous feedback: Companies are implementing tools and practices to facilitate ongoing, real-time feedback between employees, peers, and managers.
- Goal alignment: Businesses are using frameworks like OKRs (Objectives and Key Results) to align individual goals with company objectives and drive performance.
- Development focus: Performance management is shifting towards employee growth and career development, with an emphasis on coaching and mentoring.
- Flexible timing: Instead of annual cycles, companies are moving to quarterly, monthly, or even weekly performance check-ins to provide more timely feedback and support.
- Technology adoption: Organizations are leveraging performance management or enablement software to streamline processes, increase transparency, and gather data-driven insights.
- Holistic evaluations: Companies are considering a broader range of factors in performance assessments, including competencies, behaviors, and contributions to company culture.
