Why HR software is necessary for effective performance reviews

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It’s quite difficult these days to find any HR leaders, line managers or employees who don’t think the annual performance review system is a little bit broken. While appraisals are designed to improve employee performance, drive goals, and support learning and development (L&D), many organisations struggle to ensure they achieve the desired outcome, leaving everyone frustrated by the whole process.  

 In fact, research by the Society for Human Resource Management found that 95% of employees are dissatisfied with their company’s appraisal process; while a survey by Gartner revealed that 82% of HR leaders felt that performance management wasn’t effective at achieving its primary objective.  


The problem with performance reviews 

 I’ve never met a manager who says they love doing appraisals,” remarks Helen Armstrong, CEO and founder of Silver Cloud HR. “Managers, employees, HR, senior management – they are all frustrated with performance reviews. But we still find that most companies are stuck doing what they’ve always done, which makes the problems with performance reviews seem deeply embedded. Problems like the amount of time and effort they take, the rigidity of review timings, the overwhelming number of objectives. Not to mention that performance reviews increasingly don’t work for the way we work anymore. As we work more and more closely in teams, individual performance objectives, that aren’t linked to shared goals, make less and less sense.” 

 There are several issues with traditional ‘once per year’ performance reviews, adds Philippa Barnes, director of ReThink HR. “The first is making time for them – managers are always busy so asking them to find the time to prep for, hold and write up an annual review for each of their team can feel like a daunting task. Second is the lack of training to deliver effective feedback – feedback needs to be delivered regularly and constructively if it is to motivate, engage and develop the team member; waiting until the annual review and then delivering negative feedback is not a productive experience for either party. Third, feedback is most effective if it is given linked to a specific, recent event – we all learn best from doing and there are always ‘wins and learns’ in any situation, but we need to take the time to reflect regularly to get the most value from ongoing feedback and learning.” 

 A lack of employee involvement in performance reviews can also be an issue for some organisations, says Nicki Robson, managing director of Breedon Consulting. “Performance reviews can sometimes be one-sided, with employees feeling they have little input or control over the process. Another common problem is insufficient follow-up – without proper follow-up, the goals and development plans set during reviews may be ignored and not revisited until the next review, which is too late.” 

 Some managers don’t always refer back to the reviews, which makes it hard for them to recall the full year, focusing only on what has happened recently, comments Helen Armstrong. “But more than that, they don’t truly serve the purpose we think they do,” she adds. “These reviews have become a system to manage poor performers and generate a rating that decides bonuses or salaries.” 

 The way that organisations handle performance and L&D in general can also often be problematic. “Sometimes, L&D initiatives are not aligned with the broader business objectives, making it hard to measure their impact,” says Nicki Robson. “Plus, having a one-size-fits-all approach without recognising the individual needs and career aspirations of employees, let alone their preferred learning styles, can mean that programmes aren’t effective in improving performance.” 


Finding a different approach 

 So how can organisations overcome these challenges and find a way to make performance reviews more effective, valuable, and consistent? The first step is to move away from once-a-year feedback and instead encourage regular, ongoing check-ins, alongside more formal reviews. 

 “Moving to a culture of continuous conversations or regular check-ins can alleviate many of the issues associated with performance reviews,” says Philippa Barnes. “Managers should be meeting with their team members one-on-one on a regular basis already, so adding a short element of performance and development review to these sessions should not be onerous. Providing and receiving feedback allows for quick changes to be made or support given for development, and the benefits can be seen by both sides in the short term.” 

 HR must also ensure employees are engaged in the process, adds Nicki Robson. “Involve employees in the review process, allow them to set personal goals, contribute to the agenda and include their career aspirations. Also, provide training for managers on how to conduct effective reviews and eliminate biases.” 


The benefits of technology 

 One of the most important things HR can do, however, is to leverage HR software to enable continuous feedback and reflection, real-time analytics, and employee engagement.   

 “HR software is a game-changer for performance reviews, addressing key challenges like inconsistency, bias, and inefficiency, whilst fostering engagement and strategic alignment,” remarks Charlie Fairbank, CEO of Avery Fairbank. “It standardises evaluations, minimises biases through data-driven insights, and automates data analysis for efficiency. More than this though, it enriches the review process with continuous feedback, links individual goals with organisational objectives, and integrates learning and development to tailor growth opportunities directly from review outcomes.” 

 He adds: “By advocating for HR technology, we help organisations to not only streamline their review processes, but level-up their talent management through the enhanced employee satisfaction and strategic goal setting achieved through use of this type of software, which can then help companies maintain a competitive edge in their industry.” 

 HR systems are becoming increasingly more sophisticated with more configurable online forms, notifications, and reminders, says Helen Armstrong.  

 “In today’s multi-generational workforce, speed and convenience is everything. And people like self-service for everything in their lives; it should be the same at work. Software is what can enable that. Additionally, performance systems give HR a ‘real-time’ look at how reviews are going, so the data is up-to-date and easy to report on too. Historically, appraisals have been very manual and not reportable, making it impossible to know if they are effective.” 

 Robust HR software can also help to enhance employee experience and employer branding, she adds. “Enabling your employees to have more impact on their performance is a great way to showcase values like autonomy and responsibility.” 

 When implementing HR software to improve performance management, there are a few steps employers can take to ensure it is a success. First, says Helen Armstrong, map out how you want to manage performance going forward.  

 “Will you continue to measure performance the way you always have, or will this be an opportunity to rethink appraisals?” she asks. “Then, really consider reporting requirements and data analytics for key stakeholders from the start. Is there a way to get real-time data? Will you have easy access to previous reviews and data? You should look for the ability to do continuous assessment or reviews, not just annual ones. And, along those lines, be sure you can refresh objectives regularly so that they keep up with changing business goals. 

 “Also, consider your end users and different ways of gathering feedback across the company. Is there a way to gather 360-degree feedback? How much of the process can employees and managers own? Is it quick and easy for users to put feedback into the system? Thinking about it this way changes the HR-owned world of appraisals.”