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A new study demonstrates just how much performance reviews are failing employees. Even so, those who use performance reviews defend the value they provide to their organizations. Of the more than 1,900 U.S.-based employees BambooHR polled to learn how effective performance reviews are, only 58 percent of respondents participate in formal performance reviews today. And yet, 89 percent of respondents who are still involved in performance reviews feel the process is valuable to their organizations. Traced back at least as far as fourth century China—and first commonly used in the U.S. during the Industrial Revolution— employers used performance reviews to measure employee production against corporate goals and expectations. Traditionally, they have given little attention to vital goals like employee development. Because of this, the workforce experienced a massive migration away from the practice of performance reviews in 2012, led by Adobe and other employee-minded companies. Although there may be a need to keep performance reviews so companies can measure performance, the process needs to change to accommodate employee growth and development. bamboohr.com © 2015 BambooHR LLC. All Rights Reserved. WHO DO PERFORMANCE REVIEWS REALLY HELP? STUDY FINDS PERFORMANCE REVIEWS DON’T HELP EMPLOYEES KEY RESULTS • 61 percent of respondents don’t feel their companies routinely look for opportunities to provide career development following the review. Only 58 percent of the current workforce are involved in performance reviews. Three out of four respondents who are involved in performance reviews feel that they get good feedback that helps them grow. However, when it comes to actually implementing the feedback, many respondents feel they have to go it alone, since 52%61% 55% • 55 percent of respondents don’t feel their companies address the concerns or suggestions that the employee raised in the evaluation. • Following a performance review, 52 percent of respondents don’t feel that their company helps them continue to make and meet goals. 89 percent of respondents who are involved in performance reviews feel that performance reviews are either “somewhat valuable” (38 percent) or “very valuable” (51 percent) to their organization. Even though 89 percent of respondents feel performance reviews are valuable to their organizations (i.e., “somewhat valuable” or “very valuable”), members of management and CONCLUSION HR find the practice much more valuable than the average employee: • 34 percent of non-management feel performance reviews are “very valuable.” • 58 percent of management (non-HR) feel performance reviews are “very valuable.” • 70 percent of HR feel performance reviews are “very valuable.” Men (57 percent) are more comfortable being honest in a performance review than women (42 percent). This may be related to the fact that • significantly more men (73 percent) than women (53 percent) trust their companies to keep their performance review feedback anonymous; • significantly more men (73 percent) than women (59 percent) are asked for their input in improving performance reviews. No matter how you divide respondents, very few respondents prefer to receive feedback in a scheduled performance review: Non-Management: 18 percent Management: 16 percent HR: 16 percent Respondents in SMBs (under 500 employees): 17 percent Respondents in large companies (500 or more employees): 16 percent Female respondents: 15 percent Male respondents: 20 percent Only 4 percent of all respondents feel that performance reviews are the best way to motivate and engage employees. Instead, they prefer to be motivated through • Open, informal conversations (24 percent) • Getting raises (18 percent) • One-on-ones more geared toward career path (17 percent) • Managers listening to their ideas and using them (15 percent) • Getting more employee recognition (13 percent) The results illustrate that the majority of companies are holding onto performance reviews because they think it has value to their organization, even though it’s verifiably not benefitting the majority of employees involved in the process. Employees, however, want development, motivation and recognition that will help them grow and benefit their companies. Incorporating these actions into the performance management process could benefit both companies and their employees. ABOUT THE RESEARCH The May 2015 study employed simple random sampling to collect responses via an online survey of 1,933 individuals over the age of 21 who were currently employed by companies of more than 50 employees. This research was generated by BambooHR. ABOUT BAMBOOHR BambooHR is the leading provider of tools that power the strategic evolution of HR in small to medium-sized businesses. BambooHR’s cloud-based system is an intuitive, affordable way for growing companies to track and manage essential employee information in a personalized Human Resources Information System (HRIS). Now HR managers have more time for meaningful work; executives get accurate, timely reports; and employees can self-service their time off using a convenient mobile app. BambooHR’s clients include innovators like SoundCloud, Foursquare, Freshbooks, Lyft, Stance, Fitbit, Shopify and Squarespace, among thousands of others in more than 80 countries worldwide. To find out more, visit bamboohr.com or follow us on Twitter at @BambooHR. bamboohr.com © 2015 BambooHR LLC. All Rights Reserved. Still, 89 percent of those currently using performance reviews argue that companies beneﬁt from them. Performance management is more than just checking a box. It’s about cultivating culture and inspiring employee growth. Stop doing performance reviews and start managing people. To beneﬁt employees and companies, performance management should be The May 2015 study collected responses via an online survey from 1,933 professionals over the age of 21 who are currently employed by companies of more than 50 employees. This research was generated by BambooHR. Who Do They Really Help? Performance reviews were designed to help managers know who was performing and who to ﬁre. Companies changed. Leaders realized company success lies in their employees. But performance reviews didn’t change. Outdated performance reviews make employees unhappy. Performance reviews no longer ﬁt today’s workplace. 89% Because of this, 42 percent of respondents’ companies don’t do performance reviews at all. 16% Only 16 percent of employees prefer to receive feedback in a formal performance review. Only 4 percent feel that performance reviews are the best way to motivate and engage employees.4% But DO employees benefit from performance reviews? 67 percent feel they are not heard during their reviews. 61 percent say their companies don’t look for opportunities to provide career development afterward. 55 percent say their companies don’t address concerns raised during performance reviews. 62 percent don’t see changes occur from feedback they give. 52 percent say their companies don’t help them make and meet goals. 56 percent say they don’t receive raises or bonuses for great performance. The top 5 ways employees want to be inspired and motivated Performance reviews help companies monitor performance, but they don’t help employees improve performance. And it’s not just employees who feel this way. o p e n , i n f o r m a l c o n v e r s at io ns p e rs on alized rec o g n i t i o n r a i s e s & p r o m o ti o n s i d e a s h e ar d and im pl e m e n t e d o n e - o n - o n e s g e ar ed to w a r d c a r e e r p a t h Mid-Century: IN THE BEGINNING: Today: PERFORMANCE REVIEW MISPERCEPTIONS They create a culture of competition, not collaboration. They create unnecessary politics. They are an inaccurate reﬂection of performance. They hurt engagement and innovation. Nothing constructive comes from them. 3 out of 4 HR professionals are critical of performance reviews HR’s top 5 criticisms: Work has changed. Performance reviews have not. Let’s bring them together. simple accurate motivational 42% onto performance reviews because they think it has value to their organization, even though it’s verifiably not benefitting the major