How Employee Annual Performance Reviews Can Make Or Break Customer Experience

Companies have figured out their employees’ experience can make or break them in the age of the customer. Not that how satisfied and engaged the employee was never important; the difference today is that the causality between customer satisfaction, revenue and the employee has never been clearer. Human resources departments, a term which increasingly sounds like an oxymoron in today’s climate, and their company leaders are slowly accepting that platitudes on posters about how much they care about employees are over.


Free food, ping pong and open seating are becoming passé as a result of companies proactively involving their employees to shape cultures and workspaces that enable them to be their best. The impact on customer experience as measured by the customer’s perceived value-add of key interaction points is justification for companies to continue on this path.  It’s a win-win-win.

One of the biggest challenges in customer alignment is change management — the rooting out of age old practices and sacred cows.  Many of which used to be the very foundations of what was believed to make an organization successful.  One such practice is the annual employee performance review.

Employees today, regardless of generation, want continuous timely and relevant feedback. Not just to improve their performance but also in response to FOMO. Companies operate at a pace that demand employees be informed of changes before, during and after they’ve happened. Only through continuous meaningful feedback can employees continually adjust their priorities, work methods and skills to stay ‘vectored’ to company strategies and objectives .

To understand more about why and how the annual performance process actually hurts companies, I interviewed two experts that come to this discussion from very different perspectives.  Vip Sandhir is CEO and Founder of HighGround, and Michael Brenner, keynote speaker, author and CEO of Marketing Insider Group.

Christine Crandell: Why are organizations are moving away from conducting annual performance reviews?

Vip Sandhir:  While annual performance reviews are intended to give employees a holistic view of their progress, they are anxiety-inducing, can damage the employee-manager relationship, and worst of all, are backwards-looking. Today’s employees — especially Millennials — want to find meaning in their work, frequent feedback and recognition for their contributions. Organizations have recognized that annual performance reviews no longer fulfill employees’ needs, hastening the move to more continuous feedback models.

Michael Brenner: I mostly agree. Employees loathe them almost as much as managers and most executives know they do not incentivize higher performance. Effective annual performance reviews with regular feedback may simply be effective only because of the regular feedback. When I had to give performance reviews, I had weekly feedback sessions with employees and those sessions alone drove higher performance. The annual performance review did not serve me as an employee, as a manager, or as an executive.

Crandell: How can frequent performance conversations improve an organization’s ability to deliver quality customer experience?

Brenner: Gallup’s quarterly surveys on employee engagement show that the biggest factor in engaged employees is in having “a manager who seems to care about me as a person.” Frequent feedback allows the manager to check-in with employee’s performance but it also allows the employee’s goals to be reinforced, they allow for an explanation of how the employee’s performance is impacting the overall goals of the team or company. They also allow a discussion on ways to improve in near real time. And finally, they allow the manager and employee to discuss what it going well.

Sandhir: Frequent performance conversations can empower employees to do their best work, which ultimately drives their ability to deliver great customer service. Just as sales teams now look to optimize the customer experience rather than solely focusing on hitting their targets, HR departments also need to adopt strategies that strengthen the entire employee experience. Rather than waiting until an annual review to address concerns and opportunities for growth, employees can initiate monthly or quarterly feedback conversations with their managers. In doing so, employees hit their goals more often and more effectively, which ultimately results in better serviced customers.

Successful CX starts with creating two-way dialogue between managers and employees – a tactic that can reinvigorate the passion and motivation workers need to make good on their promises to customers. Integrating peer-to-peer (P2P) feedback can also foster improved CX as our report found that this tactic reduces employee anxiety around performance check-ins. By leveraging P2P feedback, employees use insight from their colleagues to build upon their skills and meet customers’ needs in the process.

Crandell: What’s the best way for companies to ditch the annual review process?

 Sandhir: Before rolling out revamped performance management processes, HR needs to get buy in from executive leadership and create a communication plan from the top down. Leadership teams want to ensure the HR platform encompasses the entire employee experience, so organizations should seek technology that’s nimble and can be customized to meet each employee’s needs and preferences.

While it’s critical to get the C-suite on board, it’s just as important to ensure managers and employees understand why you’re making the switch, given they’re the ones most affected by it. From there, HR should arm managers with the tools they need to carry out frequent and productive conversations with their employees –  whether that’s a full performance management and employee engagement platform or a standardized document for check-ins. This training will allow managers to engage in conversations that excite employees, not intimidate them.

Brenner: I completely agree that this cannot be just an HR-led initiative. And often the successful regular performance programs originate from leadership visions to improve employee engagement, to connect with employees on the overall vision, and to provide employees with a place where they are proud to work . My regular reviews include three simple questions:

• How are you doing?

• How am I doing?

• How can I help?

Crandell: How do preferences for performance conversations differ across generations?

Sandhir: We found that Millennials are spearheading the push for more frequent conversations: 58% of millennial managers hold at least weekly performance conversations with their employees compared to only 39% of their Baby Boomer counterparts.

When it comes to format (in-person vs. virtual) for performance conversations, we found that preferences are fairly consistent across generations. For instance, we found that Millennial managers are almost just as likely as Baby Boomers to hold in-person development conversations (59% vs. 62%). This is clearly one area where Millennials defy the stereotype for preferring technology to communicate.

Crandell: How can performance feedback keep employees aligned to evolving corporate objectives and strategic plans?

BrennerThe biggest gap occurs on vision and mission. Many companies state their vision as something like being the largest supplier of widgets. Their mission is sell more widgets. And who is inspired by that?

The vision should be a future goal that every employee would want to help achieve . The mission should define what impact the business has on customers. When these two elements are in place, every executive, manager and employee can start to ask, for every task, ‘does this support the mission and future vision?’

Corporate culture is defined by values. And values are reinforced by who gets hired, fired and promoted. Executives and managers need to consider more than just performance when making these decisions. We have all worked with smart and high-performing jerks. But a values-based culture would ask that employee to consider their behavior and the effect it has on the culture and other employees.

Sandhir: Our report shows that there is a gap in communicating corporate objectives in the first place.  If executives are more transparent about what the target goals are each year, employees can think of their own goals in terms of how they contribute to the bigger picture.

Development conversations between managers and employees tend to focus on employee-centric issues rather than the company’s goals – only 46 percent discuss company performance goals during check-ins. Though discussing an individual’s performance and potential areas for growth is essential, the most effective feedback conversations also address the company’s overall strategy and well-being as well as how an employee plays a part.

To better align personal goals with overarching company objectives, managers should first reinforce the organization’s strategy, values and mission. From there, they can work with employees to craft attainable goals that contribute to the company goals. If, for example, a company goal is to inject more creativity into customer service, employees can add value by setting a personal objective to brainstorm new tactics for customer experience. By providing consistent feedback on progress, employees are reminded to keep their eyes set on the bigger picture rather than get caught up in the daily grind.

First published in Forbes

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