How Employee Review Systems Enhance Evaluations and Engagement

In the past two years, employees’ wants and needs have taken center stage in the fight for top talent. Companies have learned to adjust their strategies to respond to today’s talent landscape and attract more candidates. One area that’s especially true is performance management. Traditional employee review systems at many companies have been upended or even scrapped altogether in favor of more modern performance review programs.

It’s no surprise we’re seeing such a shift in how performance is evaluated. The talent landscape today is competitive and employee-centric. We’ve learned that only 14% of employees are motivated by traditional annual reviews. In addition, 95% of managers are not satisfied with their current review process.

Companies are listening and changing their approach to the performance review process. The number of companies conducting annual reviews has dropped from 82% in 2016 to 54% in 2019. Annual reviews are increasingly unpopular because once-a-year feedback is widely regarded to be ineffective.

But, that doesn’t mean evaluations are totally obsolete. It’s still necessary to talk about performance with your employees. An employee review system ensures that workers are aware of their performance and can improve or further develop their skills. However, paying attention to what actually works and what your employees want when it comes to reviews determines their effectiveness.

Keep reading to learn more about how modern employee review systems lead to better evaluations and more engaged employees.

How An Employee Review System Fosters Employee Engagement

With a large chunk of the workforce considering new roles, it’s become crystal clear that employee engagement is a top priority. 70% of leaders agree that employee engagement is the most important contributor to business success.

The benefits of cultivating an engaged workforce are numerous. Employee engagement affects everything from turnover to productivity to customer experience:

• Reduces employee absences by up to 41%
• Companies whose employees are engaged are 21% more profitable and outperform their competitors by 147% in earnings per share
• Higher engagement levels lead to a 25% decrease in turnover
• Engaged, inspired employees are 125% more productive
• Engaged employees are less likely to experience burnout at work
• Engaged employees are 27% more likely to report excellent performance
• According to SHRM, employees are five times less likely to quit
• Higher employee engagement levels lead to better customer experience

Luckily, we know that employee review statistics show that providing feedback is a top way to foster an engaged workforce. 43% of highly engaged employees receive weekly feedback. It’s clear, too, that receiving feedback is important to employees: 96% want more of it from their managers. An established employee performance review process that offers timely, specific feedback is not only beneficial to your organization but to your employees, too.

It’s important to make sure that employee evaluations are timely, specific, and not driven by negative feedback. According to Michael L. Zirulnik, executive director of The Varsity Project, reviews should facilitate employee success rather than serving as a tool for discipline. Doing that, he says, leads to “a healthier culture” and "more productive, happier, efficient employees."

Set Clear Expectations And Align Goals With An Employee Review System

Clear expectations and goal alignment are part of a successful performance management strategy and lead to higher levels of employee engagement. When those are part of the process in your employee review system, they’re even easier to accomplish. During reviews, managers can explain what’s expected of each employee when it comes to daily tasks, projects, and processes. Employees can confidently get their work done with a complete understanding of what their managers expect.

Performance reviews are also a time for long-term goal-setting, which plays a big part in employee engagement. Research shows that employees are more engaged with their work when they are involved in setting their own goals. With a powerful performance management system, you can set and track goals and monitor employees' progress. That allows managers to address obstacles or issues before they have a negative impact on achieving goals.

Managers can also make a point to talk to employees about how their specific goals contribute to larger business objectives. Aligning goals from the top-down helps employees see their value and clarifies what they’re working toward. Goal alignment also contributes to employees being more motivated to achieve their goals.

Get Employee Feedback

An employee review system sets you up to ask your people for their feedback, too. Giving feedback is a highly effective engagement tool. Employees who feel heard are much more likely to do their best at work. Regular feedback establishes trust between employees and their managers, too, which contributes to almost 15% less turnover.

Help managers start the conversation with employee review questions that prompt feedback. Training your managers on how best to ask for feedback helps them feel more comfortable asking for it. When managers use this approach, employees see that your company is walking the walk when it comes to getting their feedback.

Employee engagement surveys are an excellent way to ask for feedback. 58% of employees say they want their employer to send more surveys. Surveys help gauge sentiments across your organization and provide insight about opinions and issues you might not have noticed otherwise. Employee surveys can cover a range of topics your employees are likely thinking about, but might be hesitant to discuss directly:

• The success and efficacy of DEI initiatives 
• Preferences for remote, in-person, or hybrid work environments
• True engagement levels
• Employee Net Promoter Score (eNPS) gauging employee loyalty

Learning real employee opinions is highly valuable: management can see which sentiments are widely held and use that to make decisions. Decisions that affect the entire organization are no doubt much more well-received when they’re supported by employees’ real feedback. Anonymous surveys tailored to specific topics make it more likely your employees will provide that honest feedback. And, asking for feedback shows employees that their input matters and has a real impact on decisions made by leadership.

Spot Performance Trends Across Roles, Departments, And Company

Have you ever wished you could get a top-level look at performance trends across your company? You could quickly get a picture of average goal completion rates, performance scores, and evaluation completion rates. You could even sort results by role, department, and organization for another layer of insight.

Thanks to performance management software, all of that is possible. Cloud-based software keeps track of every performance review, review cycle, and survey response in one central database. The best software can produce reports for a greater understanding of performance as it relates to individuals, departments, and the entire company.

An employee review system powered by software has a competitive edge because of the depth of knowledge it can provide. HR professionals and leadership can’t address performance trends — whether individual or company-wide — if they can’t see them. With performance management software, your leaders can create reports and analyze real employee performance data. Then, they’re better equipped to implement impactful changes that improve performance.

Identify High-Performers And Promotional Opportunities

We’ve discussed the value of high-performing and high-potential (HiPo) employees in the past. High-performing employees are not only 400% more productive than average employees. High performers can also lead to team productivity levels that are about 15% higher. Outstanding employees are also essential to retain, given that replacing them can cost as much as 400% of their salary.

An employee review system helps HR teams and managers pick out individuals who are high-performing or high-potential. A robust log of past performance, open, mutual feedback, and a recognition-based culture makes it clear which employees are excelling in their roles.

This knowledge empowers leadership to more effectively manage performance for their top performers. A review system reveals which performance management strategies top talent responds to best. From there, leaders can refine their strategy and focus on what is proven to work at their organization.

Recognize Employee Accomplishments

Recognition is an important part of the review process because it’s a top driver of employee engagement. 70% of employees say having their contributions recognized would improve their morale and engagement. 37% even say that recognition is the top thing their company could do to enable their success.

Recognition can also decrease turnover by up to 31%.  Peer recognition is highly effective, with a 36% higher positive impact on employees than manager recognition alone. Recognizing your employees might seem like a simple strategy, but it’s clear employees crave more of it and respond to it very positively.

The main reason we conduct reviews is still true: it’s necessary to evaluate employees’ performance. But, they should also serve as a time to recognize your employees’ contributions. Your employee review system can encourage all employees to thank one other, especially if it’s powered by software that tracks those interactions. Managers can incorporate those thanks into regular reviews to build and strengthen a culture of recognition and gratitude.

The benefits of engaging your workforce are clear and almost too many to count. Is there a single company that doesn’t want lower turnover, more productive employees, and higher profits? Yeah, we doubt it, too!

What’s one fact we have no doubt about? That would be the fact that your employee review system can serve as a performance and engagement driver. With proper implementation and execution, your system can support engagement efforts and give you the tools to monitor their effectiveness.

ClearCompany can help you take employee reviews from uncomfortable meetings to conversations that drive performance. Customize our Performance Management and Employee Engagement tools to fit your business’s unique needs. From multiple review types to employee surveys, with ClearCompany, you have the tools you need to build an effective performance review system.

See the powerful effect of an employee review system on the review process and engagement levels at your organization. Sign up for a demo from the ClearCompany experts today.