Return on Investment (ROI) of using Performance Management Tools

Learn to calculate the ROI of performance management tools to ensure leadership buy-in with this detailed guide before you purchase one.

7

min read

In recent years, there has been a steady rise in the focus on gauging and increasing the ROI of performance management tools as organizations come to realize how having an efficient performance management system impacts the bottom line and facilitates a pleasant employee experience.

In this article, we will talk about how reinventing the wheel with the adoption of performance management tools can help organizations achieve unparalleled success by combating the challenges in traditional performance management. 

Furthermore, we will highlight how organizations can secure leadership buy-in by creating a business case with return on investment for the right software. 

Performance management matters: Here’s why

Before we start discussing the challenges in traditional performance management and how performance management tools can help you navigate the same, let us quickly understand why performance management matters. Here’s what the numbers say — 

94% of individuals would stay at a job longer if it helped them grow; performance management plays an intrinsic role in employee development
79% of employees who quit their jobs cite a lack of appreciation as a key reason for leaving; performance management can facilitate timely recognition 
Organizations that were in the top quartile of employee engagement see 21% higher profitability; performance management can greatly augment engagement levels
75% of workers have experienced burnout; performance management can help preempt burnout by constant tracking to eliminate the same

Challenges in traditional performance management system 

While the business case for performance management is very strong and makes business sense, many fast growing organizations have been able to reap only limited benefits.

Only 8% of companies believe their performance management process is highly effective in driving business value
58% businesses say it’s not an effective use of time
91% of people believe company’s performance management process could be better

There are several challenges in the traditional performance management systems that limit the success and impact for organizations, rendering them unable to achieve a high return on investment on their performance management tools. Let's have a quick look at some of the major drawbacks of current performance management process:

1. Reliance on manual methods

70% of companies require a PA or HR representative to collect feedback via email, Word or Excel

The first major challenge of traditional performance management is reliance on spreadsheets and manual methods. Invariably, the process is replete with inefficiencies, which can simply be eliminated with the adoption of the right tools

2. Time intensive

Managers spend 210 hours a year on performance management, and employees spend 40 hours a year 

Second, traditional performance management can be highly time consuming. This involves time spent on gathering feedback, collating different data points, creating reviews, having conversations, and much more. 

Consequently, managers struggle to complete their reviews on time. 

As many as 50% of employee evaluations were overdue by 30 days or more

While phases like 1:1 conversations require manager involvement, many other parts can be automated to make them less time intensive. 

Performance management tools like SuperBeings even make it easier to hold 1:1 conversations easily with guided templates, automated scheduling and AI recommended talking points. Click here to see how it is done

3. Lack of accuracy and motivation

51% of employees believe that annual reviews are inaccurate
53% say it does not motivate them 
Two-thirds of performance management systems fail to recognize high performers

Third, being a manual approach, most performance management tools follow an annual cadence or frequency. They generally focus on annual reviews and appraisals and rarely have any mid-point check-ins.

SUPER TIP — Check out free SuperBeings Playbooks on how to conduct weekly, monthly, quarterly performance check-ins. 

Moreover, the lack of accuracy in employee evaluation leads to low levels of motivation and engagement for the employees resulting in negative trends of high turnover, absenteeism, lower productivity rates, etc.  

98% of businesses believe performance management is important. Only 64% say they have an effective approach to it

This clearly indicates that the traditional performance management process that relies on only human interventions and an annual approach is broken and requires fixing. 

Now let’s explore how. 

Reinventing performance management with performance management tools

Fixing the traditional performance management approach, requires aligning performance management with the dynamic market realities and changing employee expectations. 

Organizations today need to focus on consistent performance tracking and management with continuous feedback and communication, backed with integration across teams and a focus on regularly gauging employee pulse

While it is true that a lean human resource structure of a fast growing organization may not be able to realize all these, adoption of the right performance management software can help take the leap. Even research shows that such transformation is already on the cards.

81% of HR leaders are making changes to performance management
70% organizations are either updating or have currently reviewed their performance management systems 

One of the major changes that most high growth organizations are advocating is the adoption of a performance management software.

The right performance management software enables fast growing organizations to go beyond performance tracking to focus on each aspect of the employee lifecycle to create a high performance culture. An efficient performance management tool help organizations to:

  • Know their teams better with personalized assessments and gauge individual strengths to manage performance of each team member more effectively.
  • Facilitate continuous performance management and engagement by conducting powerful and goal driven 1:1 conversations based on individual performance insights.
  • Track performance trends over time and access a detailed history of performance at any time to eliminate any form of biases and compare performance over time

Check how SuperBeings can help you supercharge your team’s performance with its all-in-one performance management tool. Book a free demo today 

Impact and ROI of performance management tools 

Now that the importance of performance management software has been established and there is a clear understanding how the same can help fast growing organizations, let’s explore the impact it can create with its diverse use cases. 

1. Better understanding of employee strengths

41% of team members who are aware of their strengths show lower absenteeism

The right performance management software can help organizations understand each team member and identify their strengths. These strengths can then become the basis for work delegation to ensure that the tasks allocated to employees are aligned with their strengths, interests and workstyles. They are able to create greater value because the work allocated to them motivates them. 

2. Effective output measurement

Measuring output or outcomes also becomes more efficient with performance management tools. With high levels of progress and evaluation transparency, performance snapshots, it can help measure the output for each team member as well as the organization as a whole. This makes it easy for managers to gauge whether the targets have been met or not, as well as, to acknowledge and appreciate those who made it possible. 

3. Streamlined goal management

Goal setting is extremely important for creating a high performance culture. The right performance management software can facilitate end-to-end goal management for your fast growing organization. 

Not only will it enable you to set goals in an actionable manner based on employee personality assessment and organizational needs, but you can also track progress daily, integrate goal progress with 1:1 check-ins to preempt risks to goal achievement and address them in real time. Furthermore, it can facilitate accountability for goal achievement as well. 

14% of individuals have goals and are 10 times more successful than those without goals. The 3% with written goals are 3 times more successful than the 14% with unwritten goals.

Performance management tools also help document the goals to facilitate goal visualization and transparency. 

4. Effective 1:1 meetings

Performance management software enables organizations to conduct 1:1 meetings more effectively. While most managers believe that 1:1 meetings are critical for performance improvement, they generally struggle with making the conversations meaningful. The right performance management tools can help managers gauge employee pulse and get employee performance related data points along with guided AI driven templates to augment effectiveness.  

70% of managers leverage 1:1 meetings to understand and eliminate roadblocks in performance

Effective 1:1 meetings can facilitate a high performance culture. According to a study, employees who do have regular 1:1 meetings with their managers are 3 times more likely to be engaged. Thus, this creates a clear case for return on investment for performance management tools. 

5. Greater engagement

As performance management tools also enable organizations to adopt a continuous approach to performance management, employees are able to share their perspectives more often, participation is higher and engagement becomes more pronounced. On the flip side, only 8% of organizations say annual appraisals add val­ue. 

Highly engaged business units achieve 59% less turnover

This greater engagement with performance management software leads to effective business impact, with a realization of return on investment. 

Employees who feel their voices are heard are 4.6 times more likely to feel empowered to perform their best work.

6. Frequent feedback

Companies that implement regular employee feedback have turnover rates that are 14.9% lower than for employees who receive no feedback

Continuous performance management also empowers organizations to provide frequent feedback, and in real time. Under annual performance management, organizations tend to provide feedback only once a year, which doesn’t create a pronounced impact. Continuous feedback on the other hand enables organizations to preempt risks in real time and address the same before they turn into performance issues or challenges. 

Companies that do regular strengths-based feedback have ~15% lower staff turnover and the ROI from increasing feedback is at least 8x

Furthermore, there is significant data to support how continuous feedback leads to a return on investment for performance management software — 63% of Gen Z employees  say they want to hear timely, constructive performance feedback throughout the year. 

7. Real time recognition

80% of Gen Y say they prefer on-the-spot recognition over formal reviews 

Another impact that translates into ROI for performance management tools focuses on the ability to offer real time recognition. Conventionally, organizations wait till the end of year to review employee performance and celebrate a job well done. However, instant recognition and appreciation is seen to have a more pronounced impact. 

Performance management tools help organizations to acknowledge good performance in real time, leading to reduced attrition and a better employee experience. For instance, 36% of employees leave organizations due to lack of recognition

8. Performance tracking over time

Traditionally, performance management is seen to be a one time affair and there is seldom any tracking over time to gauge trends. However, performance management tools help organizations track employee performance over time, generate insights and trends and work towards bridging the gaps. 

It can enable organizations to maintain a comprehensive record of employee performance, at one centralized location, without adding burden to people managers. Thus, a clear ROI of performance management tools comes from the ability to get a holistic picture of performance improvement over years, than a simple siloed one. (Keep reading to see how you can save minimum Rs. 60,000 per year, per employee by implementing the right performance management tools) 

9. Focus on 360 degree review

More than 85% of all the Fortune 500 companies use the 360 degree feedback process

Finally, the traditional performance management approach due to its reliance on manual methods focused only on performance reviews and management from the direct report or manager. 

Leveraging technology and automation, performance management software enables organizations to focus on 360 performance management. This is especially crucial for fast growing organizations. 360 degree performance review can help organizations gauge the performance and impact of the employee beyond the allocated tasks towards overall organizational success. 

How to calculate ROI for performance management software

The impact or the ROI in qualitative terms that performance management tools can help organizations achieve is very evident. However, putting a business hat on, it is important for organizations to also understand how to calculate the ROI in more quantitative terms. 

Based on interactions with many fast growing organizations, we have identified the top metrics that organizations can employ to calculate the ROI of performance management software. 

1. Time saved for employees and managers

Organizations can start by calculating the time saved for both employees and managers. With the power of automation, managers don’t have to repeatedly spend time gauging employee performance as well as getting feedback on performance. 

Similarly, for employees, the time spent in self reflection and opinion on the organizations can be significantly reduced with daily pulse surveys which take less time and have a higher rate of completion. 

Therefore, ROI can be calculated by taking into account the time saved in administrative tasks for employees and managers towards performance management by leveraging automation. You can also take this calculation in monetary terms.

ROI of PMS = Time saved in hours X Hourly cost to company for the manager/employee
For instance, if you save 5 hours a month, that is a total of 60 hours a year, and if the hourly compensation for your manager is INR 1000 an hour, you end up saving:
60X1000= INR 60,000 per year for each manager

2. Reduced rate and cost of turnover

Secondly, performance management tools also facilitate real time feedback, recognition as well as engagement. All these factors have a direct impact on employee retention. Therefore, the next metric to calculate ROI of performance management software is to gauge how it has contributed to reducing the rate of voluntary turnover. Invariably, the reduced rate of turnover will have a direct impact on the cost.

Thus, ROI of performance management tools can also be calculated on the basis of cost savings that might have been incurred due to high turnover. 

You can translate this in monetary terms too. Research shows that the average cost of attrition for each employee can range from 50%-250% of his/her annual salary.  The cost of attrition depends on the leadership position, experience and institutional knowledge.

Salary of employee= INR 10,00,000
% cost for attrition= 200%
Total cost of attrition= 10,00,000 X 200% = INR  20,00,000  

3. Saved bandwidth for HR and people management teams

When it comes to performance management, the human resources and people management teams are often too stretched because of managing all the spreadsheets, responses and follow ups. 

However, with the adoption of a performance management software, automation can help these teams to take care of many repetitive tasks and open their bandwidth to focus on augmenting employee experience.

Therefore, another ROI area to consider is around how much time the performance management software is able to free up for people managers to enable them to focus on adding value to employee lifecycle.  

4. Reduced absenteeism and greater engagement

Next, if you want to calculate the ROI for performance management tools, measure the level of absenteeism and engagement since the adoption. You will see reduced absenteeism as employees will be more engaged and motivated towards their work. Invariably, there will be a reduction in days off, leading to a greater business impact.

To calculate the ROI here, compare the level or rate of absenteeism before and after adoption of the performance management software. Further, calculate how this reduced absenteeism leads to better productivity and output across the organization. 

Final Thoughts

Overall, if you take a macro view, there are several avenues which can help you gauge the return on investment of using a performance management software. It can help you to not only track performance effectively, but augment levels of engagement, motivation, productivity as well as reduce absenteeism and voluntary turnover. Putting numbers to all of these will help you measure it against the cost of the performance management software to understand the benefits and ROI greatly outweigh the costs. 

Like what you read? Book a free demo with SuperBeings today and see these in action!

Suggested Reading

8 point checklist to find the best performance management software

Complete guide to continuous performance management

References

https://learning.linkedin.com/

https://www.octanner.com/insights/white-papers.html

https://www.gallup.com/workplace/236366/right-culture-not-employee-satisfaction.aspx

https://www.flexjobs.com/blog/post/flexjobs-mha-mental-health-workplace-pandemic/

https://www2.deloitte.com/us/en/insights/focus/human-capital-trends/2014/hc-trends-2014-performance-management.html

https://www.shrm.org/resourcesandtools/hr-topics/employee-relations/pages/performance-reviews-are-dead.aspx

https://www.shrm.org/

https://www.workhuman.com/

https://www.gartner.com/en/newsroom/press-releases/2019-11-19-gartner-says-81--of-hr-leaders-are-changing-their-org

https://www.wtwco.com/en-US

https://www2.deloitte.com/content/dam/Deloitte/ar/Documents/human-capital/arg_hc_global-human-capital-trends-2014_09062014%20(1).pdf

https://news.gallup.com/businessjournal/147383/secret-higher-performance.aspx#:~:text=In%20one%20study%20of%2065%2C672,for%20job%20type%20and%20tenure)

https://www.prnewswire.com/news-releases/failure-drives-innovation-according-to-ey-survey-on-gen-z-300714436.html

https://www.eliinc.com/wp-content/uploads/eli-millenials-workplace-infographic.pdf

https://www.achievers.com/

https://www.forbes.com/sites/jackzenger/2016/03/10/how-effective-are-your-360-degree-feedback-assessments/?sh=76e41497a690

Sudeshna Roy

Marketing, SuperBeings

Hi There! I am Sudeshna. At SuperBeings, I lead our content strategy to bring you the best and latest on everything related to people management

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OKRs
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Agile and OKRs: What You Need to Know to Thrive in a VUCA World

It is no longer an assumption that the traditional approach to annual goal setting and review has run its course. The VUCA world demands more quick and adaptable business models.

While the agile values and methodology was initially created for software delivery, you can apply the same to transform how you set and achieve your business goals. 

In this article, we will focus on:

  • Relevance of agile and OKRs in the VUCA world
  • Importance of leveraging agile techniques for OKRs
  • Best agile and OKR framework for growing organizations

Why you need to reimagine goal setting in the VUCA world

Traditionally, goal setting has been a very static and long-term process for organizations. Here are a few key components of traditional goal setting and performance management:

  • Annual or multi-year goals with little or no interventions at regular intervals to realign on changing priorities
  • Top-down approach — goals being set by those at the top with minimal inputs from those working on the ground
  • Only annual feedback cycles and the inability to identify or address challenges in real time
  • Lack of flexibility to adapt to changing circumstances or situations, which are uncertain and ambiguous

This form of goal setting and performance management had relevance for organizations operating in steady and stable market conditions. 

However, in today’s VUCA world, the pace of change is skyrocketing and organizations unable to tide with the same are finding it extremely difficult to survive, let alone thrive. 

Some of the reasons to reimagine goal setting for VUCA world include:

  • Increased globalization requires businesses to be agile and adapt to changes at all times
  • Focus on creating short term goals and action plans
  • Need to relook at business priorities due to changing market conditions and customer expectations 
  • Need to incorporate constant feedback from diverse stakeholders
  • Need to focus on collaborative goal setting over top down command

Relevance of agile and OKRs for growing organizations

While it may not be apparent in the first look, agile and OKRs are quite complementary and combining the two can be a great step for growing organizations. Here’s why —

  • OKRs can help you understand the end goal and envision what success will look like. 
  • On the other hand, the agile methodology can enable you to create the right roadmap with frequent experimentation to reach the OKRs successfully. 

Here are a few reasons why you should combine agile and OKRs for your organization:

  • Set shorter goals for each quarter with the flexibility to look at the results in real time
  • Agile iterations based on learning which can be communicated across teams 
  • Shorter feedback cycles which prevent investment losses that might occur if the whole project/ goal has to be reworked
  • Continuous improvement with frequent retrospectives which can enable you to reflect on what is working well
  • Focus on collaborative goal setting and performance management with team autonomy
  • Agile approach to progress tracking

How to use agile techniques for OKRs

Now that it is clear why working agile and OKRs together makes sense for growing organizations, let’s quickly explore the top ways in which you can apply agile techniques to your OKR framework to make goal setting and performance management suitable for the VUCA world. 

Agile Value 1: Individuals and interactions over processes and tools

  • Ensure collaborative OKR setting, assigning OKR champions and the right team members to execute the same
  • Facilitate clear understanding and communication of the intention and expectation behind each OKR and the responsibility for every team member

Agile Value 2: Working software over comprehensive documentation

  • Focus on clear outcomes and key results instead of comprehensive literature on why something is important
  • Facilitate shorter feedback cycles to gauge challenges early on and ensure feasibility of the OKRs
  • Reduce administrative overheads and complex processes related to OKR setting and progress tracking by using a simple, integrated OKR tool

Agile Value 3: Customer collaboration over contract negotiation

  • Ensure continuous development by taking real time feedback from internal customers i.e. stakeholders in the leadership

Agile Value 4: Responding to change over following a plan

  • Facilitate dynamic planning over a static plan with quarterly OKRs
  • Ensure adaptability to change, uncertainty and ambiguity
  • Promote short cadence to gauge achievability and relevance of key results early on

Best agile and OKR framework

In this last section of agile and OKR for better goal setting and performance management, we will uncover the top framework. 

We have combined the best components of different frameworks like waterfall goals, delivery agile, scaling, full stack agile, into a single framework with 5 major components that can help you enhance the complementary potential of agile and OKR 

This approach can help you leverage the benefits of agile methodologies and OKR framework to impact all aspects of organizational structure for achievement of goals, including the culture, strategy, initiatives, tactics, etc. The framework is premised on:

1. Create value based OKRs

  • Focus on creating value based OKRs instead of activity based
  • Activity based OKRs are effective for specific projects, but for organizational goals, the focus should be on value
  • Instead of focusing only on the outcomes, have a clear understanding about how each of the outcomes can create value for the organization
  • The activities for each OKR should be a part of the agile roadmap and not the end destination

If you are struggling with combining agile and OKRs for your organizations, chances are you are focusing on activity based key results which often resemble agile steps, leading to confusion and inability to meet goals. 

2. Facilitate horizontal alignment for shared OKRs

  • Encourage collaborative OKR setting with realistic timelines and short intervals
  • Make OKRs team/ department specific and acknowledge avenues for collaboration and alignment between teams on shared OKRs
  • Acknowledge OKR dependencies between teams and facilitate transparency and horizontal alignment
  • Avoid splitting OKRs for a shared goal between teams, rather create opportunities for working together

For instance, if you have an event coming up and wish to successfully execute the same, the objective will be common, with specific value based key results for each team.

Objective: Successfully execute the 7th edition of our annual event

Key Results

  • Get 1000+ unique registrations
  • Raise INR 20,00,000 in sponsorship
  • Curate 5 high impact panels
  • Get 10+ media and affiliate partners
  • Get 5000+ impressions on social media with organic promotion

If you look closely, while the objective is shared, key results are spread across sales, marketing, and even product/ services teams

3. Combine quality and quantity results

Your agile and OKR framework should enable you to get the best of both worlds when it comes to results. Agile results by nature are qualitative in nature and focus on the features that you wish to ascertain in a specific period of time. On the other hand, OKRs are driven by metrics. Thus, you can use a combination of the two for effective results:

  • Use OKRs to validate goals set using the agile methodology
  • Ensure each key result has a quantitative (data) and qualitative aspect (value)
  • Use a combination of agile and OKRs to ensure that your progress is positively impacting the organization

The combination can help you create an ideal balance between outputs and outcomes which are both critical when it comes to goal achievement and performance management. 

4. Promote use of data

  • Leverage data and evidence to create your agile based OKRs
  • Instead of creating OKR based on leadership opinion alone, validate the same with market study
  • Don’t rely completely on hypothetical representation, undertake primary and secondary research to ensure relevance and perceived achievability

Pro-tip:

Using data and not relying solely on opinions will help you set agile OKRs which don’t under or over estimate the goals. For instance, if the market data on traffic to a new website in your industry is 20,000 clicks in one week, your OKR can focus on reaching 25,000 to make it aspirational but achievable up to 80%. 

However, if you set the target at 50,000 or above, it will become too far fetched and the team might not even strive for it. On the flip side, if the target is only at 10,000, it will not encourage your employees to push the boundaries. Thus, you need to replace opinions and command OKRs with data backed experimentation.

5. Build self organizing teams

  • Provide you teams with a clear idea of what the larger vision looks like
  • Encourage them to set their own OKRs and help with a direction to achieve the same
  • Facilitate team autonomy and empower your team members with the right tools and resources like SuperBeings to not only set OKRs, but also track progress in real time and grade them at the end of the cycle. (Learn more)

Self organizing teams are important for growing organizations as they proactively take onus and ownership of achieving OKRs and lead to a greater degree of success. Step away from controlling detailed plans for each OKR and encourage the leadership to provide direction. 

Wrapping Up

To conclude, if you combine agile and OKR, you have for yourself a clear model for success which you can easily apply to goal setting and performance management. Furthermore, leveraging the right technology resources can help you stay on track and enable you to thrive in the VUCA world. 

OKRs
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min read

How to Create a High Performance Culture Using OKR Methodology?

Like most fast growing organizations, you might also be leveraging the OKR methodology to set, implement and facilitate effective goal setting to maximize growth. If not, you should start using OKRs ASAP.

OKRs not only provide an excellent goal setting framework but also drive high performance when implemented strategically. Most importantly, with enhanced goal visibility and transparency, OKRs ensure that everyone is on the same page which is the foundation of a cohesive and high performing culture. 

In this article, we will discuss 8 ways in which you can adopt the OKR methodology to build a thriving company culture.

Use OKR methodology in 8 ways

1. Focus and clarity

A high performance and thriving company culture is based on the foundation of clarity and focus. When there are 100 things to focus on, your employees will eventually lose sight of what’s actually important and might feel burdened with non-priority tasks. This will lead to a poor employee experience and limited productivity, both situations that prevent an impactful culture.

However, when you apply the OKR methodology, you will be able to limit your focus on 3-5 top priorities which will attract attention, energy and efforts across the organization. You will then be able to create a high performance culture by dedicating all your resources to the key priorities to realize impact. 

2. Collaboration and alignment

A culture that thrives on collaboration, teamwork and alignment is one which creates maximum impact. The OKR methodology can help achieve this in an effective manner. On one hand, everyone is clear about their role in the OKR achievement, which makes collaboration seamless because everyone is on the same page and no one steps on the shoes of others. 

On the other hand, OKRs can help your employees align their responsibilities and tasks with the overall vision of the organization, motivating them to contribute to the big picture. 

To learn more about how to align teams using OKRs, read this

3. Agility and resilience

Recent times have shown that uncertainty and ambiguity will continue to mark the new normal. Thus, a culture of agility, resilience and responsiveness is critical for fast growing organizations. The OKR methodology can help achieve the same. 

OKRs are cognizant of the changing environment and have the flexibility to be adapted to the same. 

More importantly, you can leverage the OKR methodology to foster a culture that focuses on outcomes and is not fixated on the tasks to achieve the outcome at hand. 

4. Continuous engagement and reflection

One of the top challenges of building a great company culture is a siloed approach and annual reflection. This leads to surfacing of major risks and problems which result in high rates of attrition, absenteeism and lower levels of motivation, productivity, etc. 

However, the OKR methodology adopts an approach of continuous engagement and reflection. You can create a regular cadence to check OKR progress for each of your team members, even daily is effective. 

This continuous engagement and reflection can enable you to preempt risks before they surface and leverage the power of communication to address them in real-time. Invariably, a culture built on continuous engagement leads to greater impact and high levels of performance as well as employee satisfaction. 

5. Transparency 

The lack of transparency is one of the key obstacles for many fast growing organizations that seek to create a thriving company culture. A way out often seems difficult to navigate. Fortunately, the OKR methodology can help address this challenge as well. When you use OKR, especially with the support of an effective OKR tool, you can facilitate high levels of transparency. 

Everyone in the organization will not only know their role, but also will have a complete view of the level of performance for others. Such transparency can help you increase coordination of efforts and give everyone the visibility of what’s happening across the company. 

6. Non-hierarchy

You may agree that most fast growing organizations these days seek to replace a strict hierarchy with a more flat organizational structure that facilitates inclusion of diverse ideas, thoughts and opinions. However, many struggle when it comes to actually implementing this thought. 

Adopting OKRs can solve this problem.

By nature, the OKR methodology is based on a collaborative foundation where a top-down approach compliments a bottom-down approach for goal setting. 

This suggests that while the skeletal structure of the goals might be laid down by those in the top leadership, you can give all employees the freedom and autonomy to create OKRs for their teams and verticals. 

When your employees participate in setting the OKRs they have to execute, the level of ownership is much higher. Thus, you can leverage the OKR methodology to create a thriving culture built on greater ownership and a flat organizational structure. 

7. Open communication and feedback

With a focus on continuous engagement and reflection, the OKR methodology can help you facilitate open communication and feedback. Many studies have shown that a culture that facilitates regular feedback along with open channels of communication is more likely to thrive than one which does not. 

In the OKR methodology, when you constantly track your OKR progress (download our free template for tracking OKRs), you will be armed with data backed insights to offer regular feedback for your employees. Furthermore, you can also leverage the same to start meaningful conversations with your team members in case you feel that there is any kind of disconnect. Such open communication can help you create a truly inclusive culture when employees feel their voice is heard. 

8. Accountability and recognition

Finally, a company culture that thrives has two major components supporting it, accountability and recognition.

  • On one hand, only when your employees are accountable will they give in their 100% to create a high performance culture. 
  • On the other hand, if you don’t recognize the efforts of your employees frequently and in an effective manner, they are bound to feel demotivated with a lack of encouragement, leading to a poor employee experience and culture. 

The OKR methodology is an answer to both these challenges. 

  • First, being regularly reviewed, tracked and organization wide visibility makes accountability a given for fast growing organizations leveraging OKRs. Since everyone knows what the other person is responsible for, there is a development of a culture of accountability. 
  • Second, with regular tracking, monitoring individual progress becomes seamless for managers. Invariably, they can track the performance of their team members and recognize efforts in real time. This leads to a culture of recognition which is bound to see high levels of engagement, motivation and satisfaction. 

Empower your culture with the OKR methodology

Now that you know how the OKR methodology can help you in many ways to create a thriving culture, it is also true that as a fast growing organization with multi-pronged focus, leveraging OKRs is a challenging task. To address the same, you can collaborate with an integrated OKR tool like SuperBeings to automate the OKR adoption and maintenance.

With SuperBeings, you get to — 

  • Keep OKRs at the center of your business activities by aligning everyday tasks 
  • Reduce friction in goal management with zero context switching (by integrating Slack, Teams and Gchat)
  • Stay ahead of risks with a bird's eye view on key OKR status as well as compare progress over time with automated daily OKR tracking
  • Connect OKRs with Meetings tool to automate OKR check-ins and empower managers with data-backed AI driven actionable templates for meaningful conversations

Learn more about the OKR tool here. Otherwise, to see this in action, book a quick call with one of our experts. Also, get all your questions answered on the same. 

See Also

How to Run a Successful OKR Progress Review  

The complete guide to adopting OKRs (PDF)

Master OKRs in just 10 days: Free email course

Performance
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x
min read

How to Write Negative Employee Reviews (Examples + Templates)

With performance management becoming a critical part of organizational success, giving effective employee reviews is becoming a crucial part of a manager’s responsibilities. While regular employee performance reviews focus on illustrating the strengths and what worked for employees and the organization at large, there needs to be an equal focus on areas of development in case of poor work performance

If you look closely, writing negative employee reviews is often considered to be more difficult because the words need to be chosen very carefully. It needs to have a developmental tone rather than a critical one. 

What are negative employee reviews?

As the term suggests, negative employee reviews are reviews delivered to employees who have underperformed and need to be pulled up to the expected levels. It involves a variety of components which include:

  • Problem statement i.e. an illustration of poor performance, how it has been manifested and its impact on the overall organizational success
  • A clear understanding of the level of performance which is expected
  • A potential way or action items to correct the poor performance and improve

To get actionable ideas of how to deal with poor performance issues at work, read this

Writing and delivering negative employee reviews is very important for any organization that seeks to maintain a high level of employee performance. It is critical to ensure that:

  • Poor performers are aware of their level of underperformance and have a clear picture of what’s expected from them
  • Those who are underperforming get an opportunity to improve or face the consequences of consistently performing poorly
  • Underperformers are given the right support and guidance to improve their work and efforts to meet the expectations

Why should you be cautious of your words?

When you are writing negative employee performance reviews, you need to be extremely cautious of the words you choose. Using the right words will help the receiver acknowledge and work on the suggested points, while using words that are too harsh or critical can lead to adverse consequences. There are a few reasons which make the choice of words extremely important. 

  • The right words can help negative employee reviews focus on the developmental aspects and the impact of poor performance on the organization, rather than criticizing the person in general
  • They can help ensure that the job and the performance are the focus of the employee reviews and not the character or the personality of the person
  • Being cautious also ensures that the negative employee reviews don’t have a negative impact on the mental and emotional wellbeing of the employee and are taken in a constructive spirit.

The same review when offered with the right words can be more powerful and have a larger influence. 

For instance a statement like ‘you interfere too much in the work of others’ can be seen as a personal attack and may yield a defensive response from the receiver. 

However if you frame it in a different manner like ‘if you give others greater autonomy and freedom to work in their own way, you will be able to inspire greater creativity and innovation’, you will be able to put your message across and also help your employees understand how it will make a difference. 

Download: Free guided 1:1 meetings template to get personalized meeting recommendations

Tips for writing negative employee reviews 

In addition to being cautious of the words you use, there are a few other tips which you must keep in mind while writing negative performance reviews, including:

1. Keep it crisp and structured

While giving negative reviews is difficult, don’t beat around the bush and get straight to the point. However, instead of directly saying what isn’t going well, try adopting the sandwich approach. Start with a positive comment, add areas of improvement and end it with some suggestions and action items. 

Example: Tina has an excellent eye for detail and is very dedicated to her work. However, she often misses the deadlines which has led to a delay in 30% of her projects resulting in poor client experience. It would help her performance greatly, if she is able to prioritize her work better and keep an organized calendar for timely delivery. She can consider using the latest project management tools to facilitate better prioritization. 

2. Don’t get personal

Second, negative employee reviews should focus on the job or the role and not the person specifically. Steer away from using words or phrases which may end up combining performance and personality of the person. Your review should be specific towards performance challenges and not generalize that performance challenge is a personality trait.

Example: Instead of saying, “you are not punctual”, you can say that “I have seen you arrive late for meetings frequently, leaving shorter time for discussions. It would be best if you could be more punctual to respect others' time and make the most effective use of the same.”

3. Focus on progress

When you are writing negative performance reviews, you must focus on the progress and how a change in behavior and attitude can help them in the long run. Simply mentioning what went wrong and the associated process might lead to demotivation. 

Example: Some of your work has had grammatical errors in the past, maybe because you were trying to complete a lot at once. I am sure if you prioritize some tasks and create an action plan, your work quality will be better. 

4. Offer facts

Don’t simply give negative employee reviews about the problem area, but back it up with facts and data points. This will help you illustrate a pattern and establish that your review is not based on a single incident. Also, it will make your review more credible and authentic and not just a few words strung together. This will also help you in being very specific.  

Example: It has been observed that 40% of your customers claim that you don’t have adequate knowledge of your product, leading to a poor experience. 

5. Give examples

There might be some performance parameters which are difficult to add quantitative data points to. In such cases, you can offer specific examples of underperformance, especially if it has been repetitive. It is ideal to have at least 2-3 instances of poor performance to make your point stronger. 

Example: It has been noticed that in the aspiration to get your work perfect, you end up delaying projects. It was observed in project X with client A, project Y with client B as well as when the internal submission for Z was due. 

Pro-tip: Use our free Performance Review Phrases template to get 50+ examples of writing a negative review positively

How to deliver a poor performance review?

Once you write the negative employee reviews, you exactly know what you want to say to your employees. However, the way you deliver it also has a big impact on how it is received. To make the process simple, we have compiled a list of some of the best practices to help you deliver a poor performance review in the best way possible:

1. Connect in person

If you are delivering a negative performance review, it is best to do it in person, or if your team is remote, over a video call. If you deliver it over an email, you cannot be sure of the tone and context in which your words will be read. 

It might backfire by being read as more critical than developmental as per the intent. Furthermore, when you are delivering the negative reviews face to face, you can also use your gestures and body language to facilitate authenticity and empathy. 

2. Steer away from yelling

No matter how poor the performance has been, when you are delivering negative employee reviews, you should stay away from yelling or using foul language. Since the focus is on facilitating development for your employee, yelling will only defeat the purpose, making the employee demotivated and pushing them towards even lower levels of confidence and motivation. Furthermore, it will negatively impact your organization from an employer brand perspective. It can also create a negative impact on the wellbeing of your employees. 

3. Add anecdotes 

While delivering the review, you may want to add some personal stories or anecdotes if you have yourself been through something on those lines. This will help you connect better with your employees and make them trust you more. Furthermore, it can enable you to illustrate how they can turn poor performance into something better with a live example in front of them. 

4. Make it a dialogue

Your negative review shouldn’t be a monologue where you deliver what you have written with the employee absorbing it as a passive recipient. Instead, make it a dialogue by putting forward questions to understand the reasons behind poor performance and how you and the organization as a whole can help turn the table. Hearing their side of the story is extremely important before deciding on the next steps. 

4. Create a safe environment

When you are delivering negative employee reviews, you need to create a safe environment. It should not be harsh and the employee should feel comfortable in receiving what you have to offer. Also, make sure you deliver the review privately and not publicly shame your employee. They should see it as a developmental conversation in a safe environment, where they can also voice their opinions. 

5. Make it regular

Finally, negative employee reviews need to be regular and not come as a surprise to your employees at the end of the year. Regular reviews will give your employees enough room to improve their performance. Furthermore, it will give them a clear picture of what to expect when the year closes. 

To learn how SuperBeings can help you have guided conversations around negative performance review with AI recommendations based on performance and goals history as well as maintain a steady cadence to maximize the impact of such conversations, see this

Offer suggestions and follow up

After you have delivered the negative reviews to employees, the natural next step is to create a plan for improvement to help your employees reach the level of performance you expect out of them. This is a critical part of the performance management and talent development process for employees who have been consistently underperforming. Here are a few ways you can help your employees improve their performance.

1. Create action items collaboratively

If you have reached this level of negative employee reviews, you and your employee would be on the same page about their level of performance. Thus, it is best to create a list of action items that can help them improve their performance. To create the next steps, you must:

  • Ensure the steps are specific and not generic which only state the objective
  • Create steps which are aspirational, but achievable at the same time
  • Ascertain that there is an intended result for each decided step
  • Collaborate and brainstorm with your employee to create action items which are agreed upon by both
  • Align timelines and other factors to achieve success

2. Document the next steps

Next, your focus should not only be on planning the action items, but documenting them as well, because once they are out of sight, they’ll be out of mind. Furthermore, documenting them will help you remember the agreed steps and track progress every now and then. 

Clearly document what needs to be achieved, by when and how. It can be a good idea to encourage your team members to constantly document their experience as well to help discuss what has been working well and what needs to improve. 

3. Draft a Performance Improvement Plan (PiP) if needed

Depending on the performance issue, you may want to introduce a performance improvement plan for your employee. It is a formal tool to address performance challenges which outlines specific goals and expectations along with clear actions that need to be undertaken over a duration of 30-90 days.

For more details on PIP, check out A guide to implementing a performance improvement plan (PIP)

4. Set up a cadence

You also must set up a cadence to discuss performance improvements or challenges once the next steps are agreed upon. Unless you connect regularly to discuss the status, you might find yourself at square one at the end of the next performance review period as well. 

Depending on what needs to be achieved, you can set a weekly, fortnightly or monthly cadence to connect with your poor performers. While it may be seen as a regular review, it will also act as a reinforcer for them to ensure there is some improvement everytime the cadence to meet comes up. 

5. Define metrics

When you are determining the next steps, it is important to identify the associated metrics as well. For instance, if you want your employee to become more detail oriented, your metric can focus on reduction in errors by a specific percentage over a specific duration of time. 

The metrics will help you measure whether or not there has been an improvement in the performance as desired or not. At the same time, the metrics will help your employee move towards a specific goal. 

6. Follow up

While you have a set cadence, you may also want to check-in or follow up from time to time to make your employee comfortable enough to reach out to you in between your cadence for connecting. The follow ups can be over emails or calls or simple messages to check if everything is on track and to offer them any support whichever is needed. Especially in the beginning, you may need to check from time to time in case there’s any additional support that the employee needs to work on the action items. 

7. Evaluate progress

Finally, to ensure that your negative employee reviews translate to impact, you must focus on evaluating progress. Use the metrics you defined to gauge the level of progress and document it whenever you evaluate the same. This will help you establish a trend over time. 

Furthermore, if you feel the progress is below expectations, try to understand the rationale behind the same to check if putting the employee on a performance improvement plan will make more sense. 

Wrapping Up

By now, you must have gained a clear understanding of how to write, deliver and follow up on negative employee performance reviews constructively. If you are keen to learn how best to connect negative performance issues with regular 1:1 meetings with your team members with technology, book a quick demo with one of our executives. We would love to show you around :)

See Also

How to use Start Stop Continue feedback framework for high performance

10 performance review tips for managers that actually work

How to use employee coaching to unlock performance

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