A recent study by HR.com revealed that two-thirds of organizations don’t think that their performance management system is effective. This may be because (as research from Stanford suggests) that most people view performance reviews as “subjective and highly ambiguous”.
Ideally, the purpose of any review process should be to improve employee performance and drive better business results. However, this intention is often negated because many employees believe that their evaluations are unfair. And these beliefs may be more valid than most of us would be comfortable admitting; even though it may unconscious, bias is very real in performance discussions and takes a number of forms including, but not limited to:
- Recency bias: Judging people primarily on their most recent achievements or failures (businesses that perform annual reviews are particularly vulnerable to this.)
- Halo effect: When someone excels at one aspect of their job, a manager may overlook negative factors that would be an issue for any other employee.
- Gender bias: According to a recent study women are 1.4 times more likely to receive critical subjective feedback in performance evaluations than men.
To reduce bias in reviews and drive better performance for everyone at your business, you need a consistent structure and clear objectives. Here are four simple ways to do that.
1. Write down goals and expectations
A study from MIT shows that the best performing teams usually have clear and ambitious goals. This is hardly a mind-blowing insight, so the real surprise is that 50 percent of employees don’t know what’s expected of them.
Setting clear targets is an obvious way of evaluating performance and developmental needs. It also reduces bias. Referring to goals before completing evaluations gives managers a more objective perspective than open-ended questions like, “how did this person perform?”.
Reviewing performance against goals more often allows you to track progress more effectively, while reducing the impact of recency bias. Managers are much more likely to recall how an individual performed over the past month or quarter than for an entire 12 months.
2. Align individual and business goals
Companies with a purpose outperform the market by 42 percent. Not only does a mission guide the direction of your business, it motivates employees by connecting their day-to-day tasks and goals to broader business outcomes. Yet one study found that less than one-quarter of middle managers knew their company’s strategic priorities.
When business goals are clear and transparent, employees can directly connect their goals to specific company targets. The ability to see real business impact will reduce bias in reviews. When priorities change, individual goals should be updated as well, so that you’re not unfairly judging people against outdated targets.
Aligning individual and business goals also helps to reduce gender bias. Women are less likely to receive feedback that’s specifically tied to business outcomes than men, which may explain why they only occupy 24 percent of senior roles. The more women are evaluated on their broader business value, the more they will feel like and look like the future leaders of your company.
3. Avoid the “open box”
Much of the unconscious bias in performance reviews stems from the “open box”. Many review processes lack structure and simply provide managers with a few open-ended questions and a large blank space to fill. With so little guidance and so much leeway, it’s no surprise that certain biases find their way into evaluations.
The open box is a symbol for how little guidance managers get in general. Just 39 percent of new managers received training for their role and nowhere is this more apparent in the performance management process. In a McKinsey survey, less than 30 percent of employees said that their managers are good coaches.
To help managers improve, train them to collaborate with their team on setting and aligning goals and on providing constructive feedback that’s development-focused. Encourage more frequent conversations to reduce recency bias and provide technology that prompts them to check in with their team and what to discuss. The more guidance and structure you provide, the less likely you’ll see their open-box biases.
4. Use analytics to spot potential bias
HR professionals are often uncomfortable using data to inform decision-making. But when it comes to the very human problem of bias, analytics is useful, especially as an accusation of prejudice can itself be accused of bias if you don’t have evidence to back it up.
It can be easy to spot potential bias from the data, like when an employee receives a negative evaluation but you can see that they hit all their targets and directly contributed to the broader business goals. Or if the data shows that a manager didn’t have regular performance-related check-ins with an individual, be on the lookout for recency bias in the review.
Treat these insights as opportunities for identifying which managers need additional coaching and ensuring employees know to speak up if they feel the review process is unfair.
Objectivity = Better Performance
Labor costs can account for as much as 70% of total business costs, and employees play an essential role in productivity. You need to maximize every opportunity you have to improve performance.
60 percent of people who believed that their company’s performance management process was fair also said it was effective. By reducing bias in your reviews and helping managers have a genuine impact on the development of their team, you’ll boost performance and drive growth for your business.
One of the most important things every organization should strive to create is a “Culture of Feedback” that allows for open communication and continuous, transparent feedback at all levels. Get your free copy of our brand-new guide, 5 Ways HR Can Build a Feedback Culture to learn more.