In today’s information-driven economy, when even a backhoe’s idling time can be tracked and analyzed, many contractors may be surprised to discover just how little they know about the performance of their most important resource—their employees.

Part of the problem is a long-standing reliance on traditional performance-management processes, often centered on an annual review that employees and managers alike see as an obligatory ritual to be endured, rather than a worthwhile assessment of merit and progress.

The shortcomings of this age-old approach cut across industries. Bettina Deynes, vice president of human resources at the Society of Human Resources Professionals, says many companies that boast about excellence in performance management still rely on arbitrary annual ratings, which involve subjective criteria, such as “being a team player” or “volume of work produced.”

“This approach has demonstrated, time and time again, that supervisors find it impossible to provide meaningful feedback on performance progress and, therefore, will routinely give ratings of three on a five-point scale just to avoid having to justify a higher or a lower rating,” Deynes explains. “Employees find the amorphous process to be frustrating, inaccurate and counterproductive.”

But to paraphrase Mark Twain, rumors of the demise of performance reviews are greatly exaggerated.

Deynes says the common misperception that GE, Adobe and other high-profile companies have done away with performance reviews stems, in part, from ambiguous headlines. She says, “these companies are actually reinforcing the performance-management process, making two-way communication far more frequent and meaningful between supervisors and employees by utilizing technological advances, [such as] smartphone apps.”

Along with countering the negative aspects of traditional feedback, firms are scrambling to adapt them to the needs of millennials. “Younger workers want more real-time feedback and more frequent conversations about career progress,” says Lisa Tolbert, human-resources director for Barton Malow, Southfield, Mich.

Barton Malow has sought to address shortcomings in its performance-management processes. Tolbert says the company long relied on a traditional review that was more focused on looking back than ahead and often resulted in difficult manager-employee conversations. “It was a clunky process and not very meaningful,” she says.

“We see feedback as more of a partnership. It’s not just the boss talking to the employee.” 
—Terry Merritt, Sr. VP for Human Relations, Walbridge

Then, in 2014, Barton Malow revamped its feedback process to help to implement a cloud-based, talent-management system. Now called Career Conversations, it combines face-to-face dialogue and quarterly “check-ins” to foster more frequent and relevant conversations about each employee’s progress toward his or her career goals.

Tolbert says the employee-initiated process negates the inhibitive effects of an annual review. For incentive compensation, employees must set two goals that managers monitor via the conversations and an online dashboard.

Tolbert says employee response to Career Conversations “has been positive. “They like knowing that the company feels their career development is a factor,” she says.

While annual reviews are still key to performance management at Walbridge, Detroit, it has undergone big changes, too. “We were getting lousy results,” recalls Terry Merritt, senior VP for human relations. “Having nine pages of instructions on how to do them didn’t help.”

Now known as the Individual Development Plan, Walbridge’s simplified review is tailored to reflect skill sets and responsibilities of specific groups—for example, entry-level operations employees, project engineers and project managers—along with employee development. “We see feedback as more of a partnership,” Merritt says. “It’s not just the boss talking to the employee.”

Non-Ranked Systems

For a long time, Raleigh-based Kimley-Horn and Associates used a Career Development Review (CDR), which makes limited use of rankings and numerical values. “We never found rankings to be helpful,” says Lori Hall, vice president and regional HR manager, adding that the CDR was the same for every employee, regardless of role. Despite the CDR’s forward-looking focus, a 2013 review deemed the process stale and almost universally dreaded. “We realized that one size really didn’t fit all, and we needed to be sensitive to the needs of different groups,” Hall says. “That means they receive feedback roughly four times a year.”

Kimley-Horn’s mid-level employees conduct somewhat less-frequent career-building exchanges with senior leadership, while senior staff assessments focus on setting priorities and refining processes. Anecdotal evidence suggests the new process is more satisfying, but Hall considers the program a work in process. “We still struggle with the completion rate, especially among mid-level employees, which may be function of how busy they are,” she says.

“The idea is to make the process more casual and keep workers engaged with the company.” 
—Lisa Tolbert, HR Director, Barton Malow

To help satisfy millennials’ need for real-time evaluation, Barton Malow is exploring the use of “popcorn” feedback throughout the year. Using a smartphone app, managers can record and disseminate performance feedback quickly, rather than letting it build up over time. “We have to be sure it’s structured and easy for the managers to use,” Tolbert says. “But the idea is to make the process more casual and keep workers engaged with the company.”

As these and other firms have found, there is no quick fix to the performance-review process. For those that do seek change, Deynes recommends evaluating current processes to determine whether they are built around mutual agreement on goals and measurable outcomes.

“If the answer is no, the process needs a complete overhaul to achieve these results and measurable outcomes,” she says. “Developing the best possible performance-management system—with frequent, meaningful interaction between and among the entire workforce—will create a monster first step toward this end.”