As organizations keep upgrading the performance management system, the fresh research from McLean & Company reveals a significant issue that poorly designed performance criteria are causing the loss of employee trust, rendering them more stressful, and making them less engaged overall. In its latest document, Guide to Establishing Performance Criteria, the company explains how HR managers can develop straightforward and efficient evaluation systems that are in sync with the realities of workplaces today.
The study indicates that performance criteria have to evaluate not only the results but the behaviors leading to these results as well. Nevertheless, a lot of companies continue with old-fashioned methods they are giving the highest priority to results, using the same standards for different roles, or imposing too many expectations on employees. Such mistakes may lead to employees feeling lost and doubting that the performance appraisal is fair.
The consequences extend beyond performance reviews. According to McLean & Company’s findings, organizations that fail to deliver a positive employee experience see voluntary turnover rates rise by 40%, while employees are 1.27 times more likely to report higher stress levels.
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“Performance criteria should aim to make success clearer, not more complicated,” said Leann Schneider, director, HR Research & Advisory Services, at McLean & Company. “HR leaders need to define expectations that reflect both outcomes and behaviors, keep the number of criteria focused, and ensure employees can see how their work connects to broader organizational goals.”
Well-defined criteria with a clear structure can have a significant impact on employee engagement as well as productivity. Employees who are aware of criteria are 8.6 times more likely to be engaged. Organizations that have effective performance management practices are significantly more likely to have effective employee engagement strategies.
To address these challenges, McLean & Company suggests a structured approach to criteria that includes criteria alignment with business objectives, tailoring criteria to specific employee groups, as well as effectively communicating criteria. The framework also includes weighting criteria as well as providing tools to managers.
“When criteria are grounded in role realities and reinforced through communication, feedback, and coaching, organizations are better positioned to support employee growth and make performance management more effective,” said Justine Czencz, manager, HR Research & Advisory Services at McLean & Company.
Given increasing scrutiny on performance evaluation, the study highlights that companies should reconsider what success means, making sure that the standards are clear, appropriate, and in line with both the business goals and the employees’ experience.
