What is the most important HR framework?

I was asked a very interesting and thought provoking question a few months ago: What is the most important HR framework that if implemented well, will have the biggest positive impact on the people in our organisation?

This is a question I had never asked myself, but in my opinion the answer is simple. The most important HR framework is a well-designed, customised performance review framework, which when executed consistently and with full company buy-in, has the potential to transform entire organisations.

I am not talking about the traditional, dreaded, annual drain on resources that is usually conducted around this time of year and linked to salary reviews. I am referring to a specifically designed framework that drives development plans, encourages innovation and enhances company culture.

So, what does your performance review framework look like, when was it last reviewed, or do you even have one?

Five reminders why the humble performance review is essential to your organisation:

1. Communication

It is an essential ingredient to any business, and a structured performance review where a manager and an employee set aside some time to reflect, discuss the now and glance into the future has to be beneficial to both parties and the business. Formal, uninterrupted dialogue is gold and these opportunities should always be nurtured. Structured one on one communication should not be underestimated and always encouraged.

2. Feedback

Employees crave it good or bad and they also thrive on giving it. Managers need to provide feedback, it is the food of champions and encourages employees to grow and develop. But more importantly, they need the chance to give feedback, and performance reviews should be encouraged as an open two-way feedback session for all parties involved. Employee feedback is arguably more important as it helps the manager to develop.

3. Management capability

Managers need to be taught how to manage staff, and a simple performance review framework adds structure to a new manager’s schedule. When a performance review framework is followed it teaches a new manager the art of constant/consistent communication, feedback and interaction with their staff, all of which are essential and often neglected management skills. Impending reviews also encourage managers to formally reflect on individuals and assess any gaps in their team.

4. Structured development

Regular performance reviews encourage staff (employees and managers) to be accountable towards development. Action points from the previous reviews become staff development plans. The more effectively these are actioned and addressed, the quicker the individual or manager can grow and improve, encouraging continual improvement and sustaining a performance culture.

5. Identifying future leaders

Observing how staff react to feedback and prepare for performance reviews can help you identify future leaders. Future leaders take opportunities to be assessed and communicate with their manager very seriously. Use this opportunity to challenge high performers, but also to ask individuals where they see themselves in the coming years. The ambitious are hungry for challenge and the earlier you identify them the quicker they will develop.

Performance reviews are opportunities to listen, learn, innovate and develop your team, and if done right, will help to enhance a company’s culture. A talented people manager sees the opportunity to build rapport, there are literally hundreds of performance review frameworks. Gone are the days of the annual review that only assesses the past six weeks of a 52-week year! Quarterly, bi-monthly or even conversationally based monthly reviews can benefit forward-thinking organisations and the benefits are undeniable.

For the contemporary, there is a push toward a conversational and frequent review over a coffee in a relaxed environment, and when executed well, this transforms internal cultures.

There is no cookie cutter answer; performance review frameworks need to be designed around a business’s strategy, seasonality, industry and the experience of their management and workforce – done well they fast track development and drive productivity.

Ignoring performance reviews or putting them off as another administrative task can lead to staff turnover and mediocrity. Let’s remove the stigma and raise the performance review frameworks importance at the boardroom table; a well designated performance review framework will increase your management capability and ultimately the people performance of your organisation.

Sue-Ellen Watts is the founder and director of wattsnext, specialists in HR, recruitment, compliance and people performance.