Employee engagement has emerged as a key performance indicator. Studies show that highly engaged employees increase customer satisfaction, productivity, and profitability, while decreasing turnover, absenteeism, and safety incidents.

Employees feel most engaged when they have strong relationships with their direct managers. A few key drivers in these employee-manager relationships are discussions about responsibility and accountability and assistance with goal setting. Frequent and simple performance reviews can guide these manager-employee discussions, while simultaneously increasing engagement.

Key Details

• Although the annual review process is commonly practiced, this method can hinder employee engagement. Managers do not receive performance data frequently enough to drive meaningful discussions with employees. Employees cannot be held accountable for current work and cannot use current performance data to alter future work behavior
• Numerous studies have demonstrated the importance of manager involvement in current projects, goal setting, and accountability
  • Employees are 7x more likely to engage when they feel their direct manager is acutely aware of their current task or project
  • Employees are 17x more likely to engage when their managers assist with goal setting
  • 69% of employees are likely to disengage when managers do not hold them accountable
• Early adopting firms have replaced annual performance reviews with more frequent performance evaluations. These evaluations contain 5 to 15 close-ended items and remain fixed for extended periods of time. This allows firms to track employee performance data. Only a simple survey and analytics tool is needed to carry out this process
• On a weekly basis, managers should dedicate approximately 30 minutes to each employee. This time allotment should include survey completion and an employee check-in. If a manager oversees six to eight employees, this is a three- to four-hour weekly time commitment. While this may seem frequent and time consuming, this equates to only 10% of a manager’s time, which will be time spent truly managing

Implications

Recurrent performance reviews and appropriate manager follow-up are proven to directly increase employee engagement. In turn, increased employee engagement is proven to yield positive firm performance. Productivity increases by 21%, while profitability increases by 22% when employees are engaged. With only 13% of employees engaged worldwide, 83% of HR managers feel their performance review process needs to be improved.

Additional Resources

Gallup: Should Managers Focus on Employee Engagement?

Harvard Business Review: The Performance Management Revolution

Additional Contributing Authors: Gamble Ouzts, Betsy Curry

This report is part of the Human Capital Management Minute series. To view all featured Minutes, please click here.