There has been a recent shift in corporations’ traditional landscape of conducting annual reviews. Many are gravitating towards the digital sphere, enabling shorter review cycles and striving to maximize their time utility – a trend underpinned by the ever-increasing digitalization of our world. But in the midst of all these changes, a question arises: how exactly can we assess the ROI of the performance review process?
The annual performance review has stood the test of time for several decades. However, as corporate dynamics evolve, the question of measuring its effectiveness becomes more acute. The paradox here is that it’s challenging to engage in the change process when you are still assessing whether the current system is “broken” or not. An article recently published by Mitratech Holdings, Inc on JD Supra discusses this pressing issue.
When considering an evaluation of this ROI, the first step is identifying what exactly defines “returns”. In most cases, it’s not straightforward, as it involves assessing qualitative factors such as employee satisfaction and the development of skills, which aren’t easily quantifiable. Furthermore, implementation costs (including training and system integrations) as well as opportunity costs factor into the “investment” portion of the equation and can be complex to calculate.
The balance between the traditional approach and the contemporary need for brevity and adaptation is pivotal. Therefore, understanding the ROI of the performance review process is a worthwhile endeavor for corporations worldwide.
Nevertheless, the challenge might seem daunting due to the process’s intangible nature. A step forward could involve incorporating digital assets and analytic tools that can aid in quantifying those elusive qualities. It is important that corporations continually re-examine and re-evaluate their process, keeping up with the evolving dynamics of the corporate sphere.
As legal professionals, there is a crucial role to play in navigating these changing tides, instigating change, and guiding corporations in seizing opportunities while minimizing potential legal risks. The ability to accurately determine the ROI of the performance review process will significantly contribute to that mission.