Let’s discuss those dreaded – and mostly ineffective – performance reviews. In our one of our Culture Hacker blogs, I talked about the importance of informal feedback and how without regular, casual conversations on what an employee does well or could improve upon, then any formal feedback – like performance reviews – will miss out on a great opportunity to positively impact your culture and employee experience.
In addition to a lack of informal feedback, those annual reviews are largely ineffective – leaving employees confused, frustrated, and even angry – because managers are mostly under-prepared, utilize limited, outdated, or biased information, and fail to see these reviews as the opportunity they are – a chance to motivate their people. One study revealed that not only do less than half of employees feel that performance reviews actually help their performance, but that half of organizations feel the same way!
It’s clearly time to rethink the formal review. This doesn’t mean to throw it out completely – FastCompany surveyed a large population of Millennials, and they found that 70% of them do want to have a formal review process in place, just in a different way. So what changes need to be made?
To begin, there needs to be a clear understanding of what performance is. I define performance as a combination of what was delivered – are the numbers and quantifiers where they need to be? – and how it was delivered – are the behaviors of this individual in line with your company values? You must include adherence to company values in any review of performance. When someone delivers the results that you want, but does so at the expense of their peers, their performance must be addressed. It is one of the most powerful actions you can take to improve company culture and the daily attitudes of your teams.
Next, we must have more frequent formal conversations on performance. I already can hear the groans from managers out there, but listen up – more regular meetings can be short (about 15 minutes) and focused on how the employee is doing compared to the goals and values of the company. We work with some companies that do these monthly or even quarterly, and have found the conversations to be more relevant, and the time it takes to deliver them significantly shorter. These more frequent conversations are more focused on current activity, recapping any informal discussions, and giving the employee a chance to rate their own performance. And again, these meetings should not be a lecture – make them a conversation, and ensure that the employee is involved heavily in their own improvement.
Finally, know that there is still a place for the annual review because many companies still tie bonuses to it, so it will not be going away. To make it more effective, consider reworking this annual conversation to be focused on career goals and achievements. With this in mind, ensure that you focus these bonuses on achievement of company and individual goals, knowing everyone’s individual goals will be different. Remember – not everyone can be “the best,” but everyone can be “their best.” Not only will this shift improve the mindset of your people, but it will also improve the performance of many of your staff. In addition, consider developing an “Achievement Plan” with each employee that focuses them on what they want to do in the future and how this aligns with the future goals of the company.
Above all else, remember that effective feedback – through a combination of informal and formal conversations – is the best way to get your people to a path of improvement and growth. As Bob Nardelli, former CEO of Home Depot said perfectly, “I absolutely believe that people, unless coached, never reach their maximum abilities.”
Thanks for checking in – don’t forget to read my book, Culture Hacker, available online now.