Performance Reviews: Why the Traditional Approach is Not Effective

Let’s discuss those dreaded and mostly ineffective performance reviews. In the last blog, I discussed the importance of informal feedback and how regular, casual conversations on what an employee does well or could improve upon are critical to improving performance and the overall mindset of your team. In addition, without consistent informal feedback, any formal feedback, like performance reviews, often lacks credibility and relevancy, making them relatively ineffective in improving performance.

The traditional approach to performance reviews—the annual one-sided interpretation of performance based on recent events or activity—causes employees to become confused, frustrated, and even angry. Additionally, many managers are typically under-prepared, utilize limited, outdated, or biased information, and often see the review as a burden rather than an opportunity to motivate their people to perform better. Research suggests that less than half of employees feel that performance reviews help their performance and that organizations feel the same way. In recent years, several companies including Adobe and GE, have abandoned the traditional annual review process due to its ineffectiveness.

It’s time to rethink the formal review. However, this doesn’t mean to throw it out completely. The majority of millennials want to have a formal review process in place, just in a different way. So, what changes need to be made to ensure formal feedback is useful and motivating?

To begin implementing an effective feedback process, ensure there is 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’s values? You must include adherence to company values in any performance review. However, when someone delivers the results that you want but does so at the expense of their peers, their performance must be addressed. Reinforcing your company’s values is one of the most influential 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. Research from Gallup explains that 48% of employees are evaluated only once a year, and 26% are evaluated less than once a year. How can employees know how they are performing when feedback is so sparse? This lack of consistent feedback is a major reason why only 29% of employees strongly agree that the performance reviews they receive are fair, and only 26% agree that their reviews are accurate.

I can already 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 and how their performance aligns to the goals and values of the company. Companies that do monthly or even quarterly conversations have found the conversations to be more relevant, and the time it takes to deliver them becomes 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 performance. These meetings should not be a lecture—make them a conversation and ensure that the employee is involved heavily in their improvement.

 

 

Finally, rework any annual conversation to be focused on career goals and achievements. As many companies base bonuses and other incentives around an annual conversation, we recommend awarding bonuses when the company’s and an employee’s goals are achieved, knowing everyone’s personal 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. Also, consider developing an “Achievement Plan” with each employee that will direct them on what to do in the future and how it will align with the future goals of the company.

Above all else, remember that effective feedback, with 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 reading. Don’t forget to check out my book, Culture Hacker, available on Amazon and Barnes & Noble. Also check out Season 2 of the Culture Hacker Podcast, available on SoundCloud and iTunes.

2018-03-20T01:00:03+00:00