Raise your hand if you like performance reviews! No-one?
It turns out that even people who get good reviews don’t like having them, and the workload on managers adds up to a lot of hours across a largish company. One estimate based on time spent puts the cost at 120,000 USD for 500 people. Yet it’s doubtful that we see that value out of the review process.
It’s about that time of the year when many managers are plunged into the black hole of performance reviews. It’s a fun time, particularly if you work in digital, to see how good your guesses about the year’s activities were.
There are a number of widely recognised problems with most performance management systems;
- Annual planning cycle, given the pace of change annual planning is too slow, and many performance systems are resistant to mid-year alterations.
- Annual assessment, some systems force a mid-year coaching meeting, but it’s not the frequent/continuous feedback that’s needed to create the improvement you’re looking for.
- Forced grading, because the results are connected to pay increases and/or bonuses managers are forced, at least in large companies, to grade to a curve in order to manage total costs. I have had an HR advisor tell me that it wasn’t possible that everyone in my team was excellent. As a perceptive team member once said “the way to maximise your income is to be the best person in a lousy team.
- Looks backwards, doesn’t usually result in improved performance for the future.
- Time spent, it’s a significant amount of time from managers and employees, with questionable value delivered. Across a company it adds up quickly.
- Subjective, however hard you try as a manager to be objective you’ll always get some subjectivity in the review, particularly on ‘softer’ goals your perception impacts the review out of balance
Most companies recognise the issues and there’s a lot of research backs up the concerns; a few have started trying new ways of performance management. I think the biggest issue is that it’s a wolf in sheep’s clothing. We call it performance management, which sounds like managers will be working to help their team members improve their performance, but the reality is that it’s a tool for figuring out how to distribute a pool of money used to reward those who perform the best. Some companies try to separate the two conversations, but they remain linked in people’s minds. In one team many years ago the manager disclosed to all his direct reports how much money he had to reward them and offered options on how to distribute it. Unsurprisingly the team voted for each team member to have an equal share of the money.
We know that money is not in itself motivating yet most companies continue to with the fiction that performance reviews and ‘merit increases’ are connected to improving performance. Some companies have the courage to challenge this.
- Accenture announced last year that they will get rid of 90% of their performance management process and replace it with something giving feedback in real time with a much simplified questionnaire to managers.
- GE, the initiator of the stacked ranking, has changed their model for performance management to one that focuses on their goals.
- Adobe have altered their “stack and rank” system into something that requires managers to give regular feedback at check-ins, with one rewards check-in at the end of the year to discuss targets.
In these examples the companies are trying to build a practice of ongoing feedback – rather than the annual review. Which makes sense. In some cases they’re also trying to separate the feedback/coaching process from the assessment for bonus process. Both are steps forward. If there is training and support for managers evolving their feedback/coaching skills it could lead to improved performance.
For all the pitfalls of your company’s performance review system chances are you’re stuck working with it, so here are some helpful hints and resources;
Prepare; with a copy of the team member’s expected goals go through your notes from your 1-on-1 meetings over the last year. Check with other managers for any joint projects they’ve been on. Ask the direct report for input. (If you haven’t been having 1-on-1 meetings for the previous year set them up now).
Assess; look for what was done well, areas where you saw the person step up, skills gained – have examples. Think about what didn’t work well, limits in knowledge or behaviour that have been exposed – have examples. Prepare for questions on next steps, training needs, and salary changes.
Discuss; Be honest about achievements and failures, give feedback on 1-3 things they really need to improve. If the person reacts with any emotion or defensiveness understand that it’s not about you, remain firm and focused on helping them improve their performance.
Manager Tools – amazing series of podcasts taking you through all aspects of performance reviews.
Performance Review Examples – ten tips explaining some of the pitfalls.
Have a copy of your own goals, go through it and assess your performance. Be honest about what goals were met and your responsibility, be honest about what goals were not met and your responsibility. Note down any achievements that weren’t somehow listed or planned, things you particularly enjoyed, and assemble any feedback you’ve had from peers.
Looking into next year think about your goals, your training needs, projects you’d like to work on. If they’re aligned to the company’s goals a good manager will try to include those in the planning for the coming years.
Be prepared to give your manager feedback on how they can help you be more successful. I firmly believe that’s the manager’s number one task.