The Real Problem with Performance Reviews
While many organizations are considering getting rid of the traditional annual performance review, very few have a solution to effectively evaluate performance as a viable business skill. The move away from annual performance reviews may save leaders and employees headaches, but it hasn’t solved the problem of evaluating and recognizing good performance.
The problem isn’t whether or not a leader is reviewing performance, rather how they are going about it. Most performance review processes are lacking critical components to optimize performance within organizations long before the review process takes place. Consider these five factors your organization may be lacking when it comes to effectively measuring performance as it relates to tangible business results.
Lack of Alignment Between Organizational Purpose and Performance
When an organization promotes their mission, vision, and values, but fails to align them with performance strategy, the purpose of the organization may be viewed simply as a dream—not a reality. Organizations need to first carefully consider how their mission, vision, and values play out in relation to their performance, and then look to align performance with the overall annual and long-term strategy of the organization.
In recent performance management research conducted by PricewaterhouseCoopers (PwC), The Changing Performance Management Paradigm, revealed that “building a high-performance culture begins with a clear connection between purpose and performance.” Purpose, core values, and business strategy form the foundation of good performance. “Together with the business strategy, these elements form the basis of an organization’s moral compass and provide a reference point for managing performance.” When organizations focus solely on performance processes and systems, the reason why they are in business is often overlooked, and the purpose of performance gets lost in the shuffle of activities.
Aligning individual performance with the mission, vision, and values of the organization is only half the challenge. Individual managers and team leaders need to help each individual employee align their own personal values with that of the organization. Individuals have a fundamental need to know their work is relevant, not only to the purpose of the organization, but also to their own need for relevance, purpose, and meaning for themselves. In a recent Forbes article, Strategy 101: It’s All About Alignment, Larry Myler noted that 65% of organizations have an agreed-upon strategy, but only 14% of employees understand the organization’s strategy. Myler noted, “Assuming you have created a sound strategy based on the union of customer desires and company output, you now face the challenge of inserting employees into the mix—in a way that aligns their daily decisions and actions (values and skills) with the strategic direction of the company.” If an individual doesn’t understand how their role is aligned with the purpose of the organization and their own psychological needs, they are likely to become nothing more than taskmasters of their managers, CEO, or shareholders. There is often misalignment between what tasks a manager or team leader believes are important for a specific job role compared to the employees’ perceptions of what they should be doing. This lack of clear expectations and linkage to personal and corporate purpose can influence an employee to form a perception that they are being treated unfairly by the organization.
Lack of a Clear Definition of Good Performance
Employees often have difficulty understanding what good performance looks like within their given role on a team or as an individual contributor. Ask anyone who serves you throughout the day, at the local coffee shop, grocery store, or your place of business, “how do you know you’re doing a good job?” This individual might sight that, “my customers don’t complain,” or “my clients are happy.” People may think they’re performing well because they haven’t heard anything negative from their manager in a long time.
When organizations lack a clear definition of what good performance looks like, they have no objective means of evaluating their talent, rewarding or recognizing high performers, or addressing what may be perceived as poor performance. Furthermore, when employees don’t know what good performance looks like, their ability to achieve desired outcomes is significantly effected, as they lose a sense of relatedness to the work they are doing day in and day out. Employees in this situation may be much less inclined to take the review of their performance seriously, seeing it only as an imposed hoop they have to jump through once a quarter or annually.
Lack of Clear Performance Agreements
When organizations don’t take the time upfront to define which outcomes are most important for the team or individual to focus on during a given period of time, individuals may not be on the same page as their managers when it comes to performance expectations. When managers don’t take the time to collaborate with individuals on clearly defined outcomes, performance becomes a random set of day-to-day activities that can quickly become overwhelming or disconnected with the desired direction and focus of the organization. Lack of clear performance agreements could also lead to status quo performance by individuals who are disengaged and sub-optimally motivated to perform daily tasks to the best of their individual skill level.
Taking the time up front, before a defined performance period, to set clear goals and secure agreement on the priorities of those goals, ensures a much higher likelihood that employees will take performance more seriously and have something to refer back to when it’s time to review an individual’s performance.
Lack of Ongoing Performance Conversations
Organizations that don’t take the time to set clear performance goals may lack the commitment to hold regular one-on-one or team conversations related to their performance toward their desired outcomes. “Nothing quite beats a face-to-face, one-on-one meeting”, says Elizabeth Grace Saunders, the author of How to Invest In Your Time Like Money. “One-on-ones are one of the most important productivity tools you have as a manager,” she says. “They are where you can ask strategic questions such as, are we focused on the right things? And from a rapport point of view, they are how you show employees that you value them and care about them.”
Once the goal is agreed upon, individuals and managers need to continually check in on a regular basis, to offer feedback, listen to, or problem solve any road blocks to ongoing performance that may be getting in the way of effectively achieving the desired outcomes.
When managers or team leaders regularly check in with individuals, they are more likely to stay on course, or adjust their daily or weekly outcomes to make advances toward their goals. Organizations should consider a common practice of having brief 15 to 30 minute one-on-one collaboration conversations focused on performance goals at least once every other week to ensure that the goals remain on track and any development needs of the individual are being met on a timely basis. Employees view managers who make time for effective one-on-one conversations with their team members as better leaders overall and report being more engaged at work. Managers, team leaders, or coaches who spend one-on-one time with their direct reports increase employee engagement, are more likely to consistently achieve desired outcomes, and increase overall individual and team performance. Organizations utilizing these practices are also more likely to experience regular discussions of performance as an effective bridge to overall performance reviews on an Annual or Quarterly basis.
Lack of Performance Feedback
People may tend to have an inflated view of their performance, which can be complicated by inaccurate measures of performance by managers who may not want to deliver constructive or negative feedback. Many times, managers were once peers of their direct reports and have a personal relationship or rapport with those whom they must deliver this feedback to. This makes collaborating with direct reports about sub-par performance, or even average performance, an uncomfortable conversation when forced to review for promotions, pay raises, or career moves. Ongoing, documented input is needed to ensure accurate, objective reviews, as well as to prevent a biased and ambiguous performance review process.
Organizations that use effective feedback on a regular basis create a highly engaged workforce that is set up to provide support for customer needs and positively impact bottom line outcomes.
Optimize Organizational Performance
If you’re considering getting rid of Performance Reviews in your organization, be sure to consider how great performance is critical to serving your organization’s purpose for being in business. Linking purpose to performance, clearly defining what good performance is, agreeing on performance outcomes, and offering ongoing feedback on performance are fundamental to optimizing performance within your organization. Cultivating a culture of high performance and achieving desired outcomes for individuals, teams, and the organization, will increase the likelihood of employees taking performance reviews more seriously and viewing them as a means to grow and develop their career, while experiencing high levels of satisfaction in the work they are doing. Don’t abandon the evaluation of good performance because you’ve formed the belief that it’s too time consuming, difficult to measure, or not worth the resources it takes. With the right performance strategies and effective processes to evaluate the execution of those strategies, your organization can leverage optimal performance and achieve excellent business results.