It’s Time to Review the Performance Review

By Quint Studer

Performance reviews often get a bad rap these days. Employees dread them; managers see them as one more thorny task on their endless to-do lists.  But performance reviews are necessary. And when they're done properly, people actually like them.  Employees want to know how they're doing. They want to connect with their managers. And reviews give leaders an opportunity to measure performance results, reward great employees, and move not-so-great ones up or out.

Maybe the problem isn’t the evaluations themselves, but rather the way companies handle the process.  A change in approach can not only make reviews more effective—it can have a positive impact on a company’s culture as well.

So what can leaders do to make performance reviews really count?

• Think of reviews as a process, not an event. Let's put the traditional performance review in context. It's "business as usual" all year: employees go about their work, managers go about theirs, and never the twain shall meet. Then suddenly, once a year, they do meet. That one encounter is expected to yield a productive meeting of the minds, followed by growth and progress on the employee's part. It rarely works that way. If the review is an aberration in the fabric of daily work life, the results are bound to be lackluster.

Leaders should lay the groundwork for performance reviews all year long, weekly or even daily, rounding for outcomes. In the same way that a doctor makes rounds to check on patients, a leader makes rounds to check on employees. The technique allows leaders and managers to regularly touch base with employees, make personal connections, recognize success, find out what's going well, and determine where improvements are needed.

This process involves asking specific questions, that is:  “Do you have the tools and equipment you need to do the job? What is going well? What isn't going well? Is there anyone who's been particularly helpful to you that I should recognize?” Leaders should listen, write down answers and then follow up.

In this way, reviews become the culmination of lots of minimeetings. Neither party is surprised by what the other party says because the issues have been raised before—probably more than once.

• Hold reviews four times a year. The annual performance review should become the quarterly performance review. If this sounds like a lot of work for managers, it is. But it's also far more effective than the annual review, which too often reflects an employee's performance during the previous month leading up to the meeting.  What if that month of the annual review turns out to be an employee's one bad month in an otherwise good year? Quarterly reviews are a far more accurate reflection of the employee's overall performance. They force leaders to pay close attention all year long.

• Link reviews to organizational goals. It may seem an obvious strategy, but surprisingly few leaders structure employee evaluations around concrete, companywide goals. When employees know they are going to be graded on the progress they made toward goals the entire company shares, they will alter their behavior accordingly. But leaders shouldn’t just impose goals on employees. Getting employee input up front helps them "connect the dots" regarding the impact their work has on the organization and makes them feel like an important part of the whole.  And when leaders bring up these goals again and again in performance reviews, it reinforces employee efforts.

• Make review criteria as objective as possible. One of the major criticisms leveled at performance reviews is that they're often too subjective. What do words like communication, organization, and professionalism really mean? And what does it say that Manager A gives Rebecca a 2 in "communication" while Manager B, who supervised her last year, gave her a 4? Clearly, it says that perceptions—of the criteria measured, of employee behavior, and maybe of both—vary wildly.

What you can't argue with, is hard numbers; measurement. The medical field is notorious for its measuring—Which department has the highest patient satisfaction scores? Which one has the lowest employee turnover?—and there is no reason other industries can't take the same approach.

• Strive to make performance reviews conversations, not confrontations. The words “performance review” call up an image of a stern judge pronouncing a sentence on the nervous employee.  This doesn't inspire anyone. The best leaders draw employees out, solicit their ideas for improvement, and offer concrete suggestions on how to better pursue the goals you've set together.

• Avoid falling back on we/theyism. Let's be honest. Most employees come into performance reviews with the hope of walking away with a pay increase. Leaders  often have to disappoint them (especially in today's economy). And many of them (often those who lack leadership training) fall prey to the "we/they" phenomenon—as in, "Well, Rick, I fought for your pay raise but you know those tightwads over in corporate.”  The problem is, we/theyism has a divisive effect on company culture.

Leaders should instead make a conscious effort to position the company as a united entity. It's fine to say something like “Sales are down 11% and no one is getting raises. But we have a great team, we're all working hard, and I'm confident we can turn things around.'"

• Use reviews as a springboard to move low performers up or out. The whole idea behind reviews is to improve employee performance, right?  No one benefits if low performers are permitted to hang around year after year.  They tend to pull middle performers down to their level. Worse, high performers may become discouraged and leave. Once managers get rid of the “bad apples,” middle performers will naturally emulate the behavior of star employees.

The new and improved performance reviews described here—frequent, objective, and goal-driven—enable leaders to very quickly build a case against low performers.  It's a good way to gather the evidence needed to fire them if they don't show improvement.

Concluding thoughts
Admit it: not having to endure the annual performance review charade of old would be a huge relief for all concerned. But the benefits of a change in approach reach far beyond the meetings themselves.  It's no exaggeration to say that revamping the performance review process can transform the entire company.  When employees know they are treated fairly, when they are engaged in the company's mission, and when they are coached toward meeting clearly stated goals, they will put their hearts into their work.  And that’s nothing less than culture changing. 

I've always said it and I still believe it: a great culture outperforms strategy every time.

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