performance reviews

I asked a millennial a straightforward question: ‘Have you ever had a performance review?’ ‘Yes, and it sucked’, he replied.

He’s a motivated, engaged worker who routinely exceeds his monthly targets, so I’m sure it wasn’t his rating he was unhappy with; it was the process. We know it needs to change; after all, the workplace has changed profoundly in the last decade. We make decisions more collaboratively, we work in global teams, our work is more data-driven and information overload is a constant stressor.

This young person described his ideal alternative to a performance review to me and it boiled down to three things:

• Coaching and mentoring to help him reach his own goals
• A clear understanding of the organisation’s goals and how he is expected to meet them
• A fair and balanced assessment of how he is doing, from a range of perspectives

And while these are all really important to him, he doesn’t want them to be onerous or too time-consuming; not for him, his manger or the people in HR.

I participated in a webinar hosted by Halogen Software, in which presenters Evelyn Watts and Hawley Kane outlined five alternatives to the annual review. I’m sure my millennial mate, as well as any of the other three or four generations in the workplace, will find an alternative that suits their workplace and their people.

It’s important. Watts and Kane reported that when organisations began to focus on coaching and feedback in their ongoing performance management they reported:

• increased revenue (70% of companies)
• decrease in staff turnover (72% of companies)
• improved customer satisfaction (54% of companies).

So here are the five alternatives that Watts and Kane of Halogen Software suggest.

1. Quarterly goal setting

Frequent revision and updating of goals leads to better business outcomes. It’s common for executive teams to review their goals as often as five times a year; employees are unlikely to do the same.

Step one is to align individual goals with strategic goals; and step two is to set concrete goals with a target and a measurement. It is then critical to keep on track and stay engaged, which is accomplished by regular and specific feedback and discussion. As Halogen is a software company, it has clever computer-based ways to manage these processes and keep them front of mind.

2. Development discussions

In the contemporary workplace, especially for millennials, the reality is that 18 to 24 months in a job is normal. In this time, employer and employee want to get the most from each other. Holding development discussions that challenge everybody is the manager’s challenge. The process should be honest and open, with the manager acting as coach, not boss.

It is still important that the process be formal and that a solid development plan results from it. Halogen’s career development plan asks, ‘Where do you want to be in two years?’ The manager is then challenged to identify appropriate development plans to help the team member reach their career goals. They must keep the conversation going, periodically asking, ‘how are we doing?’ and at the end of the year asking, ‘did we get there?’ before creating the next plan.

3. 360 degree feedback assessments

One of the things my millennial mentioned in describing how his reviews sucked was that although his manager felt she had the full picture of his achievements, he didn’t believe that she did, as he did some of his best work on a project in another team, some of whom were in another city. Well-conducted 360 degree reviews overcome this as workers are far more accepting of performance feedback when it comes from multiple sources. Halogen reports more accurate, credible and reliable performance appraisal ratings, improved performance and higher functioning teams as well.

These are their guidelines

• Have employees choose raters with manager approval
• Feedback should be aggregated and anonymous
• Rate on competencies
• Provide training and follow up

Teaching people how to give and receive feedback is important for this approach to be successful, and feedback should flow up as well as down the company hierarchy.

4. Project reviews

Reviewing the success of a project and the people working on it aligns better with the way many companies work now. This method is not limited to the employee-manger relationship and is flexible in that it can launch any time and team leaders can manage their own project teams and set project goals and measurements. Project reviews should incorporate continuous feedback to work most effectively, say Watts and Kane.

5. Check-ins

Watts and Kane refer to frequent, regular one-on-one conversations as the ‘Holy Grail’ of performance management. They link coaching and feedback to goals, development, rewards and ultimately career progression. Because they are so important, we will look at these in detail in our next post about performance reviews.

Progress, not perfection

In the webinar’s question time a participant said that they presently had no performance reviews, and asked how to get started.  Training people to understand the benefits, linking goals (the what) and competencies (the how) and changing the mindset of managers all formed part of the answer, but what really resonated was Watts and Kane’s assertion that you can start tomorrow with these five methods.

We know the performance review has to change, and we can take small steps, aiming for progress rather than perfection. Work is changing so fast that we can’t afford not to – improving conventional approaches is not going to cut it and the annual review is becoming less effective at driving performance every year.

performance reviews

When we last looked at performance reviews, we saw that more regular and less structured feedback and conversations are rapidly replacing the annual review. At a recent open day at the Australian Institute of Management (AIM) I listened to Kerrie Yates, Consultant at Catalyst Learning and Development, explain exactly how to go about holding an effective, productive performance conversation. This is what I learned.

Many managers find conversations about performance the most difficult part of their job. Participants in the AIM session ‘Effective performance discussions’ expressed the opinion that they were not insufficiently coached and trained, particularly when it came to discussions about behavioural issues, rather than measurable KPIs. They agreed that more of their time was spent on poor performers than good performers, as poor performers required more managing, attention and training  – at the expense of good performers, who were often penalised by being piled with more work. Many expressed the fear that star performers would leave the team or the organisation because they did not feel positively acknowledged for their high performance.

BLOCKS TO EFFECTIVE PERFORMANCE CONVERSATIONS

Yates identified these blocks to effective performance conversations, as felt by managers:

• Uncertainty about their capability to handle the conversation
• Lack of time to hold regular conversations with all team members
• Lack of perceived benefit – a perception there are no measurable outcomes
• Not wanting to hurt another’s feelings
• Seeing the conversation as too difficult, and so moving it elsewhere (usually to HR)
• Having to deal with an organisational culture of non-recognition (Hint: pay everybody enough to take the issue of remuneration off the table.)

The session then focused on how to have a performance conversation and how to deliver feedback, beginning with thorough preparation.

BEFORE THE CONVERSATION

Give the team member notice, and set expectations for the conversation. Nobody will respond well if they feel ambushed. Say something like, ‘I’ve noticed that your last two reports have been late and I’d like to talk to you about that. How about straight after lunch?’ The person is clear what the conversation will be about and can think about their response.

Be fully prepared and know and discuss the facts. Consider the solutions rather than only focusing on the problem. Describe the impact of the problem at the individual, team and organisational levels. For the late report, for example, you may say, ‘Because the report was a day late, I was unable to review the figures and there was an error in the budgeting. When I presented it to management, they picked up the error and it seemed like our team hadn’t done the research properly. I’m concerned that we might not get the budget to get the project done.’

Consider how the person might respond, and be prepared for their response. Think about how you feel about having the conversation: What language will you use? Do you have some responses ready? Of course, you can’t control every situation, such as when issues outside the workplace are affecting a team member’s performance and they respond by bursting into tears, for example.

HOW TO DELIVER FEEDBACK: A QUICK GUIDE

Positive feedback is aimed at acknowledging good performance and promoting more of it. However, saying something like, ‘Well done on the report’ is not enabling the person to understand what was done well, and to do more of it. Yates offered the following, stressing that it is a guide and not a script:

1. Give a concrete example of good performance. ‘Your report was well-structured and clear; good job’.
2. Say what the impact was. ‘That meant I was able to give a really succinct presentation to the board.’
3. Say what the benefit was. ‘I was able to get across the team’s funding needs and I think we will get what we need to run the project, so well done.’

Feedback for improvement is more challenging, but the following framework makes it less stressful. At all stages, ask open questions (i.e. ones that cannot be answered yes, or no, or with any other one-word answer).

1. Identify the problem. ‘Your report was late, and this has happened three times now.’
2. Say what the impact was – including the impact on others such as the team or customers. ‘I had to go to the management meeting without being able to read through it and so I was unprepared for questions from the CEO and CFO.’
3. Listen to their reaction and explanation. Really listen, without preconceptions or judgment.
4. Look for solutions. This depends on their reaction. It might be that the deadline was unreasonable and they need more time in future, or that they need an editor or proofreader at the final stages of report writing in future.
5. Say what the impact of this will be. ‘If I give you a day longer to get them done, we can get all reports finished in time I can be properly prepared for management meetings’.
6. Say what the benefit of this will be. ‘I’ll be much more likely to get out budget requests approved and we can then go ahead with the revenue-generating project we want to work on.’

Performance measurement and holding performance discussions is complex, and people are messy (and I’m not referring to the state of your desk). As Yates stressed, there is no ‘magic formula’ for performance reviews that will work in every case. Take the situation where a talented person is in the wrong job because the company was desperate to fill the position when they hired; or where a high performer’s performance drops, but they still outperform the average employee. These situations can give rise to complex conversations. Hopefully you will find some pointers to holding effective performance discussions. AIM has many events and resources Australia-wide for mangers, leaders and aspiring leaders: see www.aim.com.au/events.

performance reviews

A year ago, Deloitte announced that they were getting rid of performance reviews. Research had shown, they argued, that a critical assessment was no longer the way to gather information about staff performance. Not only did they waste millions of hours, representing a huge cost, they were demotivating and inaccurate.

Other organisations, including Accenture, Google, Microsoft and NAB have also ditched the annual review and ranking system. They were convinced by their own research and by that of outside organisations that the system was not driving better performance.

If you hate performance reviews, either giving them or being on the receiving end, you’re not alone. A poll in the Sydney Morning Herald had 87% of participants agreeing that the ‘whole process is just a waste of time and doesn’t achieve much’, with only 5% agreeing that, ‘They force employees and managers to think beyond the daily grind and see how they are tracking’ and should be kept.

Kevin Murphy, a scientist at Colorado State University and an expert on performance appraisals, told the New Yorker that there were further issues:

• Managers have incentives to inflate appraisals of their team members.
• Feedback can make people less motivated and hurt relationships as it is often perceived as biased and unfair, even when it is accurate.
• Organisations do a poor job of rewarding good evaluators and sanctioning bad ones.

‘As a result, annual appraisals end up as a source of anxiety and annoyance rather than a source of useful information’, Murphy told the New Yorker.

Other reasons given for scrapping performance reviews include:

• They focused on the last couple of months and on recent performance, rather than on the full year.
• More than half of the performance rating reflects the traits of the person conducting the review rather than those of the person being rated, due to the conscious and unconscious biases of the reviewing manager.
• They tend to reward the most self-promoting employees, who are not necessarily the best employees in the long term.
• They reflect an outdated way of working, based on the time and motion studies of the early 20^th century, seeking efficiency above all else.
• The performance review process is the single biggest cause of claims for bullying, according to research by reputation management consultants Risk To Business, who write, ‘The link between performance management and workplace bullying is unequivocal.’

Supporters of the review process argue that it is not the performance review per se that is the problem, but how it is conducted and managed.  Rhonda Brighton-Hall, board member of the Australian Human Resources Institute, has said that it is the quality of the leadership, not the form the performance review takes, which establishes its effectiveness. Handled well, a performance review can increase motivation, reward productive employees by giving them more responsibility, identify training needs and confront problems in an honest way. Staff are able to set career objectives and ask for support in achieving them. Confrontations can be managed in a considered way, and open communication is encouraged.

Supporters argue that it is important to separate the performance review from a pay review, as employees will perceive a negative review – or even any adverse comments – as a way to avoid giving a raise. Separating the two processes allows the performance review to feel more collaborative.

In a fast-paced work environment, there is no doubt that slowing down and reflecting on performance is helpful and positive.  Those who have given up the annual performance review have typically replaced it with more regular and less structured feedback and conversations. Next time we will take a look at those alternatives.