Purpose of the performance review: to improve employee performance.
In recent years, there’s been a continual and growing number of executives calling for death to the performance review. In January the Human Resources Executive Form (HREF), a peer learning group facilitated by Suzanne Elshult, owner of HRNow, met to share experiences with transforming the performance review process.
Interested to pick up a practice here or there, I always look forward to hearing from other HR professionals. Three of our members agreed to spotlight their process. One company recently streamlined the process, another has been evolving towards elimination of the review form, and the culture of the third company drives an approach that is nearly invisible to its employees.
In a quick survey of the room many expressed their interest in some form of transformation. Many of us are looking for performance utopia; a state of existence where managers deliver results by coaching performance through their savvy leadership. For some, a performance review revolution entails elimination of the form. Others seek it through a transformation of certain other elements. And the most bold of us seek utopia by shaking up their performance culture and eliminating the entire process, form and all.
Isn’t it curious? It seems for many, eliminating the review form is synonymous with eliminating the review process. The form is a component of the process, but does not define it. This curiosity is common. Just this month the HREF experienced it. News reports, consulting firms, blogs and other articles; they all have expressed the confusion. As an example, it was reported last year that Accenture would do away with the performance reviews for its 330,000 employees. And Microsoft did it in 2013. The reality, however, is that neither of these organizations has abandoned performance reviews; their processes have simplified and the form is absent. These giants are joining a small but prominent list of major corporations seeking performance utopia. They have had enough with the forced rankings, the time-consuming paperwork and the frustration engendered among managers and employees alike. Their course has been modernization where the best is kept, and worst is thrown out. And you’ll see a range of this in the processed spotlighted in our January HREF meeting.
To Change or Not To Change
Within the January HREF, an interesting question provoked the group. It pursued adopting a new process based on not using a review form and instead providing good leadership. “How many of you, if starting from scratch, would adopt a process based on leadership, without a review form?” Awkwardly, the question was returned by few hands and many blank stares uncertain as to how to answer it. Are we just too close to the problems in front of us? No, while the problems are obvious, the solution(s) depend upon the company’s specific objectives for performance review, and its culture. Socializing a formal position statement about performance review changes is a great first step in order to answer questions about change. Objectives can be surfaced, clarified and even redefined. With that in hand you’ll be able to rip right through questions like that one.
Regardless of the specific change, amongst executive chambers questioning a familiar, yet frustrating, performance driving program causes hesitation, and fear. There are those who cling to the known, and those who question it, in search for something better. Many executives continue their defense of the old system believing reviews, ratings, and rankings bring a sort of disciplined rigor to the overall management process. It’s no wonder the annual performance review has persisted for so long. They’ve proved useful to employers for keeping employees accountable, rewarding those that excel, and tracking performance over time. As I’m sure you’ve experienced, I have exchanged more than a thought or two with executive power players and board members who continued to carry a torch for yesterday, even in the face of so much strife. Quite frankly, on occasion I might have been tempted to set that system ablaze, with their own torch.
And then we have a camp of executives who clearly see that performance reviews now cause as many problems as they solve. They say it is true, the annual employee evaluation that many business executives consider a pillar of best practices may in fact be an outdated process in need of an overhaul. Instead of guiding managers to coach employees, companies continue the old way of training them merely to cover their bases. With so many reviews based on traits, assessment is subjective and biased, and the conversation lacks credibility. Burdensome and stressful, managers seek the necessary data, attempt to remember a year’s worth of performance examples, and attempt to squeeze in the time to write a properly worded review and tell the employees how their performance has been characterized. This costly process is stressful for employees too, and wen it’s over, they reject an assessment of their performance as lacking credibility. It simply doesn’t achieve the goal of driving better performance, and may actually hurt performance. Samuel Culbert, a professor at UCLA’s Anderson School of Management, told The New Yorker he doesn’t think performance reviews work “in any form.” I surmise he supports total annihilation and he too would set torch to process paper.
The Case for Change
What a bold move that would be. 100 years in the making, performance reviews entered our culture in the early 1900’s. Let the ashes of the old give rise to the performance utopia phoenix. Changing the performance review program is tantamount to the French Revolution in 1789. It forced thinkers all across Europe to reassess the ideas of human rights, political equality, and the rights of women. Revolutionizing the concept of the performance review will change a company’s performance culture as everyone, everywhere will be required to reassess how they lead their teams’ performance. This change is a loaded proposition not to be considered lightly. Those HR executives were right to withhold their responses to that provocative question about adopting a new approach to performance reviews. Here’s a great answer, “Hold onto your horses, let’s clarify our objectives.” Wise words, indeed. Isolating and discussing the problem is the first step. Thoroughly exploring performance review objectives, vetting the problem and solutions, and the importance of changing those specific elements over other elements. Your case for change should include both the positive outcomes expected, along with negative implications to the success of both people and the firm.
To address a comprehensive transformation, each element must be called out so that it may be understood in its current state and how it drives value in the future. I’m simply suggesting that a change of this scale is served best through a position statement that will likely stimulate a re-evaluation of what the performance review is supposed to gain. What if these become more focused? Wouldn’t the process, via it’s elements, be equally focused? Hopefully the focus is high performance. Now that would be position others would adopt. Make the case more compelling by including “testimony” of credible, trusted employees at all levels and functions, from every corner of the organization. One of our member HREF companies referred to this as their “canary group.” Think about coal mines and the practice of canaries alerting the miners to danger. They will ensure the proposition won’t go down a wrong path, and instead will be invaluable in identifying the critical issues and addressing them with realistic solutions. Remember, you’re proposing a performance revolution, so be specific, clear, credible, thorough and compelling for the best chance of being heard, adopted, and implemented.
Fix These Three
What do you think? Is your performance utopia built through transformation or elimination? My advice: STOP. For many, the problem is not about having a program. It’s with the program itself. Perhaps starting your search in the three troublesome categories surfaced by the HREF. Those three categories are listed below with some of their common hallmarks.
Demotivating, leading to disengagement. Traditional reviews simply do not promote good manager/employee relationships. At many companies, the performance review process is incongruent with their values-based, vision-driven and collaborative work environments. Traditional reviews use a biased, one-person point of view – like a film critic giving their own opinion, based on their preferences only. Managers can remember what their employees did yesterday, let alone six months or a year ago. That must certainly disengage employees. The one-way delivery of assessment, including a full list of positive and negative drains the manager’s energy, and with so many reviews, it becomes an exercise on the checklist. It’s just as stressful for the employee whose expectations plummet. As barrister, jury, judge and executioner, the manager has tough role to play, and it doesn’t serve to strengthen relationships. Employees certain don’t look forward to meeting with the manager who is taught to find something to fix in everyone. Oh, it’s supposed to add value with a developmental purpose. Unfortunately, managers have much of a role model to follow. They don’t receive feedback from their bosses any better than they provide it. Today’s review, in fact, further impedes personal growth when employees, in the face of intimidating power. Their refusal to bring up weaknesses that if were improved could help them perform better, for fear that information will be used negatively against them. Communication preferences, work styles and generational differences are not factored into today’s performance process, all chipping away at engagement.
Lacking relevance and usefulness. Performance reviews are actually hard work – which would be fine if they were also useful. But what usually happens is managers spend a lot of time gathering a lot of information on employees, and that information goes nowhere and isn’t converted into action and results. Or, it only finds its way, through an administrative process, up to the executive chambers. Employees may know about executives having their information, but they’ll never see or hear about it again. It’s summarized and reported, only. The process is backward looking. The form collects information against “goals” so that employees know how they performed against “yesterday’s” objectives. And, anything waited on for a year to give meaningful feedback on is already old news. Managers do not use yesterday’s performance to inform “tomorrow’s” success. Use of reviews in that manner is equal to a boat anchor holding back progress. Forced bell curves normalize people and performance, rather than showcase and unleash performance. That is not relevant and useful to growing high performance employees in charge of company success. Corporations use the form to create documented legal trails which guards the company against fired employees’ grievances. If employees, managers and HR all hate it, then it can’t be relevant and useful to guiding performance and making people better while they’re at it.
Reviews and their rankings are complex and burdensome. Today’s reviews are commonly referred to as too time-consuming, expensive and generally ineffective. It’s true that a vast number of performance review processes focus on process over outcome. Boxes must be checked and milestones satisfied. It’s a bureaucratic process nobody likes, and everybody wants off their shoulders sooner than “as quickly as possible.” These things are generally rules-based and bureaucratic, existing as an end in itself. There is a form in every process, whether a one pager, or 10 pager (you’ve seen them all) not a single manager looks forward to gathering twelve months’ worth of data to properly complete the required fields. Nor can one be certain that the review criteria definitions are clearly and consistently understood, rating formulas applied appropriately, or that the ranking credibility is trusted or that rankings are aligned across teams. What information goes in what space? Is it worded properly? Depending on the review form, it’s completion can be frustrating and time consuming, and the same is true for those who must oversee the process; bosses, executives, HR, compensation, payroll, etc. In many companies this task is a two to four months long chore. This could be longer depending on time necessary to train the process, explain and calibrate the vast number of ratings, and writing the form to ensure good, ironclad documentation, rather than guiding performance. This one-time event makes its annual approach like a dark, burdensome cloud anxious to suck time and energy from managers, employees, and HR. HR doesn’t like to force everybody to the review, it’s not a good use of their time to police a process everybody hates. The world isn’t really on an annual cycle any more, for anything, and the accelerating pace of change has caused many companies to realize that annual goals set at the beginning of the year may be completiely out of date by the end of it. Unless managers check in with employees more often, a single conversation at the end of the year can be pointless.
Examples of Change
Three HREF executive volunteered to share how their companies approach performance reviews. One firm, Company A, recently completed a change in which its executives sought to replace a complex rating and ranking process with an objective performance and talent management process. A 41-point complex rating system gave way to five simple buckets. Moving from quarterly to twice per year, quarterly objectives which flow from level to the next, are evaluated. Each objective is comprised of metrics and deliverables removing previously subjective ratings. Where there are now objective ratings, once existed very subjectively evaluated competencies whose definitions were often misunderstood and lacked consistency of assessment. Now, “competencies” are addressed throughout the year, on the job and outside the review process. Still requiring an understanding of the performance across the company, Executives are provided a comprehensive, department level bell curve, which today is not forced is in the past. Executives use of the curves is their way of normalizing results. Comparisons between departments stimulate discussions amongst executives making comparison between departments. A leader by go back his/her team as they listen again to performance and ratings, seeking calibration from the performance of one person to the next. But, performance levels, or rankings, and associated ratings, are not reported, rolled up, or cause an individual to be spotlighted at an organizational level. That stays at the until level where performance is actually managed.
Company B took another approach, yet with some similar elements. Recognizing a complex and burdensome process that needed to morph into something “lighter and easier” was all these executives needed to get started. Establishing performance objectives was inconsistent and subjective. Now, organizational objective setting serves in the center of the performance review. Goals are truly objective and they are checked in on at mid-year. The believe the objectivity and ease of performance ratings enabled a more credible salary merit process, which has been automated taking the administrative burden out of the manager’s workload. They also recognized that performance was getting lost as employees identified themselves with overall ratings, 1-2-3, etc. Such fixation distracts from discussions about strengthening performance. In fact, it wedged strained relationship between bosses and employees. No surprise, overall ratings were eliminated. Individual performance objectives remained, as employees and managers alike found them helpful. Another key to simplification, and increasing effectiveness, is the new role played by HR. These professionals are now helping leaders with making the performance review, especially the discussions, more effective. Employees are provided regular and continual feedback. As the company works toward the end of the annual performance review form, HR is helping leaders with effectively providing daily feedback, and performance coaching, to their team members throughout the year. Done properly, annual performance objectives will be assessed as the year unfolds. Continual coaching ensures on-target and off-target performance can be adjusted. By year-end, review discussions would only be redundant. As such, management’s goal to eliminate the review form will be attained as it is replaced by everyday performance management.
The traditional performance review has never been a good match for the people-driven culture at Company C. In fact, it’s culture, not performance reviews, that bonds performance and people in a highly competitive environment. Missing performance targets is not an option in this culture, and putting the people who create results comes as a no brainer to managers. Ensuring employees “wear the culture” means fiercely scrutinizing new hires t ensure each one is predisposed to high performance. This is why they are “people-first.” This is the first element of their performance review – hiring performance driven people. Great managers, or coaches, is the second component. Executives easily show their trust for their top-tier managers who also “wear the culture” and show it through their actions. They are sophisticated, high performance managers who are empowered to “do their own thing” in order to achieve their results. The “how” is left to managers, as only they are accountable for the performance of their unit. It’s their job to ensure a high performing team, working side by side, and giving feedback all day long, every day, all through the year. Their feedback, “natural and fluid” and people-first, centers on guiding performance. Next up is the boss-employee relationships as the third critical element. Working side-by-side in the job forges trust build credibility. They know one another at a personal level, treating one another as a family. Good times and bad times are easier to handle, whether it’s celebrating a win, or discussing a disappointment. Managers can leverage such relationships with their team members, and the team member benefits. Another practice rooted in a people-first culture which drives performance. The final ingredient in this process is performance and people discussions. In January, managers plot annual deliverables in great detail. At built in milestones, they report in to the boss on a bi-weekly basis to discuss the business, and performance of his/her team members. Congruent with a foundation of people first, these discussions are steeped with examples of training, coaching, counseling and other performance discussions regarding every member of the team. These collaborative, objective conversations are documented and used at year end for “no surprises” compensation purposes. Because of the empowerment and people first approach, dictated structure and formatting are nowhere to be seen or heard. Another approach to eliminated control and oversight, HR’s role as the cop of process has given way to a consultative one. They serve as partners building a high performance culture.
Creating Performance Utopia
Companies who overhauled their performance culture have certain common hallmarks of success. These are non-negotiable to build the foundation on which to change your performance culture. These companies recognize that the sole, and most important objective for the performance review is improving employees’ performance. There exist just five hallmarks that must be built into the organization’s norm of performance management. They are EFFECTIVE FEEDBACK, GREAT COACHES, RATINGS AND RANKINGS, ELIMINATE THE FORM, and finally, LIBERATE MANAGERS AND HR. Each is discussed here.
EFFECTIVE FEEDBACK. No matter what you call it: performance appraisal, review, feedback, development, etc., ongoing formal and informal feedback must be a part of your culture. Employees need instant performance feedback—that is, ongoing performance development—to know when they’re moving in the right direction or how to make a positive change. What was once done at set intervals, often only once per year, must now be “real time” where open, collaborative conversations focus more on the future, and how to improve, than dwelling on the past when performance cannot be changed. Managers must ensure projects are summarized at time of completion, rather than discussing their success or failure 3, 6 or 12 months later. Scrapping the old school way of doing performance reviews and moving to a continuous feedback driven approach puts the mantra of “employees are our most valuable resource” into practice.
GREAT COACHES. Managers must be great coaches. Coaches seek to understand performance, and seamlessly provide feedback, while working in the business alongside team members. Accurate reflection enables objective feedback, which great coaches use effectively to guide team members’ performance toward success. Converting feedback into developmental and performance progress is a skill demonstrated by great coaches. Great coaches ask, “How are employees performing this month, this week, today, or even on this assignment?” Not six months ago, or last year. They don’t wait months for the next scheduled performance review to bring up an issue or reward for a success. Their feedback is timely and frequent. They seize every chance to motivate and inspire employees today, or help support their long-term goals. Performance management is not solely about the company anymore; it’s time to focus on the coaches and their employees – our most valuable resource, the source of the company’s success.
RATINGS AND RANKINGS. The most effective at instant, ongoing feedback will appreciate perhaps the most controversial performance review change. Leaders of the movement are transforming their programs by replacing the concept of “rankings and ratings” with a more fluid system of timely feedback from managers on an ongoing basis following assignments. Without a scorecard checklist, they claim, it is much easier to have objective and honest, continual feedback sessions. Taking place on the job, these discussions are rooted in a collaborative fashion involving others familiar with the work, including the employee. With their backward focus, ratings and rankings simply report performance. Eliminating them and focusing on today’s performance actually impacts tomorrow’s performance. What has more value, “reporting news,” or “creating news?”
ELIMINATE THE FORM. Another potentially disruptive shift is to eject the form from your system entirely. The firms enjoying the best results from review transformation don’t use performance scores as the centerpiece of the discussion as noted above. Therefore, the need for a form evaporates. Further, instead of leaning on the performance review form as a legal record of past performance, they use conversations to improve performance, and to create strong results. And, great coaching, which is on-the-job, in-the-work, etc., is unscripted, spontaneous, and genuine. Which means the form has no role in effective feedback and conversations.
LIBERATE MANAGERS AND HR. Liberate the role of “process cop.” Separate it from the Human Resources job description, and instead expect them to serve as performance consultants and coaches. Have them focus attention on ways they can help grow the high performance culture. Expect HR to help train managers to be great coaches. They should consult with managers on the effectiveness of their ability to coach and lead toward high performance. In liberating HR from the cop role, managers must then be empowered. For starters, managers won’t have HR looking over their shoulders, which means that they’ll need to use their own judgment. Those who understand great coaching in a culture of high performance will police themselves. Empower your managers by fostering open communication, ensuring clear context, allowing safe failure, clearly defining roles, requiring accountability, supporting their independence, and appreciating their efforts. If they are a cultural fit, and you trust them, they’ll do what’s right.
News coverage will continue to shed light on this process that creates a tense relationship between employees, managers, and the company that employs them. Many will call out the diminishing role such an old process has today in growing organizations. Such news will cause many HR teams to take a hard look at their performance review processes, with 100 year old roots. These antiquated processes are demotivating, lack relevance, and have become overly complex and burdensome. Armed with these facts, HR directors will bring their case for change before two camps, one clinging to the familiar, and another willing to embrace it, yet blind to its form. What both sides may not clearly understand is that theirs, like most firms’, performance management systems don’t need to be replaced; but they are crying out for change. Nonetheless, for some, transformation of any sort may be far into the future. Whatever is your definition of a performance utopia, and whatever or whenever your transformation may be, ensuring your managers are great coaches, providing ongoing, effective feedback and open communication can’t wait another day.
What will you do next?