Rumours of the performance review’s death have been circulating for some time. We think it’s actually evolved into something better.
The traditional performance review has copped a lot of flak over the past few years. It’s considered by many to be an antiquated, box ticking process where no value is added and everyone wastes a lot of time. “We’d rather stick pins in our eyes” was a quote we once heard a CEO share as the business lamented the tediousness of their review process.
And we agree. In fact, we’ve argued that many businesses need to consider whether they’re better off doing nothing at all than sticking with their current performance appraisal process.
But we don’t think the annual performance review is ready for extinction just yet. Instead we are seeing a crossroad where review conversations are evolving and when done well are actually critical to the success of your business. Here’s why.
How we usually conduct our performance reviews
Most organisations still give their staff a formal performance appraisal once or twice a year. The dates are fixed, calendar invites are sent, a form is provided, and the manager and the employee both go away and prepare for their discussion based on the questions in the form.
Typically, this happens during a particularly busy time of year – often when budgets are being set and financial performance is being evaluated. But despite this conflicting pressure, both manager and employee will take time away from their other duties to go through the motions of a formal appraisal.
Sometimes this sacrifice is worth it. Usually it isn’t.
The problem with performance reviews
If both manager and employee are genuinely engaged in the whole process, prepare properly and follow up regularly on the goals and objectives that are set, the performance review can be a structured process through which the employee grows and develops in their role as a consequence.
But for the most part, that’s not what happens. Instead, even when painstaking preparation has gone into the performance review discussion, that’s where the process starts and ends. Nothing is mentioned again until the next performance review in six months’ time.
And that’s not the only problem. There’s also an issue with the review itself. Many reviews hold people responsible for past behaviour and things that happened 6 or even 12 months ago, at the expense of improving their current performance and focusing on the future. In short, the review becomes a report card, not a development tool. This means it also fails to groom the future talent that will be critical for the organisation’s long-term success.
When you think about it, the annual or half-yearly performance appraisal system runs counter to everything you’ve ever read about how to give effective feedback: that it’s meant to be specific, timely, goal-oriented and forward-looking.
Introducing the performance review 2.0
There’s a new generation of performance reviews emerging. These leverage the idea of coaching and mentorship rather than the carrot and stick of the traditional approach. Every day becomes an opportunity to guide and develop.
The performance review 2.0 is based around four concepts, which go to the heart of the coaching philosophy, not the superior/subordinate relationship that traditionally characterised the review, says David Hassell, CEO of 15Five. These four concepts come down to doing the following:
- Giving people leeway to make mistakes. “Use sink or swim but don’t drown them,” Hassell says. Ask your people to reflect on highlights, frustrations and learnings.
- Taking calculated risks. When setting objectives, take people out of their comfort zones and stretch them. Just don’t push them beyond their capabilities.
- Having honest conversations. If you’re concerned, let them know why.
- Asking questions. Inspiring and motivating people begins with understanding who they are and what makes them tick.
Where the coaching approach could take you
By coaching employees in this way instead of appraising them, you open up a world of benefits for the business – most notably this includes having engaged, empowered staff who can have complex tasks delegated to them. It lets you set and review goals more frequently, gives your employees the chance to – and satisfaction of – stretching themselves, and lets them build the skills they’ll need to advance their careers quickly.
Adopting a coaching style of review will probably cost you less than traditional performance reviews, make employees more engaged and increase staff retention – all bottom-line benefits.
Interestingly some of the companies that have moved away from traditional performance reviews (Google, Atlassian, GE to name a few) have paved the way for a more rational, less subjective analysis of employee performance – one often based on using apps to capture exact data on how an employee performs. I think the important thing to note here is that the use of technology simply acts as an aid to having a better coaching conversation – and that can only be a good thing.
If you’d love to reinvent your performance review process but don’t know where to start, get in touch. We’ve had experience helping businesses like yours build a coaching-based model into everything they do.