"I hate performance reviews"
We hear this all the time from employees and managers alike, and despite numerous discussions of how to revise reviews, they have remained virtually the same. We know the reasons for dissatisfaction with performance reviews: little meaningful data, unfair and inconsistent ratings, forced distributions, and the age-old binary of facts versus opinions. The result is a less than effective process.
In my tenure at FedEx, we tried to make the performance review more effective. We changed performance scales numerous times—3, 4, 5, 7, 10 point scales—and every time it resulted in the same very narrow, high-peaked bell-shaped curve that kept creeping higher and higher in the range. Rather than acting as a way to measure performance across the company, with a lack of statistical difference in the scores and ratings, discussions became meaningless and these performance reviews functioned as just another exercise. It was only after we truly examined the performance review process and recognized that tweaking was not enough, that we revised the approach and the performance review became more effective.
If you are experiencing similar issues and think the time for talk is over and the time for action is now, here are some thoughts to consider if you wish to achieve meaningful change:
- Define why a performance review is needed. While there may be some variation, most companies would agree that a performance review is intended to serve three key objectives: to improve employee and company capabilities, reward and recognize employees fairly, and support proactive succession planning.
- Determine what is to be measured. Many performance reviews focus on results, but this focus fails to acknowledge that results come from attitudes, and attitudes are shaped by behaviors. Even things like competencies are not as important to understand and measure as behaviors because it’s not the knowledge you have about a topic, but rather how you go about executing it that matters. Consider changing performance reviews to measure behaviors, for they produce long-term results.
- Clearly define expectations. Employees should have no doubt how they should act in their fulfillment of their responsibilities. Provide examples of what behaviors are considered excellent, satisfactory or below average regarding each behavior. This should be done for unique positions and jobs where possible.
- Obtain timely, accurate and meaningful feedback. This can be done by surveying the customers, team members, direct reports, the employee him/herself, and management involved in or affected by the employee during the completion of any and all major assignments. The survey should be well structured and ask for the participants’ rating of employees’ performance as compared to the behavioral expectations defined for the position or project. The survey should also allow for comments about the behaviors displayed by the employee. It should be sent to all relevant parties as soon after the assignment is complete. Feedback—good and bad, as well as detailed discussions of why and what could have been done instead—should be given to the employee as quickly as possible to ensure that the employee has time to modify behaviors before the next feedback session.
- No less than yearly, conduct the formal performance review. Rate all employees at the same time of the year to remove ‘seasonal bias.’ Rate each candidate by behavioral expectation starting with the best and worst at displaying these behaviors and then filling in those in the middle. When all behavioral categories are rated for employees, conduct a formal review by subsequent levels of management within a department to be sure consistent ratings were applied for each category. It is important the criteria is consistent and the ratings are applied in an unbiased nature — everyone starts out as ‘average’ and earns any variations from the same starting point. Reviews by subsequent management levels— starting with first line managers — should be honest, critical of the ratings and performance, substantiated with justifications, and include discussions of developmental plans for individuals.
- Reward, recognize and follow up. Detailed and meaningful discussions with each employee should be conducted to detail the results of the process. It should be a two–way conversation, but should not be difficult given the constant feedback provided throughout the year. A developmental plan for the employee should be included in feedback discussions and referenced in the performance review the following year. If individual merit increases are part of your process, base them on the results of this behavior review. Consider giving management a merit pool that can be distributed among all employees individually as appropriate.
This process is difficult, but given the purpose of a performance review, it is necessary. It provides structure and eliminates many of the objections to reviews that people have. No review process is perfect, but to implement meaningful change in this process, it is clear that some fundamental premises need to change as well. The above process may not be ideal but it:
- Recognizes that a performance review is conducted for positive reasons and helps ensure it is more beneficial in attaining that result.
- Treats performance reviews as they are, not a stand-alone event, but rather as intrinsically linked with, impacted by, and affecting virtually all people-related initiatives (talent management, succession planning, compensation, rewards, recruiting, and retention.)
- Focuses on behaviors, which are controllable and significantly impact the effectiveness of an employee, shape his/her future and provide long term benefits to the company.
- Permits ‘ranking’ and distributions, but by behavioral categories only, not overall performance. This forms a truer picture of an individual’s strengths and opportunities, and lays the groundwork for of the construction of a proper individualized development plan for each employee.
- Results in a performance bell curve as desired, but the distribution of the ‘spike’ and the location of the curve on the overall performance continuum are not forced. This recognizes the true value of employees and provides a reflection on recruiting and hiring success.
- Separates rewards for short term results (year-end bonus, a one-time project with significant results) and merit (included in base pay and used to reflect behaviors that will impact long-term results.)
This process may not work for all, but it should be food for thought about the types of things that really need to be changed, in unison, if you want a more effective performance review at your organization.