Editor's note: This article appeared in the January 25, 2010, edition of Quirk's e-newsletter.
Performance reviews don’t have to be annual formalities endured only to result in a pay increase. Instead of treating the review process as a corporate-mandated waste of time, consider that employees want to know how they're doing and to connect with managers, and managers want to reward great employees and to address problems using concrete measures. So why are performance reviews seen as such a chore? According to Quint Studer, author of Straight A Leadership: Alignment, Action, Accountability, it's the way companies handle the review process that's flawed. Here are a few ways you can make your performance reviews more valuable to employers and employees.
Think of them 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. The review is an aberration in the fabric of daily work life, so of course results are lackluster. Leaders should be laying the groundwork for performance reviews all year long and “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 you and your managers to regularly touch base with employees, make personal connections, recognize success, find out what's going well and determine where improvements are needed. Rounding means asking specific questions about job satisfaction and performance, truly listening to the answers, and then following up. By using rounding, neither party is surprised by what the other party says during the review because the issues have been raised before - probably more than once.
Hold them four times a year. That's right. 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. "Quarterly reviews are a far more accurate reflection of the employee's overall performance. They force leaders to pay close attention all year long,” says Studer.
Link reviews to organizational goals. It may seem an obvious strategy, but surprisingly few leaders structure employee evaluations around established, 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 don't just impose these goals; get employee input up front. This helps employees connect the dots regarding the impact they have in the organization and makes them feel like an important part of the whole.
Make review criteria as objective as possible. One of the major criticisms leveled at performance reviews is that they're based on maddeningly subjective criteria. 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 and of employee behavior) vary wildly. What you can't argue with is hard numbers. Whether it be customer satisfaction scores, employee turnover or sales, find concrete ways to measure progress.
Strive to make performance reviews conversations, not confrontations. The best leaders draw employees out, solicit their ideas for improvement and offer concrete suggestions on how to better pursue the goals 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 fall prey to what Studer calls the "we/they" phenomenon - as in, "Well, Rick, I fought for your pay raise but you know those tightwads over in corporate." Problem is, we/theyism has a divisive effect on company culture. Instead, make a conscious effort to position the company as a united entity.
Make sure all leaders are singing from the same choir book. Leaders aren't born knowing how to hold effective performance reviews. They need to be trained. Studer suggests standardizing the review process to encourage fairness and consistency.
Use reviews as a springboard to move low performers out. Of course, the whole idea behind these reviews is to improve employee performance, right? So what do you do when certain low-performing employees refuse to budge? What you don't do is let them hang around year after year. It's essential to get rid of low performers. When they're tolerated in a company, they tend to pull middle performers down and repel high performers. The performance review process Studer proposes is designed to allow managers to quickly build a case against low performers.