Banish the specter of the annual performance review

Sean-ConradThe following is a guest post by Sean Conrad. Sean is a Certified Human Capital Strategist and Senior Product Analyst at Halogen Software. For more of Sean’s insights on talent management best practices and creating a coaching culture, read his posts on the Halogen Software blog.

Watch out!  One of the most dreaded times of the year for both employees and managers is approaching — Performance Review Time!

Shredding a reviewIn recent years, there has been a lot of discussion about the pervasive ineffectiveness of annual performance appraisals and the “need” to throw out performance reviews.  Indeed, writing in a recent issue of Vanity Fair¸ Kurt Eichenwald cites a toxic performance review process as a major contributor to corporate giant Microsoft’s performance decline.

According to Eichenwald, Microsoft’s practice of “stack ranking” employee performance in a forced bell curve created a culture of internal competition and risk aversion that stifled innovation and collaboration.

What is wrong with a process used by over 97% of businesses and intended to define, measure and improve employee performance? In an April 2011 report, the Wharton School of Business stated that traditional annual performance reviews tend to have competing goals that hinder their success.

There is a better way

Many organizations are finding that moving from a traditional annual performance appraisal toward a culture of ongoing feedback and coaching has a significant positive impact on performance as well as on the relationship between employee and supervisor.

Here are some differences between traditional annual performance reviews and an ongoing performance coaching model:

Limited Annual Performance Review Performance Coaching Model
Occurs once a year Occurs on a frequent, ongoing basis
Manager and employee must rely on memory of performance that may have occurred many months ago – may not agree on what happened. Feedback is given immediately after the performance occurs – allows feedback to be pinpointed to objective observation with little room for disagreement.
Employees have no indicator during the year of how they are doing so are unable to improve performance or build on successes during the year. Employees are given frequent feedback about how they are doing and what needs to change, giving them the opportunity to improve performance and build on successes during the year.
Often linked to ranking, compensation and promotion decisions.  Impact can create a divisive and competitive atmosphere more focused on defensiveness and justification than on improving outcomes. Frequency means that no single interaction is decisive in determining performance rating, compensation or promotion decisions, allowing for focus on improving outcomes and team collaboration.
May be adversarial because of impact on employee future. More room for collaboration and coaching mentality.
Focus may be on completing the exercise to “satisfy HR requirements” rather than on improving outcomes. Less focus on administrative tasks and more on performance outcomes.

Keys to building a coaching culture

Aside from changing to an ongoing feedback cycle rather than relying on a single annual review, here are more things to consider when building a coaching culture.

  • Senior management commitment is essential to building a culture of coaching and holding managers at all levels accountable for delivering effective feedback.
  • Make performance management an integrated part of an overall talent management program that includes development, competency modeling and succession planning.
  • Establish individual performance goals and measures that are linked to organizational objectives and initiatives so employees understand where to focus their efforts for the most effective results.
  • Provide training and practice to managers and supervisors on how to observe performance and deliver objective feedback that defuses defensiveness and helps employees understand exactly what they must do to succeed.
  • Emphasize positive feedback, catching employees when they are doing something right and encouraging and reinforcing those activities. Managers should seek to provide positive over negative feedback at a ratio of at least 4:1.
  • Conduct reviews at the conclusion of a project to glean best practices and learn from mistakes.
  • Make sure that employees have the guidance, resources and skills to be successful.  It is the manager’s responsibility to identify and remove barriers to success.
  • Engage employees needing improvement in identifying strategies for improving their performance.
  • Observe and reinforce small steps toward improved performance.
  • Help managers to focus on how to fix errors rather than assigning blame.
  • Help managers to be open to receiving as well as giving feedback.
  • Use performance management to explore employees’ career aspirations and help them identify competencies and development opportunities that will enable them to progress.

There is enough evidence linking effective performance management to bottom line business results to support the conclusion that performance reviews should be here to stay.

By integrating them into a larger talent management process and expanding them into ongoing feedback and coaching, organizations can replace the horrors of the annual performance appraisal with a culture of collaboration and achievement.

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Categories: Human Resources

Author:Chris Taylor

Reimagining the way work is done through big data, analytics, and event processing. There's no end to what we can change and improve. I wear myself out...

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