Does this sound familiar to you? Once a year, you get a notice from your HR person that it is time for the annual performance reviews. So all of the managers spend the next few weeks reviewing everyone’s performance, and determining who get the allocation of available money for raises.
The idea of yearly performance reviews is ridiculous and should be abolished immediately. It does very little to actually motivate people, and does a poor job at measuring performance. Instead I advocate making three changes.
Step 1: Have managers provide real time feedback. Change the culture so that feedback is given in real time. When someone does something exceptionally well, or if they under-perform, as soon as practical, let the person know in-private what they did well. In the case of under-performers, use those failures as learning opportunities so that they can understand what went wrong and how to do better next time. This should be done in a constructive manner so that the staff member can learn something from these, rather than feeling beaten down.
Step 2: Have monthly performance discussions. Managers should meet with their staff members once a month to evaluate each person’s performance against the mutually-agreed to goals. Call this a “performance discussion” to avoid the stigma that the term “performance review” has. This monthly discussion allows the staff members to understand how they are performing throughout the year, instead of just once or twice a year. The managers should use these as real opportunities to mentor their staff, instead of just being a “manager” to them. This reinforces the idea of “no surprises” and promotes true transparency as everyone will understand how they are performing and what they need to improve on a continued basis. Set these up as monthly recurring meetings and agree that these are important meetings that are not be canceled because everyone gets too busy (sound familiar?).
Step 3: Step 3: Realize that performance discussions are not the same as pay increases. Change the mindset so that the pay increase cycle is not tied to the frequency of performance reviews. Most people (including both managers and staff) act as if the sole purpose of performance reviews is to determine how big each person’s share is of the money available for raises, and they lose the real opportunity to grow and challenge the staff. By moving performance discussions to monthly and keeping the cycle for salary raises yearly, it will start to change the culture so that people can have real performance discussions outside of the yearly cycle for pay increases. When it is time for the consider who receives salary increases, it is important to use the performance discussions as input but it is done as part of an ongoing dialog, instead of a yearly event.
To change how performance reviews are done, organizations should make the following changes:
- Have managers provide real time feedback to staff
- Have monthly performance discussions between managers and staff that promotes an ongoing dialogue
- Realize that performance discussions are not the same as pay increases
Agree, disagree, have another point of view? Would love to hear from you.