Accomplished senior human resources leader with expertise in delivering strategic solutions that solve organizational challenges.
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For many organizations on an annual calendar review cycle, this is the time of year when performance reviews are completed and merit and/or bonuses are rewarded. The challenge with year-end reviews, in my experience, is that most are not done well due to inaccurate information and/or rater bias. With compensation linked to ratings, this creates a fallible process, and most of the time, it is a one-way conversation with the manager telling the employee how their performance did or did not meet expectations.
The real question is, do performance reviews actually improve performance? Performance reviews can negatively impact employee morale and engagement. While this is not the intent of managers, the challenge is that much of the review process is focused on the past and the individual.
In today's environment, organizations need to be more agile and responsive to changing market conditions, and this requires collaboration and innovation to meet these challenges. The performance review process also needs to be responsive and future-focused, which leaders can accomplish by setting goals for team results and identifying individuals' strengths for professional development. This requires a manager's role to move away from evaluator to a coach/mentor. Here are five areas to modernize performance to become a future-focused organization.
1. Align philosophy with strategy. Define with clarity the company’s performance management philosophy, and ensure the philosophy is aligned with the organization’s strategy and culture. Clarify the behaviors expected of managers and senior leaders as a part of this process to create accountability and modeling for the rest of the organization.
2. Setting goals should be a dynamic process. According to a Deloitte Insights piece, "Intel, for instance, uses a transparent, agile goal management process known as OKR (Objectives and Key Results) that focuses on giving people stretch goals and helping them to establish regular, achievable results that others can support." OKRs create alignment around goals, the priorities are clear and everyone throughout the organization is moving in the same direction.
3. Conduct ongoing and regular check-ins. Ongoing and regular check-ins are opportunities to cultivate the manager-employee relationship, check in on goal progress, ensure clear communication and expectations, and provide support and direction to engage with the work. Conducting regular check-ins allows you to be agile and responsive to changing priorities, updating goals to be current and relevant and ensuring understanding through clearly communicated expectations.
4. Manager development and empowerment. Managers today need to learn how to coach, develop their teams and focus on an individual's strengths. Organizations need to invest in leadership development. Many organizations start with senior leaders when investing in leadership development, but in my experience, it is more impactful to ensure frontline managers are provided leadership training first. This is because they have the greatest impact on employee engagement and ensuring employees achieve the organization's objectives.
5. Separate compensation from performance conversations. Performance conversations should be decoupled from merit increases and/or bonuses to help reduce rater bias. Instead, train managers to facilitate calibration meetings to discuss the performance and behavior attributes of each employee to determine the best way to assign merit increases and/or bonuses.
If your organization still needs to conduct annual reviews, reduce the stress of the process for both managers and employees by redefining the process itself. Create a culture of ongoing and regular performance conversations based on responsive goals. Establish behavioral standards, and train managers not only how to coach and develop their teams but also how to lead.
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