
Put an End to the Annual Performance Review
Each year on our wedding anniversary my wife and I sit to down for our annual performance review. Twenty-five years ago we created job descriptions for our roles as partners in our marriage. These job descriptions drove the annual performance review, consisting of 35 items on which we rate each other on a scale of one to five. Our goal was to ensure our performance as partners remained at the same level as when we first met.
Of course I am writing this facetiously. We know this would not be a good way to have a great marriage, so why do we think the same process would work for employees?
I see three fundamental challenges to annual performance reviews.
- The annual review is a process to satisfy HR’s goal for compliance to reduce risk. When a performance review is treated as a process, the employee feels like a number rather than an integral part of the team. Our people can pick up on our insincerity. Of all the managers I have asked, “How much do you enjoy the annual performance review process?” 85% have told me they dislike it.
- We wait too long to give regular feedback on the skills and attitude of our people. When we wait, our message becomes diluted or comes as a surprise. We often start with praise, put some opportunities for improvement in the middle, and end with more praise. I like to call this the crap sandwich. The employee leaves a one-way conversation not sure whether they are doing a good job.
- It does not discharge the leaders’ responsibility of stewardship. As managers of people, we have been given intangible assets – people – to care for. Stewardship is our responsibility to maintain and increase the value of the assets who have been entrusted to us but are not ours. Compare this to my opening analogy: am I discharging my responsibility as a partner to my mate if we only discuss our relationship annually?
What is the alternative to the annual performance review?
We use a tool called Levels of Performance combined with regular, structured one-on-ones with each employee. In these one-on-ones, which happen at least once per month if not more frequently, we discuss the growth and “selectability” of the employee and the company.
What is selectability?
In my next blog post, I will discuss the idea of a company being selectable to its employees. But in terms of employee selectability, our definition is simply the answer to this question: Based on what I know today about the employee and the job, would I hire them again? If the answer is yes, the employee is selectable. If the answer is no, the next question is: Do they know, and do they know what they need to do to get back to being selectable?
If an employee is not selectable, they are incumbent.
While the incumbent employee is currently not someone you would hire for the role again, that doesn’t mean you’re ready to fire them either. Having the conversation early on – well before the employee becomes unacceptable – means they can work on returning to selectable.
Our responsibility as managers and stewards of our people is to keep them selectable and, month over month, increase their value to the organization.
If you are regularly communicating to your people that they are selectable and then they eventually start to slide, it is a safe conversation to have. Why? Because they have heard you say each month that they are selectable, and now you are genuinely concerned something has changed. Your goal if something changes? To keep them selectable.
Let’s start a movement to end the annual performance review!
Let us change it to be a summary of the dozens of conversations we have had with our employees throughout the year – a summary of how we have invested in our people to increase their value to the organization.
Why?
1) Results are an outcome of the behaviors of our people.
2) We are stewards of intangible assets, and the greatest intangible asset is our people.
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