Companies are moving away from the traditional annual performance review process, much to the delight of employees and managers everywhere. The annual performance review process, as well as goal and objective setting, has long since ceased to be a meaningful process that improves productivity and morale. Instead, it is viewed as a bureaucratic time suck that is of little value. If we want to change that and make it a truly worthwhile exercise, we need to consider the following:
Goals and objectives should be flexible. Most performance management systems require that employees enter objectives and goals for the entire year at the beginning of the year. This is the basis for the year-end evaluation. The flaw in this is obvious—business needs change and develop as the year progresses. What is a top priority in February might be scrapped by May and totally replaced by September.
It should be an ongoing conversation. No one should ever arrive for a performance review and receive feedback which is surprising. Feedback should be given and received in a timely fashion. There is no point in discussing a performance issue that occurred in March at the performance review the following January. Talking about performance once per year is a waste of time.
Managers and employees both need to be on board. If either or both do not see the value in performance management, it is destined to fail. An important component is to conduct manager training—real training, not merely a WebEx that goes over how to use the tool—on what performance management is, and how it should be executed. Managers need to be able to think about concrete things that their teams need to do to improve performance.
Stacked rankings need to go. Stacked rankings, which usually use a scale of 1-5 distributed along a bell curve, are one of the biggest morale killers that HR has ever invented. They make no sense. . .you are ranking your employees against what exactly? Against each other? Against some nebulous idea of performance perfection? Against the person who has done the best in the company? Industry? History? Stacked ranking also tells managers that they cannot have a team of superstars, because it forces them to rank most their team as average performers.
Employees need to have buy-in as well. The traditional performance management process is set up like the old teacher/student model. The teacher evaluates the student’s performance, and the student has no say in the outcome. This approach is counterintuitive. The manager and the employee both are working together to achieve common goals, and must work as a team when it comes to performance.
Traditional ranking and ratings-based performance management damages employee engagement, discourages high performance, and costs everyone valuable time. Scrapping the yearly performance discussion and replacing it with ongoing, meaningful coaching and feedback can and will promote continuous improvement.