Why can’t we just talk? Reinventing the Performance Review

Goal setting Scrabble tiles

Published October 12, 2018

Performance Review Time

And here we are again … the dreaded annual performance review process! As a Human Resources professional with more than 20 years’ experience, I’ve been chasing down this process for far too many years.  I should join my colleagues on the ledge, but to help them understand that the performance review process doesn’t need to be painful.  Since the early 1950s, when performance ratings hit the scene, we’ve allowed the inertia of our past to carry us into today.

Here are some facts about the process: 30 percent of performance reviews end up decreasing employee performance; 2 out of 3 employees with the highest ratings aren’t actually the highest performers; 70 percent of managers think reviews take too much time; there is way too much focus on the past and not enough on the future; they are too subjective and too infrequent.

HR Bias Terminology

Let’s not forget about rater bias.  The performance review process is fraught with bias, albeit probably unconscious.  There is coined HR terminology for this bias.  Let’s talk about some of these:

The Halo Effect: the tendency for a single, positive rating to cause other ratings to be inflated.  After all, if you are good at this, you must be good at that too, right?  Wrong.

The Horns Effect:  the tendency for a single, negative attribute to cause raters to mark everything on the low end.  Of course, the consequences can be detrimental and lead to unfair outcomes, including dismissal.

The Central Tendency Bias:  I call this the path of least resistance.  I’ll just rate everyone right in the middle — not great, not bad … this is the equivalent of a “C” grade.

The Leniency Bias and its evil brother, The Strictness Bias:  These are self-explanatory — either a rater is too easy going or too harsh.  How do these raters ever determine anyone’s strengths and weaknesses?

The Recency Bias:  This creeps in when a recent event clouds the memory of previous performance — the “good streaks” and the “bad streaks”.  Whatever the streak, this is an inaccurate way of rating.

The Similar to Me Bias: We see this in nature and in the Performance Review. After all, “birds of a feather flock together”. Isn’t it nice when everyone is perfect like us?  After all, when you review Suzie and say, “She is a great communicator”, what you are really saying is, “Suzie is a great communicator, like me … hell, I taught her how to communicate well”.  So, if you are rating someone on their height, whether you perceive them as short or tall depends on how short or tall you are.

The Adult Report Card

The performance review process has become a subjective adult report card!  Maybe we should stop doing them all together — I know that’s what you are thinking.  Or, maybe you just don’t do them at all until someone in HR threatens or bribes you, or kindly reminds you several times until you succumb.  I heard an interesting quote the other day: “No one ever rises to low standards.” It’s simple, yet profound.  Don’t we have an obligation to help our employees rise to standards that will move their careers forward?  Won’t this level of performance also move our business forward if outcomes are correctly aligned?

Making a Change

Get off the ledge!  The exodus is upon us.  More and more companies are radically changing their performance review process and it is starting to look like this:

Regular check ins/fluid systems with feedback from manager and peers/conversations and coaching/no numbers or ratings/forward-looking goals/self-reflection and professional development.

You may be thinking more feedback, regular check-ins, employees participating in goal-development, and being accountable to report and update progress — this sounds like more work. Well, it is certainly different from the traditional performance review, but it is not more work.  The time has come to simplify the process and get to the heart of what matters — strategic goal-setting and ensuring employee success.

Goal Setting

Goal-setting is the pinnacle of the performance evaluation process.  When you can measure a goal, you turn the subjective view into objective feedback.  When employees participate in goal setting, they are more engaged and likely to accomplish the goal.  When managers refine goals, ensuring the goals are SMART (specific, measurable, actionable, results-oriented and time-bound) and stretch employees, even ever so slightly, it serves as a motivator for ongoing development.

Linking goals to business objectives helps employees see how they individually contribute to the big picture.  This is where the accountability enters the picture as employees grasp the direct impact of their performance, e.g. what they have accomplished and how it has helped the business move forward.

Where businesses and the legacy performance review processes fail are setting the goals and forgetting the goals — only visiting them once a year.  Do a quick test with your employees: ask them very casually to tell you two to three of their annual goals.  My guess is that most would struggle to remember even one.  Or, someone may surprise you and say my goal is “XYZ”, but it is not relevant anymore because of “XYZ”.  Everything changes — as external and internal situations happen (what I call reality), we don’t stop to re-visit and tweak the goals.  Don’t get me wrong, a goal should not be a moving target; rather, it should be adaptable as the environment changes.

Keeping Goals Alive

Making goals visible and breaking them down into smaller tasks will keep employees engaged and focused and help them feel a sense of accomplishment.  Talking about these small accomplishments on a regular basis keeps the goals alive and front and center, for both the manager and the employee. These are condensed conversations, quick and succinct, in other words, updates.  How many of you have conversations on Monday morning about the Sunday football outcomes?  Why not take the same approach with performance discussions?

Finally, having an integrated Human Resource Management system can assist in making this process less cumbersome, more meaningful, and keep everything in one place.  When transforming your organization’s performance system, embrace a solution that provides the full array of tools to track performance, gather feedback easily, push out notifications and updates and keep the information accessible to employees and managers at any time in the cloud.  The system should also provide you with information to analyze data and trends — from comparing retention metrics to understanding employee engagement.

Help your employees know where they stand, and, it shouldn’t be on the ledge when it’s time to discuss performance! Begin having regular conversations with your employees.

At Miltec UV, we utilize BambooHR as our Human Resource Management System. BambooHR is a user-friendly, cloud-based system offering mid-sized and growing companies employee and candidate automation tools including applicant tracking, employee on-boarding, document retention, benefit tracking and other features which manage all aspects of the employee lifecycle. We are currently reviewing Performance Management the Bamboo way.

Take a look at what BambooHR can do to transform your Performance Review process: Performance Management Demo

Written by: Karen McKernan

Miltec UV