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Ditching the Annual Performance Review

Of all the hot HR topics in the last several years, getting rid of the dreaded annual performance review is one that is getting a lot of attention. Go ahead and Google, “get rid of annual performance review.” You will get over 4.9 million hits. That’s right, 4.9 MILLION (insert Dr. Evil laugh here.) So why is this such a hot topic? Well first off, everyone hates the annual review process – both managers and employees. It takes a lot of time, it is often too subjective, in a lot of cases neither party is prepared to have candid conversations, the forms themselves are too long and complex, no one understands the organizational competencies and how they relate to the job that they do, etc. The list goes on and on. The bottom line is that in a VERY general sense, the annual review just doesn’t seem to work for the people preparing and delivering the reviews (managers) and the folks receiving them (employees).

Yes we canSo the questions remain – why do we continue with this practice? Why can’t we get rid of annual performance reviews? Is there not something better we can be doing? Here is my take on this subject having written and delivered hundreds of reviews in my career and having coached/counselled/calibrated thousands of reviews on others. Bold statement alert – I think that sometime in the near future we can get away from the annual performance review. (Gasp!). However, (HR people always like to make a bold statement and then follow up with a ‘however’) as HR Pros we have to guide and support our organizational leaders and managers to go in a different direction with their thinking and managerial practices.

You see, with the annual review process, we could always rely on the fact that once a year there was a formal sit down meeting between manager and employee. There was a guarantee of some sort of face to face dialogue, with some things written down on paper and perhaps a general or even vague understanding of how each party viewed the employee’s performance. There might even be some general discussion about career development plans and/or some broad thoughts on goals for the next year. With all the other challenges HR Pros are faced with, we can and do live with this process because at least something is documented (and HR Pros LOVE documentation) and perhaps employee performance is differentiated in some way.

We all know we are just fooling ourselves though if we think that this is working. For sure, in some cases and companies it is working, but for many, it is an exercise in paperwork and HR compliancy – a big check in the box under the category of, “Conduct Annual Performance Review” because HR said I had to. So, how can we ditch this? Well, the answer is simple, yet it isn’t. You see what I did there? Classic bait and switch! The simple part of it is that there really is nothing but our own organizational mindsets holding us back from stopping this madness. There is no law or labour standards act that says we HAVE to conduct annual reviews on our staff.

In order to start to move away from the annual review, we as leaders and managers need to start changing the way we think about having discussions with our employees and how we will measure their performance in a meaningful, open, objective manner. We need to wrap our heads around having ongoing dialogue with our staff about their performance, both good and bad. We also need to make things like career and retention discussions (i.e. stay interviews) part of what we do on a regular basis. Here is the thing, if we work together to make our organizational cultures ones where coaching, feedback and meaningful dialogue is part of the DNA, than we will ultimately not need the annual review. If managers are accountable for identifying goals and objectives with/for their staff and then measuring their success through quantifiable KPI’s (key performance indicators) than we won’t need the annual review.

The beautiful thing is that the establishment of these goals and objectives becomes the foundational element for regular coaching sessions. If we are able to change our organizational thinking towards how we view the main responsibilities of our managers, than we can ditch the annual performance review process. So, to move forward with ditching the annual performance review we need:

1. A fluid and dynamic goal setting process – one where goals and objectives are established, adjusted and readjusted on an ongoing basis. Metrics are established that clearly show where/when an employee has met, not met or exceeded expectations. Keep in mind, “manager observation” is a KPI, as long as the manager actual observes something.

2. Regular coaching touch points and communication – during these coaching sessions, progress towards goals/objectives is reviewed and identified outcomes are made clear to both parties. Additionally, both employee and manager have an understanding as to what success looks like and how it will be recognized/rewarded.

3. “Stay” discussions form part of the regular dialogue – managers need to focus on engaging in this type of dialogue with their staff on a regular basis. They need to be attuned to any drivers of disengagement and thus are able to have the appropriate dialogue as it pertains to these areas.

4. Career planning and support are shared by the manager and employee – managers need to work with their staff to provide them with the knowledge, skills and opportunity to excel in their current role, while also providing opportunities to learn new skills to prepare them for upward or lateral mobility within the organization. Simply put, this is called building bench strength and should be a KPI of all your managers.

5. Overall organizational accountability – organizationally speaking, we need to hold everyone accountable for establishing and supporting this type of culture and environment. Human Resources needs to function and lead as a true partner in enabling this to occur through training, development and support of its business leaders.

So, that is the utopian environment that needs to exist in order to ditch the performance review process. It is the stuff that HR Pros dream of! What about the operations managers out there? Is this do-able? Can we get there? I think we can. It will take time for sure, but it is a do-able do. Until then, I need to get back to getting ready for our annual performance review process…*sigh.*

Image courtesy of artur84/FreeDigitalPhotos.net

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2 Responses

  1. Scott, a very well needed post, I’m pleased you are addressing this. I don’t know how true this is in Canada, but here in the States there are legal liabilities of poorly done performance reviews.

    I’ve run into several labor attorneys who now routinely advise clients not to do them simply because of the problems with wrongful terminations. No matter how much training managers seem to receive, problems persist.

    For example, I was on the board of a non-profit when the Executive Director announced raises and bonuses for all personnel. He gave all employees at least a satisfactory review. After compensation was approved, he discussed the performance problems of one employee and suggested he will likely need to put her on probation. In the States, she falls under three protected groups (gender, race & age).

    This is not unusual. Legal counsel for plaintiffs in these situations almost always request performance reviews the first thing, so they must be fertile ground for positive evidence for their clients.

    Thoughts?

    Thank you again for posting this.

    Mike

    • Mike – it is pretty similar in Canada. Any time someone sues for wrongful termination or makes a human rights complaint, they always want to see the performance review. It does go both ways, a well written performance review is great documentation in support of a termination for poor performance. Unfortunately, it is usually the other way around. I have always coached my clients/customers to use the review as the playbook. Keep it objective and measureable and make sure it aligns with reality. Don’t tell the employee they meet expectations and then 3 months later come looking to terminate them for poor performance!

      I personally like performance reviews when they are done for the right reasons and reflect reality. They are rubbish if anything else but. I am more of a fan of ongoing goal setting, coaching, feedback and re-setting/re-aligning where need be. However, that is a BIG cultural shift for many companies. If you aren’t ready for that, than that is ok – steady as she goes with the annual review…but you have to do it right!

      Thanks Mike!

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