June 2, 2016

A new perspective has emerged over the last few years that performance reviews are a waste of time and that organizations would be better off without them. Companies today are doing a great deal of tinkering with how and when feedback is given and by whom. Several organizations are experimenting with new methods of providing feedback that are both effective and efficient – even in some cases employing social media type-technology like TINYpulse.

The major drivers of this new way of thinking are:

  • The amount of time spent on the annual review process
  • The way it makes some employees feel
  • Recency bias in documented annual reviews
  • A normal distribution does not describe the variability in human performance
  • The lack of timely and relevant feedback resulting from current processes

On the surface, these challenges seem to suggest a need for a new and different performance review process. However, the real issue is the lack of proper utilization of current processes and technology and a general lack of execution. When reviewing what has been written, one is struck by the lack of discussion about the actual expectation and goal-setting process that should be the underpinning of any good performance management process or system of how performance is measured.

The rationale for change is based on a profound misunderstanding of how you motivate people to perform. It’s not the annual review process or infrequent feedback that’s the root cause of poor review process performance, but a fundamental lack of setting aligned goals and having clear expectations for each employee. Feedback should be given in many forms, but the most important is the feedback one receives from a set of aligned and balanced measures.

Most leading organizations use a technology based HR performance management process like Taleo or Success Factors, and these solutions are very flexible and allow for robust goal-setting processes. However, most organizations just don’t set goals for their employees or they do it in an unaligned way. For example, a manager and employee sitting down to set the employees’ goals for the year outside of the context of a leadership-based, goal-setting process will not lead to the desired outcomes. There are several reasons for this:

  • The goals may or may not be contributing to the company’s overall strategy or mission.
  • Goals set in this way tend to be self-serving or employee- or department-focused rather than mission-focused.
  • Leadership-based goal setting and alignment addresses the need for a balanced set of measures to support understanding of progress toward the goal.
  • Employee-set goals tend to be mostly qualitative or project-based rather than quantitative and outcome-based.

Setting clear and aligned goals and clarifying expectations are the first execution components you need to get right. This must be followed by providing regular (daily, even) feedback from a set of balanced measures for each employee. These measures form the basis of regular performance discussions both in terms of department or company performance and an individual’s performance within the organizational system.

This is an element of feedback that, when done correctly, actually motivates people. Aligned performance measurement is another area where organizations fail and indict the performance management process as opposed to addressing the real issue.

The annual performance review process should be the culmination of ongoing feedback, where everyone spends 25 percent of their effort focused on what was performed over the last 12 months and 75 percent of the time thinking about refining the goals and expectations for the coming 12 months in a mission-focused and aligned way.



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