A recent Leadership IQ survey asked 48,012 CEOs, managers and employees to reveal their true feelings about performance reviews. While it came as no surprise that no-one likes performance reviews, what was learned about the effectiveness of the reviews currently being conducted was shocking.

• Just 13% of managers and employees thought their year-end reviews were effective.
• Just 6% of CEOs thought year-end reviews were effective.

I’m less interested in the “Why’s” of this finding, having been through numerous of these procedures in the past. I’m much more interested in “How do we change this?”. If the “Performance Appraisal” is a critical element of the Performance Management process, then it stands to reason, for me at least, that making the process more effective will lead to improved Performance Management. So how do we achieve this?

Well, let’s start off by looking at the traditional “Performance Appraisal” process. For 12 months, sometimes six months, work is carried on by the organisation’s workforce. Then, in the 12th month (or 6th month where applicable), each manager is expected to hold a review with each member of their specific workforce. To facilitate this, they are given a sheet of paper with a number of “qualities” and a rating scale – generally 1 to 5. The idea is that the manager will discuss each of the “qualities” with members of staff and, together, they will agree on the rating of that staff member for each of the qualities. The “scores” are then totaled to give a total for each employee.

The burning question is why do we do this? The answers are one or more of the following:

• To review how each person completed their job for the prior year
• A pay review
• A review for bonuses
• An assessment of the employee for promotionTypically the procedure is paper based and HR is the custodian of the information. Where Human Resource Information Systems (HRIS) have been introduced, the paper-based system is computerized, but is still based on the same process and outcomes. Just looking at this, it’s no wonder that everyone, including management, hate the process and it’s no wonder that it’s not effective. It becomes an exercise in futility.So, what’s the alternative? The “new” concept of Performance Management provides the answer. Performance Management today is a system that aligns individual and team performance to organisational strategy and performance.They start with understanding the role that individuals and teams play in the success of the organisation, and cascading corporate goals as well as team and individual goals down the organisation. From the individual perspective, Performance Management starts at the beginning of the period (year, quarter, month, etc.) and defines what is expected of each employee for the next performance period. The definition includes specific objectives for the period, backed up by a job description which includes the normal expectations for that position

  Then, the manager meets with each employee on a weekly, or at least a monthly, basis, to judge whether or not the performance goals and objectives for the period will be met. If not, the manager can implement specific interventions to ensure that the employee achieves the goals necessary for individual, team and organisational performance. The emphasis on modern Performance Management is on ensuring that goals and objectives are met, rather than reviewing why they were not met – when it’s too late to do anything about it.

  In this way a Performance Diary is maintained for each employee on an ongoing basis making an Annual Review more meaningful, more relevant, and more fair to both employee and the organisation. This process, as part of the manager’s normal “people management” role, is more effective and is enjoyed more by both manager and employee as the focus is on improvement and achievement, not blame and retribution.

  If you are interested in knowing more about the “new” Performance Management and how to implement it, contact us.