This is the final post, 3 of 3 about why companies should eliminate the traditional annual performance review, what the alternatives are and how to do it successfully.

We talked about why annual performance reviews are destructive and how to do them right when we start doing them more frequently.  Do you know the sure fire way for performance reviews to be objective?

Well it’s not the traditional form that managers complete.  Being objective on traditional performance review forms is not possible, period.  Think about some of the categories on your performance review form?  You’ll see categories like “initiative” and “adaptability”.  Just exactly how do we speak about these topics objectively?

You can’t.  You can’t because what you think the meaning of initiative and adaptability may not be what others think.  You may have an employee who thinks that getting out of bed is a huge step in taking initiative!  Objectivity and human nature often cancel each other out.

Here’s where old school is really new school.  Remember our old friend SMART goals?  That’s really the magic bullet for objectivity.

When we’re not basing our evaluation on the completion of agreed upon goals, bad things can happen.  Here’s a story for you:

I worked with a manager named Bob.  He had a team of 5 and became a manager due to what I like to call “battlefield promotion” which is when his manager resigned, Bob had the most seniority so boom! — Bob gets to be manager.

Bob was happy with his new gig and had a great relationship with his team from working with them and figured that would give him an edge.  Let’s fast forward to review time.

He has Joe working for him who hasn’t quite been making it happen.  Bob’s running interference between the others on his team and Joe because everyone else has been picking up Joe’s slack.  Well since Bob is buds with Joe, he also knows that Joe is having some financial stress and personal issues at home.  He doesn’t want Joe’s review to reflect a poor salary increase so Bob starts to pick up Joe’s slack…

Now this is a total lose-lose situation.  We have Joe who is losing by not having productive and frequent sit downs to have an opportunity to turn his performance around…we have Bob who’s losing because he’s doing his own job, and covering for Joe.  The rest of the team is losing because they’re having to work their tails off to pick up the slack.  That’s a big mess that could have been avoided had Bob and Joe agreed to objective goals and had frequent discussions about Joe’s progress against those goals.

Another bad thing that can happen is what I call the sin of recency.  Maybe you’ve seen this happen:

A few months before it’s time for the performance review, employees who might normally be average will kick it into high gear all of a sudden because they know their manager isn’t going to remember those blunders from 8 months ago.  And it’s a fact that managers will only retain a few months back of memory … So what’s recent is evaluated, and what’s less recent is forgotten.

This is frustrating and demoralizing for employees, and helps even more to make the performance review process completely worthless for everyone.

Then, one more twist…

When you link the annual performance review discussion with the discussion about pay increases, which, in the employee’s mind is:  “do I get a raise and how much”, then neither of those conversations will have the impact they should.

But when you have frequent conversations all year long, based on how the employee is doing against an agreed upon set of goals, then you can have the compensation discussion all by itself, and since the employee already knows how they’ve been doing, it’s a much smoother and productive conversation.

Apply this to your organization.  If you  have a “once a year” performance appraisal system:

• How can you incorporate goal setting and more frequent performance discussions?
• Who would you have to influence?  What kind of training and development would your managers need?
• How could you ensure that this is a culture shift, and not just a “flavor of the month new program”?
• How can you skill your managers to depersonalize the conversations?
• How can you unlink the performance and compensation conversations?

I hope that these posts have given you food for thought.  Providing feedback to our employees is essential.  But not if we’re not doing it right.  Doing it right is a relative term — it’s what’s best for your organization — not for all organizations.

Would you like to learn how you can implement an effective performance management program in your company?  Let’s talk!