In this newsletter, we’ll discuss performance review systems:
- Where they fall short
- Why they fall short
- What can be done to improve them.
We’ll also look in depth at how a company can radically overhaul its system for improved on job performance
It is a fact: companies are implementing performance measurement systems to improve performance. However, they are instead killing moral.
Today’s widespread ranking- and ratings-based performance management is damaging employee engagement, alienating high performers, and costing managers valuable time. Only 8 percent of companies report that their performance management process drives high levels of value, while 58 percent said it is not an effective use of time.
Leading organizations have scrapped the annual evaluation cycle and replaced it with ongoing feedback and coaching designed to promote continuous employee development.
That is why the #WinningTheGame strategic planning process, focuses on on-going performance appraisal. You want to identify impediments to performance in time so that they are resolved in time before things go out of hand.
Take an example of a passenger travelling to Nairobi. At what point of their journey should they notice they are lost? It is when they are already air-borne? Or when they are at the airport or when they are leaving home?
The earlier you notice the problem, the more costs in terms of money and time, you save. You don’t want to notice that you came to a wrong city when you have already landed!
Yet, that is exactly what happens with traditional annual performance appraisal systems.
Here is how traditional performance appraisals work:
- Like many companies, staff start with setting objectives for each employee at the beginning of the year. After every project, people were rated on:
- How well they met their goals
- Where they did and didn’t excel
- At year’s end, managers get together to examine ratings and compare people. After a lot of discussion, they boil every employee’s contributions for the year down into a single performance number.
- That whole process takes a lot of time.
- On average, an employee wastes over 50 hours a year on house-keeping issues worried about end of year performance appraisal. That include time spent completing forms by the employees and holding countless meetings with their reviewer.
- And most of that is not even focused on performance. It is usually devoted to long closed-door discussions about the outcome of the process.
- Another problem: company needs are evolving so quickly that annual goals can’t keep up with them.
- To this end, real-time discussions are much more valuable than year-end conversations about performance. That is why Human Capital and People Agenda’s role must be focused on on-going job coaching and support through working with team and the strategy execution champions to facilitate performance.
- Yet another challenge: Skill ratings are not consistent from reviewer to reviewer. My interactions with some employees show that ratings reveal more about the people who give them—what they value and how tough they are—than about the people being rated. This makes staff question the value of ratings. And they start not trusting the system.
- So an organization needs a system that would:
- Make ratings more consistent and accurate
- Generate timely, tailored discussions
- Get everyone focused on fueling future performance instead of assessing the past
- Now let’s turn to how a company can tackle the challenge well:
- I studied a few teams that I was told are high performers – and those that are low-performing teams.
- Three things mattered most:
- Coworkers’ commitment to quality
- An inspiring mission for the team
- The chance to use your strengths every day
- The third one is the most powerful across the organization.
- The first goal is clear:
- For Pillars / Teams to perform, an organization must reward high performers with raises and bonuses.
- However, most performance management systems do this. So what is the problem??
- To do a better job of rewarding performance, an organization must see it more clearly.
- The fact is, the person with the best view is an employee’s immediate team leader. That is why in the WinningTheGame strategy cascade we want Director to evaluate their managers, and managers to evaluate their supervisors, and down below the levels.
- So, to streamline the process, you must stop asking multiple people for feedback on each employee—input from the team leader s enough.
- To remove biases, clear targets that are set at the start of the year should be the basis for on-going performance monitoring and appraisal. Break the annual targets to weekly/ monthly/ quarterly and bi-annual so that progress is tracked
- That is the secret of performance management.