CONTINUOUS PERFORMANCE ADJUSTMENT INSTEAD OF ANNUAL PERFORMANCE REVIEWS
WHAT IS WRONG WITH ANNUAL PERFORMANCE REVIEWS? Long performance appraisal cycles that are common in most companies do not work well. There are several reasons for that:
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The manager’s assessment of the employee’s performance usually depends on her latest impression about the person and even her mood that day. There is no way a manager could objectively assess the behavior of the employee during the entire 12-month cycle. It is a well-known issue and it is massively exploited by employees who noticeably improve their performance a week or two before the review time to leave a good impression in their manager’s memory. Similarly, making major decisions, like promoting or dismissing an employee, also requires unbiased evaluation of a long series of multiple small events, because such decisions are rarely made based upon a single major event. Some managers tend to postpone giving feedback (both corrective and reaffirming) until the performance review. This makes the feedback absolutely ineffective, because it breaks the causality relationship between the behavior and the feedback. In many companies the salary increases and/or promotions are tightly associated with annual performance reviews and employees automatically expect to have their compensation raised if the review is positive. However, the compensation decisions depend on many business and economic factors and are often made a few levels of management higher up the food chain. Therefore, quite often managers already know that they cannot give a raise to a solid performer even if she deserves it. By submitting an excellent review not be supported by a raise, they risk that the motivation of the employee will be seriously damaged, so many managers tone down the positive and come up with some negative points to support the “no raise” decision.
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Because of these problems annual performance reviews gained bad reputation, and most people consider them to be a necessary formality, painful for both the manager and the employee. A BETTER WAY In order to fix these problems, managers need to switch to much shorter performance appraisal cycles or, ideally, just do it continuously. Long cycles may remain, for instance, for reviewing the data and making major decisions, but the focus of documenting the performance and discussing it with the employee shall be shifted to short cycles. A good manager already has a short-cycle framework in place – the one-on-one meeting with each direct report. During these weekly, or sometimes bi-weekly, meetings the manager and the employee discuss the performance-related items. Therefore, the only missing element is collecting the performance statistics. The approach described below addresses this problem. It is easy to carry out and it brings valuable side-effects, like more disciplined approach to one-on-one meetings, task assignment, and feedback. In the examples below, I show how to do it using MyDirects.com online management system, but you can achieve similar results using Word documents, paper notebooks, or clay tablets. STEP 1 Establish a system to collect notes about each of your reports. If you decided to use MyDirects, just go to www.MyDirects.com and sign up for an account. STEP 2 Make sure that you have regular one-on-one meetings with your reports. If you don’t – focus your effort on this first before even thinking about improving your performance review appraisals. Setting up effective one-on-one meetings will bring you enormous value. STEP 3 Start collecting performance data points. Such data points will be coming from many directions: • • • You assigned a specific task to your direct and she completed it You observe some behavior of your direct You receive feedback from other people.
Your immediate reaction in most of such situations would be to give feedback to your direct report. Immediately after that you should take a short note and categorize it as good, or bad, or whatever other categories you prefer. The challenge is to do this regularly and here is where a good notetaking system really helps.
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Here is how it is done in MyDirects. When you assign a task to your report, you record it in the system. When the task is completed, you just flag it either as “good”, “bad”, or “slow”. In the example below, the person created a good report (green “thumbs-up”), but it took him too long (yellow “too slow”).
You can use exactly the same mechanism to record any notes about the employee, not necessarily tasks:
Let me repeat - make sure that every time you record a performance data point, you give the employee positive (reaffirming) or negative (corrective) feedback. Don’t wait for annual reviews and don’t even wait for your weekly one-on-ones. The sooner you give the feedback after the event, the more effective it will be. STEP 4 Make sure you review your notes before each one-on-one meeting, and discuss the recent performance data points and review the status of assigned tasks during the meeting. After the meeting, make sure that you document the results:
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if some tasks have been completed, document the performance and give feedback if new tasks have been assigned, enter them into the system if the performance data shows a clear trend in your direct’s behavior, discuss it with the employee and act on it.
MyDirects provides several convenient reports for this purpose:
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One-on-one meeting form with all current notes and other relevant information. This allows printing the notes out before the meeting to avoid staring at the computer screen during the face-to-face meeting.
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List of notes for arbitrary period of times. Can be filtered in several ways. Performance report for the last six months.
This last one deserves a picture:
It gives an interesting view at the performance history – it shows the overall performance statistics, how the performance evolved in time, and provides relevant examples. STEP 5 The approach described above is a more effective mechanism for adjusting the performance of your employees compared to annual reviews. You still could have a longer cycle, such as your existing annual or semi-annual reviews, to review the long-term trends, but it becomes much less important.
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