This time of year brings thoughts of family, turkey, pumpkin spice everything and hopefully, a little time off to relax. This time of year is a joyous occasion for most and an opportunity to reflect. For many companies across the nation, part of that reflecting happens in an effort to complete annual performance reviews.
The bane of many a leader’s existence.
While there has been much talk for years about doing away with the annual performance review, many companies are holding on. Our HR services caters to small businesses and most of them are doing some form of annual reviews when we join their team. For the most part, they are what you expect from annual performance reviews: lengthy, hard to measure and lack the real ability to change behavior or performance.
The alternative that seems to be gaining momentum in many companies, such as Netflix, is real-time, ongoing feedback. A continual loop between supervisor and employee that eliminates the need for formality and offers a better opportunity to really move the needle forward. This approach is ideal in my opinion, but not always practical for small businesses. You may think it would be easier to deliver ongoing feedback in an organization where you only have 25 people. If you’ve kept that organization relatively flat however and you are wearing multiple hats as founder, it isn’t. Virtual workforces and the everyday stress, especially in a startup environment, can make this idea of a continual feedback look difficult to execute.
It can be done and to the leader who can be deliberate about it, I encourage them to go for it. We have set up several performance programs in small businesses that are centered around a continual feedback process. Again, I think this is ideal, but know that it isn’t practical for everyone. So for those small teams I have a few different ideas that might make the process more thorough while still allowing for the annual process to take place.
Involve Peers in the Process
There are multiple relationships in the workplace. Relationship between employee and supervisor, employee and company, and of course, employee and co-workers. Yet, annual performance reviews are always taken from the viewpoint of only one individual, the supervisor. If an employee interacts and works with multiple people, then their performance feedback should, at some level, include information from those people.
Facebook allows employees to pick three to five peers to review them. A client of mine, with 15 employees, allows every other member of the team to weigh in on the performance of others. There is something about the accountability to one another when you know every person you interact with is going to provide feedback.
It’s important to ensure that peers are providing feedback on relevant components and that subjectiveness (I don’t like her so I’m going to give her a low rating) is removed, but when done well, utilizing peer feedback in a review can be a tremendous step in improving performance.
Dial it Down
Last year I was hired by a company of 47 employees to restructure their performance review process. They wanted to keep their annual review, but wanted to update it and then look at how they could include more ongoing feedback sessions throughout the year. I always start this process by looking at what they were currently doing and was a bit shocked to see the form they were currently using to conduct reviews. It was 8 pages long and extremely labor intensive to fill out. Leaders had to leave extensive comments, explanations and examples for each category, of which there were many. This meant leaders either spent hours and hours filling out forms or didn’t put full effort into it. Either way, the performance feedback was not effective and highly unproductive on multiple levels.
We took their current form and modified it into the categories that were really necessary to impact performance. What was 8 pages that required extensive information, was decreased to 2 pages of highly impactful feedback. The form still accomplished its intended goal, but in a much easier to process format.
With performance reviews, more is not necessarily better. In this case, more often means least productive method.
Consider the Milestones Along with the End Goal
One of the most effective changes I have seen in a performance review process came a few years ago with one of my first clients. Their performance reviews were typical up to that point. Every employee had a list of goals and at performance review time they essentially received a pass or fail grade (ranking) to that goal. If they passed, they got a raise. If not, they didn’t. After reviewing the work that employees were doing, I made an observation. The goals assigned to many employees took a long time to accomplish. Some couldn’t even be accomplished in a year. Essentially, employees were tasked with goals they knew would take a long time and they would receive no reward until the task was completely finished. Further, due to the nature of the business, that goal could be one to two months out from completion and, through no fault of the employee, be eliminated. Imagine working on something for nearly a year, having it be a part of your formal review process and then have it be eliminated right before completion. Not very motivating.
We decided to build in milestones for the longer range goals that allowed employees to be rewarded for meeting smaller goals along the way. This accomplished several different things. First, it gave the employee incentive to make it to the next milestone knowing they didn’t have to wait until the project was completely finished before seeing any recognition. Second, it allowed leaders to keep better track of projects which prevented more projects from being cancelled closer to completion. Third, when projects did have to be cancelled, employees didn’t feel as bad because they had been recognized for the work they had done to this point and weren’t left hanging after doing a ton of work and no reward.
Sometimes goals take longer than a review period. Other times a goal wasn’t accomplished, but the progress towards the goal is just as important. Performance reviews that give a flat pass or fail grade without considering all factors are missing the motivation mark.
I believe the reality for most companies is that the review process is not being as effective as it could be. For true performance motivation and improvement, continual feedback that flows freely between supervisor, peer and employee is needed. In environments where that is not possible or not supported, making a few tweaks to the current process can make a huge difference in effectiveness and efficiency. Two things all small businesses need more of.