Make Performance Reviews Work For Your Team

Traditional annual performance reviews are confusing, dated, messy, time-consuming, and sometimes just plain inaccurate to what’s really going on in your team. 

As organizational psychologist Bob Sutton said, “If performance evaluations were a drug, they would not receive FDA approval. They have so many side effects and so often fail.” 

According to a survey of 837 companies across the globe, only about 1 in 4 companies in North America said their performance management systems were effective. Only one-third of the companies surveyed said their employees were evaluated fairly.

The employees and the employers have spoken.

The Dilemma of Performance Reviews

The workplace and work have undergone radical transformations in the past few years. It’s time for performance reviews to do the same. Managers don’t like evaluations because they can be confusing. 

It’s a hassle, and it feels like extra work on top of their existing work

Employees feel the pressure of being graded through a confusing system because, typically, it can make or break a potential raise for them. The intent of the review process—to fix problem areas, develop skills, and set people up for success—breaks down into debates about what rating scales mean and the semantics of every definition.

And then there’s the time involved. On both sides of the review process, it just takes a long time. Adobe found that managers spent about 17 hours per employee on their performance reviews. You can interpret that amount of time in two ways:

1) Either managers are taking their time to thoughtfully reflect and analyze an individual’s performance and contributions over a year or

2) It’s an audacious amount of time, in addition to regular performance meetings and check-ins that happen naturally throughout the year.

But if you’re leaning toward the latter, trust your instincts.

How Did Performance Reviews Become So Painful?

The Ranking Method, or stack ranking, or “rank and yank,” was popularized by Jack Welch, the CEO of General Electric from 1981 to 2001. If you didn’t already know him as a very influential figure in corporate America, then you might recognize him as the mentor of Jack Donaguey on 30 Rock.

GE went through a massive hot streak during most of his tenure as CEO, and a lot of that success was attributed to his popularized ranking method among his employees. It worked like this:

The manager will have a list of all employees and will first choose the most valuable employee and put that name at the top. Then, they will choose the least valuable employee and put that name at the bottom of the list. With the remaining employees, this process would be repeated.

In addition, there is a bell curve at play here. Not everyone will get a top rating or perfect marks, even if, theoretically, everyone on a team is a superstar and exceeds expectations. Under Jack Welch, in a team of 10, everyone knew only two would get a great rating, and at least one would get a negative rating and possibly be…yanked.

This method, or some variation, became the norm at many companies until about 2012 when more research began to emerge, and leaders began questioning whether the method was doing more harm than good.

Managers reported that people became obsessed with the rankings, which created a wealthy, siloed competition between everyone, especially top performers. Great employees would distance themselves from other great employees out of fear they might fall.

Great Employees Should be Collaborating, Not Competing

Microsoft recently overhauled its performance review system after realizing how damaging rank-and-yanking was to performance and morale. From 2000 to 2012, Microsoft’s market cap declined from $510 billion to half that value. Employees pointed to one big reason for the nosedive: Stack Ranking.

Turns out that pitting your employees against one another created a culture where innovative ideas were killed and fast. It was all about the rankings and not about the actual work. Top performers were even ditching the company where more value was placed on the work, not just a metric.

So, Microsoft ditched the stack rankings. A handful of other Fortune 500 companies quickly followed suit after finding the same negative effects. Motorola, Expedia, and Adobe were all yanking their rating methods in favor of more frequent, informal, focused conversations with individuals throughout the year.

Performance Reviews Should Be An Ongoing Conversation

Removing the annual ritual of performance reviews and replacing them with more targeted sessions throughout the year may sound like more work, but it actually saves time. At least it did for Motorola, which saved 50-70 percent of time spent on review processes after ditching its once-a-year ranking method.

These check-ins don’t have to be grueling, high-stakes sessions; they should be very informal, just like the name suggests. A check-in. Schedule it sometime at the end of the month with your direct report and…check-in. 

The best check-ins hit on expectations, feedback, and professional growth. Don’t confuse this with another stand-up progress check you usually do with your whole team.

If you’re reading this as an individual manager with no authority to ditch annual reviews, remember that nothing stops you from doing more frequent check-ins with your team. That will leave you better prepared when the annual performance review season comes up, making them more willing to accept your feedback. 

The annual review becomes just another check-in.

Use AI, But Sparingly

There is a lot of enthusiasm for AI and what it can do to make work easier. However, as a leader, you should remain highly skeptical and cautious if using AI tools in your performance review process. Pew Research came out with some recent data findings, and it is, unsurprisingly, mixed on AI being used to monitor them in the workplace. Tracking especially.

Have AI help you figure out where to look where to find problem areas. But AI shouldn’t be making decisions in the evaluations. Great teams are made up of humans, and when we evaluate others, we need to look them in the eye and come prepared to back up whatever we have to say, person to person. 

It can be an intensely vulnerable process for both sides of the conversation. If you’re looking to bring in AI to make it easier on yourself as a manager, to take away the awkwardness you might feel when you have these conversations…you might not be cut out for being a manager.

How to Make Performance Reviews Work

Performance reviews should always align with the project or organization’s main objective. The two can never be unlinked; they should contribute to the company’s growth and success. 

Aligning these performance reviews with the company goals will also help your employees understand their roles and see how they can contribute to the big picture. It will give them a sense of purpose and motivate them to work towards a goal that will benefit everyone.

These goals must be Specific, Measurable, Achievable, Relevant, and Time-bound (SMART) and reflect the organization’s vision. This way, the employees can see the direct impact of their efforts in the workplace.

Utilize Peer Feedback

Feedback can become an invaluable tool in these performance reviews. It provides a broader perspective on the employee’s work ethic, teamwork, and behavior.

Peer feedback also gives a more balanced and comprehensive evaluation of an individual. How? Well, the work colleagues have the major information on all key aspects and traits of a certain employee. The insights you can get from them you can’t from their supervisors or managers. 

Integrating it as part of the feedback will create a culture of transparency and trust in teams. The employees will feel comfortable sharing constructive praise and criticism about their fellows.

They will also learn to collaborate and see how their actions affect others. These insights can help managers identify employee behavior patterns usually overlooked in one-on-one discussions. 

Moreover, it will help employees develop professional interpersonal skills that benefit them at work and even in their lives.

Impact of Recognition on Performance Reviews

Recognition is a motivating tool and very important in performance reviews. 

When employees are acknowledged, they feel that their contributions are seen and valued. This, of course, results in higher engagement and more commitment to their work. So, positive recognition also plays a major role in performance reviews. 

Anything from verbal praise to tangible rewards like bonuses, promotions, or increments acknowledges the efforts. 

This leads to higher morale and better behaviors, resulting in a positive work culture where employees feel valued and appreciated.

Addressing Underperformance Constructively

Underperformance is never a good thing but an inevitable part of the workplace. Instead of penalizing underperforming employees, the performance review should offer a constructive picture of how they can improve their efforts.

The best approach to underperformance is to approach it with empathy and understand that external factors or miscommunication can be the leading causes. Then, you must set actionable goals for these employees while offering support through training and development where needed.

The approach should be to find solutions and work towards growth rather than highlighting the employee weaknesses. Moreover, setting clear and achievable goals with regular follow-up meetings can further help in tracking employee progress and help them stay motivated.

So, consider underperformance an opportunity rather than a failure. Managers and leaders will play a key role in supporting employees.

Wrap Up

The evolution from the rigid, competitive ranking systems of the past to the more flexible and supportive frameworks of today marks a significant shift in how companies view and value their employees. 

Modern businesses are paving the way for a more engaged and innovative workforce by focusing on development, continuous feedback, and a collaborative environment. This transformation enhances individual performance and drives collective success, ensuring that the workplace remains one where everyone can do their best work.

Consider engaging and training your team using easy-to-create content, such as video presentations. Tools that produce AI videos on Canva can help you generate tailored visual aids quickly, enabling more effective communication during performance review discussions. 

Detailed tutorials available through such platforms allow managers to enhance their feedback sessions creatively.

HOME_AboutDavidBurkus

About the author

David Burkus is an organizational psychologist, keynote speaker, and bestselling author of five books on leadership and teamwork.

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