Performance Reviews Don’t Work…So What Does?

Written by: Alan Rodway

Some of the world’s largest companies are ditching performance reviews as a tool to elevate the performance of people, for one reason, that has been obvious for many years … they don’t work! It’s quite fascinating that sometimes it takes us way too long to change what we actually know doesn’t work and this is one of them. Few businesses could claim that (their system of) performance reviews truly make a positive difference to performance … and, in fact, they can even have a negative impact on people’s behaviours when handled poorly. There are many reasons they don’t work but fundamentally they miss the most fundamental aspect of performance management … continuous improvement through frequent, specific, timely and skilful feedback to individuals and teams, to change behaviours.

So, here are far more productive ways to handle performance management:

  1. There are only four reasons why people don’t perform at a high level and they have to be addressed in the order that follows:                                                          a) Does the person know what to do ? If not, the business has to shore that up.   b) Does the person know how to do it ? If not, the business has a training and development responsibility.   c) Does the person have the resources to do it , including time, equipment, skills and knowledge? If not, the business and the person have a responsibility to remedy this.   d) If, and only if, the answers to the previous three questions are established to be affirmative can we draw a conclusion that the person does not want to perform the tasks or perform at a high level. If that is the case then real conversations have to be had between the business and the person, to establish why they don’t want to and, depending on the truth, deal with it appropriately. The point here is to keep right away from assuming or thinking that someone does not want to perform until the first three questions have been properly dealt with.
  2. Replace the term performance review with performance discussion. The word review itself implies to look back, when, in fact, the whole purpose of performance discussions is to elevate future performance. Sure, the past is a teacher for us of what can be improved but holding performance ‘reviews’ is too biased towards the past.
  3. Performance discussions should be held weekly, fortnightly or monthly. Businesses that claim they don’t have time to do this should ask themselves what impact the performance of their people is having on their bottom line .. it’s always significant. We shy away from investing significant time in people because it is less tangible than upgrading a server, a website, new equipment or whatever. Physical resources tend to receive the attention they require because we can see them and can measure the impact they have on the business. But people are as important to the bottom line and culture of a business… it’s just not as tangible, immediate nor as easy to deal with.
  4. Combining remuneration reviews into the same meeting as performance discussions is absolutely ludicrous. To try and have an open and honest discussion with someone about their performance in the same meeting as reviewing what they are paid is hardly inviting honesty! ‘Tell me how you think you have performed’ when the person knows their future remuneration will also be agreed during the same meeting… that’s just silly. The two discussions should be completely separated, by meeting, by time frame and by the person conducting the discussion.
  5. People conducting performance discussions have to have adequate skills to do so. Too often in business, that’s not the case. The discussions are run by real estate agents, accountants, sales managers, general managers or whomever… and it’s not their fault they haven’t received proper training on how to go about the discussions. We have to invest in the people running the sessions so they are skilfully and productively run.
  6. Templates and formality are not always the most effective mechanisms to underpin performance discussions. 360 degree feedback approaches can be valuable but not if they result in wads of paper pushed into a discussion that can be intimidating, difficult to comprehend, cause ‘who said that’, or be so lengthy that not much can be digested let alone acted upon.
  7. A simple point to accommodate… talk with the person not to them. They are fundamentally different. And put that up front… “Let’s talk about”, “Let’s have a discussion about”. The language matters in setting a productive platform for performance discussions. Lecturing, instructing and talking at someone is not likely to be as effective as having a discussion with them.
  1. Could any business actually claim that organisation charts, reporting lines, job descriptions and (old style) bonus schemes actually elevate the performance of people? Unlikely! Businesses set all of this up because it’s the norm; even smaller businesses do this. What is it about such an approach that is likely to create high level performance? The problem is not that such things exist within a business; the problem is that they are relied upon to elevate performance, and they don’t. In fact, they often get in the road.
  2. Ditch the terms and concepts of KPI’s (key performance indicators) and KRA’s (key responsibility areas):                                                                                           a) Why would we want to ‘indicate’ something rather than be absolute about it? Use the term MAO (measurable action and measurable outcome). Measurable actions are absolutely under the control of the person and measurable outcomes are primarily under their control but not totally. Each person should have three measurable actions and one measurable outcome,that they put forward for agreement with the business, not the other way around.                                     b) Specifying key responsibility areas goes against wanting people to do what it takes to make the business successful. We want people to get involved wherever they can help, so specifying areas for them can limit that and the broader teamwork that results.
  3. People support what they help create. So, get them actively involved in how to elevate their own performance; don’t just impose an approach on them. It may even be that the approach varies from person to person… many businesses would resist that because they want uniformity. That’s ridiculous. Fair and equitable, effective performance management actually works better if it is tailored to individuals rather than trying the one approach / one size fits all. A person who feels they have responsibility and opportunity to input to their own performance management approach is way more likely to benefit from that than someone who comes into a room because someone else said so.
  4. If a person is wrong for a role then that’s a fact. Accept it and deal with it. Waiting years in hope is not a strategy.
  5. Keep away from fancy phrasing, that so many large businesses love to get involved with. We are people and we respond best to what we can relate to. Too many people in business are paid to invent phrases, jargon and documents that achieve little other than justify their pay packets. Behaviour is behaviour and we all get that. Stick to everyday language to keep performance discussions real.
  6. Summaries of performance discussions should sometimes be created, but never lengthy. The point of such summaries is for follow through and accountability, not for files nor to meet formal requirements of the business. So, whatever is noted should be real, behavioural and brief.
  7. Talent management grids and career development plans. These can be useful if they are kept up to date, people are aware of them and genuinely tie into future opportunities for the business and its people.
  8. A separate point… if something is not working, it’s usually obvious … and why it’s not working is usually just as obvious. Successful business can be as much about common sense as anything. We should be way more open to spotting (traditional) approaches that don’t work and having the courage to just change to something different that makes more sense. Performance reviews and old style performance management is a good example of this. It’s taken way too long for businesses to admit what has been obvious and to change the approach. Where else in your business could the same be applied?