Tips to Rethink Performance Appraisals

The 2012 U.S. Employee Report found that less than half (45 percent) of U.S. employees believe the feedback they receive in a review fairly and accurately represents their performance. However, most major employers have no plans to abolish annual appraisals.

In a 2012 survey of 100 relatively large U.S. corporations conducted by Edward E. Lawler III, director of the Center for Effective Organizations at the University of Southern California, just 6 percent said they are considering getting rid of performance appraisals for some or all of their employees. Further, the vast majority (85 percent) believe their appraisal system is at least moderately effective.

Still, there remains a sizable gap between employee and employer perceptions of the value of performance appraisals. How can employers close that difference, and more importantly, derive maximum value from their appraisal process?

The answer resides in rethinking the performance review process — getting away from the “when?” mentality of reviews and instead focusing on the “why?” and “what?” As in: Why do we conduct performance reviews, and what do we seek to accomplish?

Following is a four-step approach to achieve that point.

Emphasize it’s a business process. At too many organizations, performance reviews are a perfunctory, check-the-box exercise. On the other hand, organizations that treat performance management as an important business process approach it with greater expectations and achieve superior outcomes. Such organizations provide senior leader sponsorship, align with vision and strategy, set clear performance expectations, create sound measures, monitor progress and share feedback widely to ensure success.

Both formal and informal reviews drive an ongoing performance dialogue that helps individuals understand where and how they need to develop to enhance or broaden their future impact. The results include stronger engagement, retention and individual and organizational performance.

Make it year-round. Employees dislike performance reviews in part because they happen just once a year — like paying taxes. But organizations that make performance management an ongoing, multifaceted process stand to benefit.

Jim Collins, in Good to Great, talks about how regularly doing little things right pays big dividends. Now apply that to performance. If an organization sets up its performance management system as an annual event only, it will have a hard time getting the kind of performance desired. However, if there are multiple processes working at the same time (e.g., goal setting, ongoing feedback, periodic assessment, development planning), the organization will more likely get the kind of sustained performance desired.

Never forget it’s a leadership opportunity. A leader’s approach to performance management reflects his or her leadership intent. It’s a leadership opportunity — and employees notice. Leaders who don’t make their expectations clear, rarely discuss performance or are hesitant to hold people accountable signal that mediocrity will be tolerated and development is unimportant.

On the other hand, leaders who set clear goals and expectations, assess performance regularly, provide timely, meaningful, constructive feedback, and support development will build teams that believe that continuous performance improvement and employee development are critical for success.

Align technology to meet your needs. Performance management is an opportunity to leverage technology. Data collection, reporting, notification, progress tracking and other data-management operations can be easily automated and streamlined, saving HR and managers lots of time. What’s more, most of the available software tools handle these “review of the past” functions very well.

But for performance management to drive future performance improvement and employee development, the demands on technology are different. The choice of a particular technology-based solution should depend on the degree to which that software can support the kinds of conversations known to drive performance and development. Such conversations include performance planning (e.g., gaining alignment on goals and other expectations), ongoing performance dialogue (e.g., capturing and sharing feedback immediately) and facilitating development (e.g., development planning and support). Organizations that know and understand their performance management goals — the why and what — will likely be better positioned to shop smart for technology tools.

Kevin Louiselle is senior vice president and partner at MDA Leadership Consulting. He can be reached at