Performance appraisals

Traditional performance appraisals

Most organisations have a formal process for evaluating the performance of its employees. Usually, it has a form of an annual performance review where employee’s work performance and behaviours are assessed, rated and documented by direct managers.

The ultimate goal of a performance review system is to reward and retain capable employees by keeping them happy. Managers believe that this process:

• Provides useful information for promotions and compensation decisions.
• Motivates employees and enhances their involvement.
• Improves overall performance of the teams.
• Boots communication and provides valuable feedback.

Unfortunately, while HR departments are happy with growing documentation records, most employees hate performance reviews. A majority of people find this top-down process useless, counterproductive and, most of all, destroying teamwork.

They don’t see a performance review as an honest discussion based on trust, but rather a place where a superior communicates a pre-determined story and judgement and, in the best scenario, comes up with an already fixed salary raise proposal. Regrettably, it has nothing to do with performance, but largely is a result of the budget limitations and politics.

360-degree feedback

One of the most popular solutions you can use to improve your performance reviews is a concept of 360-degree feedback. It’s based on the assumption that multiple points of view are required to correctly assess somebody’s performance. It means that peers are included in the process and, therefore, everyone gets a more comprehensive picture of employee’s contribution to the organisation.

Suggestions

Changing from a very top-down reviews to a 360-degree feedback model is highly recommended, but it’s not enough to make you succeed. Also other parts of the process have to be adjusted to make it effective.

Set right atmosphere

You need to develop a feedback-rich culture and build trust among your employees. They need to believe that performance review is about learning and improvement they can honestly benefit from.

Get rid of fixed-scale, make it simple

Get rid of checklists or forms created by HR departments that forces you to evaluate employees in terms of a long list of predefined categories and a set of behaviours that are assumed competent people should show.

Please bear in mind that every person is different. Employees come with their own characteristics which include individual strengths and imperfections, and, therefore, applying same fixed-scale to different people makes little sense. Last but not least, it’s really unreasonable to measure the same way employees with different roles and functions which, regrettably, takes place in far too many organisations. It’s far better to concentrate on individual objectives and perform a review based on a short, but descriptive assessment.

Finally, make sure that a process of collecting feedback from peers is quick and easy. Please bear in mind that everyone is busy doing their work, and providing feedback to the peers shouldn’t be seen as an additional burden.

Do it frequently

Conducting performance reviews annually is a waste of time. Personally, I can hardly remember what I was doing a month ago, thus expecting anybody to recall actions from 12 months ago makes little sense.

To make the whole process relevant, you need to start assessing performance and giving feedback regularly. You’ll soon find that doing it on a regular basis (every quarter is a good start) is easier and far more productive.

Encourage self-assessment

Peer reviews are really beneficial, but it make also sense to match it with what employees thinks about themselves. People tend to have a pretty good idea of their own strengths and weaknesses – give them an open and positive opportunity to share it with you. Self-assessment can be a great start for a productive dialogue about goals and expectations.

Collect some quantitative data

Measurable goals and objectives are required, and you should collect and share all the metrics before the review. However, please make sure that the numbers don’t lie in the heart of the process – they should only be used to set a background for honest discussion.

Qualitative data are more important

It’s the core of the review. It’a bidirectional, honest discussion about what was great and what are the areas for potential coaching. You should concentrate on accomplishments and strengths rather than failures.

Please be aware that if somebody isn’t performing as expected it’s not necessarily his fault – the organisation should take responsibility for supporting them or helping them find a better fit if need be.

Foster teamwork and collaboration

The behaviours you should be encouraging are teamwork and collaboration, not individual achievements. Please take it into account while setting objectives and commenting on how your peers contributed to the organisation.

It’s not to say that exceptional individual achievements shouldn’t be appreciated, but it’s teamwork that you should value the most. Please note that in the absence of an understanding of how individual contributions compare to team achievements, self-preservation rules supreme. On the other hand, an ability to link individual performance with a team success increases job satisfaction and employee’s engagement.

Do not rank employees

Stack-ranking employees based on the results of their performance reviews may sound tempting, but it should be avoided. In large organisations even if you get a good score (i.e. second the highest rank possible) it may turn out that there are hundreds of people doing better than you. And it neither feels good nor increases your motivation. And above all ranking employees destroys teamwork by making everyone concentrate on their individual goals and achievements.

Separate from compensation and career plans

In many organisations, the results of performance reviews are explicitly used to decide about bonuses and salary raises. At first sight, it may look reasonable, but the reality is that you should separate the discussions about performance from discussions about compensation and career plans.

The performance review should be about learning and employee’s contribution to the team and organisation rather than a process narrowed down to getting a nice salary raise. It’s not to say that meeting goals or getting a very positive feedback should not be taken into account, but a direct link between performance review and compensation ends up in employee concentrating only on the latter.

Instead of doing good work many employees starts focusing on getting a good review. They spend more time on their “career” than on the actual work at hand. Instead of energising people and promoting teamwork such a process clearly leads to bogus activities, cynicism and employees spending time on cover-your-back actions. I’m sure it’s not what you’re aiming for.

Come up with actionable items

Identification of measurable goals and actionable commitments is critical to successful performance reviews. Open discussion lies in the heart of a good review, but in the end, some well-defined actions should be agreed on.

And the words “measurable” and “actionable” are significant. An accomplishment of measurable goals can be verified at next review, and actionable commitments are well-understood, have clear steps to completion and acceptance criteria.

Please bear in mind that actions may not be related only to the employee being reviewed – it can be also something that a manager has to take care of in order to support the employee, help him with his goals or make him improve his work.

Doesn’t it sound like a good retrospective?

When you look at suggestions discussed above it can be easily spotted that performance reviews are somehow similar to… good retrospectives. I think it’s worth noticing that Agile principles (like adaptation, strive for continuous improvement, teamwork, transparency, etc.) relate not only to software development but a whole organisation and its processes. It shows that you can’t have a high-performing software development teams without transforming other parts of the business.

Next steps

Building empowered teams that take responsibility for their results requires transparency and trust. So the next logical step towards this goal is to make performance reviews… open and public.

It may be difficult at company’s level, but you can try doing it within your team or department. The idea is to gather the team in one place and perform peer assessment of each and every team member together. Despite appearances such an approach reduces time required to perform the review and has several advantages:

• everyone is evaluated at the same time in equal measures,
• it’s less formal and, therefore, more open,
• ability to see if a majority of the team shares same concerns,
• ability to ask questions and clarify problems,
• everyone forces themselves to be fair, honest nad more understanding.

Summary

Performance appraisals have a terrible track record. But the problem doesn’t lie in performance reviews themselves, but rather in the way they are implemented.

The process of how performance reviews are conducted has to change. It has to stop destroying intrinsic motivation and focus on teamwork. Most people seek for better performance and strive for continuous improvement. They can do that by getting meaningful feedback from their peers and managers, therefore frequent, honest and transparent reviews are desired.

It makes sense to involve employees in designing and establishing your new performance review process. Please bear in mind that a system designed in collaboration better serves all and engages employees. What it boils down to is that employees want to know how they are being evaluated and want to know that they’re making conscious choices.

Further reading

• Time to Scrap Performance Appraisals?
• Get Rid of the Performance Review!
• Why (and how) we Traded Performance Reviews for a Peer Feedback System
• Setting goals: OKRs
• Management 3.0