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Performance Reviews are Dead, Long Live Reviewing Performance

Pete Cherecwich shares ways organizations can transform the dated, dreaded and anxiety-ridden performance review process.

Phone books, VCRs and landlines…all once common things in our everyday lives, are now on their way to becoming historical artifacts shown in museums, or as my kids point out, my home. While some may be sad to see these items disappearing, I think many would agree on what they hope will be next on the extinction list; the dreadful, awkward, and antiquated annual performance review.

Originally established during the 1950’s, performance reviews were intended to help establish accountability and measure employee contribution. But more and more organizations are starting to question the need for formal performance reviews, recognizing that the current review process is time-consuming and can actually have an adverse effect on driving employee engagement.

That being said, while I agree that performance reviews are not effective in truly improving performance, I would challenge organizations to stop and think before doing away with them entirely. Instead, the key is to understand the culture of your organization. Some organizations may not be ready to fully strand the review process, and should instead look to explore a shift from the older, more traditional approaches, to newer and better adapted ones. As the workplace continues to evolve, so should the annual review process, especially in these extraordinary times.

So, how can we work towards saving the positive aspects of performance reviews from extinction? Here are a few key points that are helping me on my journey to transform the dated, dreaded, and anxiety-ridden annual review process:

1. Measure What Matters

Employees can easily become defensive and find themselves resenting their annual performance review. While specific fears may vary, the crux of this resentment is consistent – the self-appraisal.

Think back to your last annual performance review. Did you find yourself dreading and putting off documenting your accomplishments for the year? When you finally got around to doing so, you probably spent hours carefully crafting a picture of your accomplishments for the year, with the fear being that something gets left out. Or maybe, you blew it off altogether. These are natural and common feelings, and can actually be detrimental to an organization as a whole. The mere quantity, rather than quality, of an employee’s accomplishments shouldn’t be the sole measure of his or her performance. Quality, first and foremost, should serve as the foundation of self-appraisals and performance measurement. The key is for management to clearly define and measure what performance excellence is within your organization or team.

I recently read a book by John Doerr in which he discusses this. In the author’s words, “Measure What Matters” and establish objectives and key results (“OKR’s”) that can then be used to track performance. Having clear objectives and key results will help ensure that both parties to the review process are aligned. This alignment should exist from the CEO all the way through the organization. Defining and establishing clear OKR’s is only the first step, however. Leaders also need to have ongoing conversations with their teams so that, come time for performance reviews, there are no surprises.

2. Eliminate the Surprise Factor

No one likes to be blind-sided. One of the driving forces behind performance review anxiety is fear of the unknown. Wondering, “Did I meet my manager’s expectations?”. As a leader, what has helped me to alleviate some of this anxiety is the practice of “in-the-moment” coaching. Having regular, honest, and constructive conversations in real-time to help adapt and evolve behaviors as needed and drive enhanced performance. These moments can be reviewing the quantitative key objectives and the qualitative behavioral aspects.

Having 1:1 check-ins is another great way to ensure there are minimal surprises when it comes time for annual performance reviews. The annual review should be a recap of things already discussed throughout the year, whether through 1:1s and/or “in-the-moment” coaching. Doing so will make performance reviews far less daunting for both the manager and the employee, and maybe even unnecessary.

3. Remember the Goal

I am writing this while watching the Masters. A strange year indeed. But, this thought crossed my mind. I wonder if these golfers’ coaches waited until the end of the year to give them a rating. And if so, it would probably be the equivalent to a rating of “excellent”, as they are in the Masters after all. I think not. Performance reviews would happen after each round with the goal of improving. They wouldn’t necessarily point out where someone made a mistake, but rather give feedback on how to improve things. This happens all year long.

Too many performance reviews are tied to the annual pay cycle. This leads managers to write glowing reviews for the employees that they want to promote vs. trying to give them feedback on how to improve their performance. Some will even rate all their staff as “excellent” just to try to get more funding. I am a fan of separating the two. Even if all your team members are outstanding, the goal is to make their performance better by giving them feedback. That is sometimes hard to do if it is directly tied to pay and promotion.

Bottom line – Performance should be constantly reviewed against corporate objectives that are pushed down all the way through the organization. Both the end results and how those results were accomplished should be given feedback, with the goal of improving performance for both the individual and the organization. The annual review should go away, while the constant review gets put into place.

Peter B. Cherecwich

President of Asset Servicing
Pete is an Executive Vice President and a member of Northern Trust’s Management Group in Chicago. Pete currently serves as the President of Northern Trust Asset Servicing.

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