Performance reviews are incredibly popular. In fact, some 91% of organizations used them in 2019. While that’s down from a reported 96% in 2012, it’s still a significant portion, especially considering data shows that modern, merit-based appraisal is toxic.

A Gartner study found that in 82% of organizations performance reviews either did not contribute to goals or directly negated them. Modern performance reviews, which involve collecting data and delivering a single performance review at the end of the year, do little but show that a manager is able to lead some people better than others. Essentially, they offer very little value.

While more and more organizations are dropping them altogether, others are shifting focus to use performance reviews for positive organizational change. Making those changes is likely essential to the ongoing value of performance reviews. The same Gartner study listed above suggested that 20% of C-suite leaders wanted changes to performance programs in 2020. What should those changes look like?

Make Performance Reviews Ongoing

One of the largest flaws in performance management is that it means managers cannot give real live feedback. Instead, they are reduced to delivering threats like, “That will go in your performance review”. Employees who are certain they are already losing the “game” have no incentive to improve or better their performance because they’re already at the bottom and they will stay there.

Yet, management best practices, ranging from the much-read “1-Minute Manager” to Emotional Intelligence and many other tactics all recommend avoiding this. New management techniques ask managers to offer feedback in real-time.

For the popular “One Minute Manager” that feedback looks like:

  • Clarify and agree on goals
  • Confirm what happened/describe the mistake
  • Mention why this is concerning
  • Highlight that the person can do better than this and help the person find solutions (do not make the solutions for them)
  • Offer praise for good behavior this person has shown

This approach means that employees immediately know when they’ve done something wrong. This gives them the opportunity to resolve it and replace the behavior with something else. This sort of hands-on approach also means that managers directly play a role in what their employees do by offering feedback on whether something is working, whether something is acceptable team behavior, etc.

For example, if someone is spending 60% of the time in meetings and is not meeting other goals, a review here could include a quick meeting about why this is not great and what is going wrong because of it. The manager would ask the employee to come up with solutions.

S/he might say they often have to delegate content for another team to avoid bottlenecks, which would shift the performance issue to another person entirely. Resolving that would free up the first person to do their job well, completely avoiding a negative rating and potential lost employee.

Integrate 360 Feedback

360-feedback involves collecting feedback from managers, employees, and underlings. This means that HR gets a much stronger overview of a person, their performance, and their contributions. It also avoids potential issues in terms of tracking metric inefficiency.

If HR is measuring performance in terms of output in a development team, but this person has been assigned the role of proofing his or her colleagues’ work to reduce total bugs, their production would look low.

360-degree feedback allows you to get a better picture of the total performance and interaction of the individual in the team.

However, 360-feedback also has flaws. For example, people are significantly more likely to rate someone with a positive review, regardless of the actual quality of work or contribution, if they have known that person for 5+ years.

This means that you must account for how well colleagues know each other when gauging the accuracy of a performance review. Combining 360-degree data with traditional data can help to overcome this.

Stop Highlighting Failure

Most of us would react very badly if someone walked up to us and went, “You’re the worst person on earth, here’s the data to prove it”. Yet, organizations do that every year to the bottom 2% of employees.

These employees are ranked, sometimes publicly, with percentile ratings and informed they are in the bottom “low performance” section. Sometimes their team and the entire organization are informed as well. That’s incredibly demoralizing for most.

Shifting away from negative feedback and towards positive feedback designed to highlight what you did well and what you can improve can greatly change that.

For example, if you avoid ranking employees in any system they can see, you remove the interpersonal competition which leads some employees to work outside the best interest of their team. You also remove demoralizing and demotivating messaging from performance reviews. And, by directly linking negative feedback to “improvement opportunities”, you could encourage employees to make an active change.

Develop 2-Way Dialogue to Share Responsibility for Results

Many employees are resistant to performance reviews because they feel they aren’t’ given the tools to succeed properly anyway. Opening dialogue for employees to share what they do need to succeed can change this. This is especially critical if long-term hires are suddenly not performing, if entire teams aren’t performing, or if performance drops following a change in leadership.

For example, personality clashes with leadership can result in poor performance from an otherwise stellar employee. Similarly, changes in process or tooling can reduce productivity. And, if employees don’t have the tooling they need to properly do their job, it’s unfair to rate them accordingly.

Link Performance Reviews to Personal Development and Coaching

Some of the most common traits linked to poor performance are simple behavioral issues. These soft skills or (negative) competencies are trainable. This means you can deliver personal development and coaching to poor performers to help them excel.

For example, some of the most common traits linked to poor performance include:

  • Clock Watching – these people are the last to arrive and the first to leave, they aren’t engaged in their work, just in doing the job and going home. Time management, motivation training, and better employee engagement all help with the time-wasting and lost hours that result from this behavior. 
  • Resistance to Change – Changes to the company, to software, or to the employee’s job result in resistance and lack of performance. Implementing coaching and training to show the individual they are still valued and can still provide value in the new system can help 
  • Complaints – Everyone complains, but constant complaining is demoralizing and hurtful to those that have it worse. Coaching can help. For example, introducing a meeting protocol where problems are brought up in meetings and discussed in a resolution scenario before being aired outside of meetings can reduce much of this. Of course, that employee has to feel listened to for this to work. 
  • Poor Collaboration – Collaboration and teamwork skills can be resolved with training, coaching, and interpersonal skills development. You should undertake any training of this sort as a team, but some individuals may need extra coaching or help to get through it. 

Performance reviews can add a lot of value. However, many organizations use them in ways that add little to productivity, performance, or ongoing development.

Shifting the current performance review to an ongoing process, with reviews focused on future development and improvement, plus room for discussion with HR, can greatly improve this.

And, if you take the time to offer development or coaching to struggling employees, to discover why they’re failing, and to communicate what needs changing when problems occur, even the worst employee can improve.

About the Author: Jocelyn Pick