Annual performance reviews can get a bad reputation in some companies, being seen as the dreaded month where everyone is “graded” and not much else gets done. For many organizations, they’re expensive, time-consuming, and provide little valuable information, while fostering employee dissatisfaction and reducing loyalty.
Managers spend an average of 17 hours per employee, per year on traditional performance reviews. That in itself is a huge time cost to the company — without factoring in the employee’s time, designing the assessments, or analyzing data.
To drive value from performance reviews, organizations have to implement it as part of daily work. Shifting performance appraisals from a large, yearly approach to an ongoing, daily or weekly touch point can dramatically improve how people perceive performance reviews. With negative opinions about performance evaluations, how you integrate feedback into daily work should be done with care.
Set clear expectations
When people know what the feedback is for, the quality of it increases since they know what points to hit. Expectations should define:
- What performance feedback will be used for. For example, in waterfall environments, it’s usually used to identify a top 2% and bottom 2%. In Agile environments, it might be used to issue remediation training, coaching, etc.
- Next steps (e.g., Will low performers be fired? Do they get a pay cut? Will they be given developmental opportunities to close gaps? Will they receive coaching to determine problems and how to move forward?
- How performance is rewarded (for individuals vs. teams, etc.). Traditional feedback models often fail Agile teams because they reward individual performance, which simply incentivizes bias towards negative or neutral peer feedback in 360 and other horizontal feedback systems.
Clearly stating the outcomes of performance feedback lets employees better prepare for and justify what they say and why.
Build trusting environments with goal-oriented feedback
The second step in fostering a positive feedback environment is creating goal-oriented feedback. Often, defining a top and bottom percentile is not goal oriented. It’s just a ranking system that offers no benefit to your organization.
Setting goals for feedback changes that. This could include delivering development, directing people and teams to self-improve, or comparing perceived production and skills gaps with actual production and skills gaps, etc. Once you establish what the feedback will be used for and how it will contribute to your business goals, you can communicate that to employees and gain buy-in.
For example, many Agile teams now integrate feedback cycles retrospectively. Teams might be asked to fill out simple performance surveys for their and their team’s performance after every sprint. That can then be utilized to discuss how things went during the retrospective. More importantly, it can allow people to suggest improvements and how to do better next sprint. Making those goals self-motivated also encourages buy-in because ownership and accountability help people to progress.
Implement feedback training
Feedback training is the process of helping people learn how to give good feedback. Sometimes, that means acknowledging or highlighting the right things. In other cases, it means avoiding personal and emotional bias when offering feedback. Feedback training is relatively simple and can often be delivered in a single day – but it ensures people know how to select and highlight the things that are important to performance.
Often, that also ties into giving daily feedback in the form of compliments, goal-oriented criticism, and requests for solutions. If people don’t practice those skills on a daily basis, they become much less useful.
Use OKRs and goals to ensure feedback is implemented
OKRs, or objectives and key results, is a goal-setting methodology designed to help people and teams push their capabilities. Here, goals should always be high, and teams should not be able to complete them easily. Instead, you should normally aim for a success rate of about 70%. Why? People perform better when they have goals.
Setting goals around feedback, whether to correct performance issues, behavioral issues, communication, etc., is great.
But, if goals are easily reachable, many people will reach them and then drastically reduce their work effort until the next goal is set. OKRs prevent that, while challenging the individual to perform better than they otherwise would.
Make it a multi-way conversation
When feedback is one-directional, it won’t be taken seriously. If managers have a say about their teams, but teams are denied a voice concerning their managers, the process will create tension and lack of trust. Incorporating opportunities to deliver feedback in different ways and on different levels will increase employee buy-in and trust.
That means using one-on-one feedback, as well as anonymous and 360 feedback, where people can contribute horizontal and upward feedback anonymously. These different avenues of feedback might generate surprising results, which could offer insight and value into management relationships with teams, team relationships with each other, and other work relations.
Wrapping up — Turn performance feedback into actionable insights
Performance appraisals are increasingly moving away from a once-per-year check-in to ongoing feedback delivered as part of work (e.g., included with tooling, after sprints), which is a good time to check in on how people are doing, what they’re working on, how it went, and what they think could have gone better.
That shift in mindset is necessary to transform performance appraisals into a healthy process that contributes to a culture of development. Most importantly, it allows the organizations to drive performance improvement through training, providing tooling, and analyzing the bottlenecks inhibiting people from performing their best.