Reinventing Performance Reviews: Answering Your Questions
Performance reviews are a hot topic.
In recent years, there has been much debate regarding their role in companies and whether they truly measure performance and drive positive outcomes. As a result, ‘Continuous Performance Management’ was born.
Many employees still want to know where they formally stand and what their next steps may be to achieve their career goals.
Companies also wish to compile their data in such a way that they can inform compensation and succession planning processes.
So what do we do?
Let’s re-imagine Performance Reviews and this time, let’s get it right.
If you haven’t already, watch our interactive webinar on how to reinvent performance reviews and send us your questions with #Ask7Geese on Twitter.
In the following Q&A, you’ll find answers to frequently asked questions on performance reviews.
Q: Are annual performance reviews on their own a waste of time?
This is a little tough to answer without more context.
If the question is in relation to conducting performance reviews in the absence of other continuous performance management activities (i.e. feedback, goal setting, recognition and ongoing 1-on-1 conversations), then they are certainly less beneficial and are unlikely to overcome the challenges and biases of the traditional review as we discussed in the webinar (e.g. recency effects, administrative burdens and the accuracy of data used to inform the process).
Research by CEB in 2004, however, has indicated that for those companies that do not regularly provide feedback, employees may suffer as they crave the ability to understand where they stand or be rated. And it could be argued that some information, compared to none at all, may be essentially “better than nothing”.
Other studies have shown that employees with a higher proclivity to anxiety actually suffer more without feedback than they do when receiving critical feedback. The challenge here is that we know other very robust research states that if the employee does not perceive the feedback as fair, this may risk demotivating the employee also.
If your company insists on only having annual reviews alone (not ideal), then I would try and refocus them to come back to the “why?” (i.e. finding the purpose of running the review in the first place) work to enhance the perceived fairness of the process overall in order to ensure the process is as motivating as possible for those involved. To do this, at the very least, it is imperative to ensure your managers are equipped and capable enough to handle the conversations and provide robust and effective feedback throughout.
Q: Is there a link between performance reviews and succession planning?
This is a big question and really depends on your current methods for succession planning.
For example, organizations with clearly defined competencies will find this an easier process to integrate into their succession planning initiatives. Given this, depending on the process you use for your performance reviews, you could and should certainly use some of the data from a review for succession planning purposes.
In fact, this is a key reason as to why most organizations feel they need to gather data through the review. Of course, you should be gathering more ongoing information to inform succession planning processes as well. You should use these as an opportunity to craft conversations around scoping whether you have high performers, high potentials as well as scope opportunities for replacement planning.
The conversations should also inform where individuals want to move – could it be lateral, progress into leadership or even diagonal? There are so many options and using Reviews and performance conversations overall are a great way to diagnose this and capture this information.
Q: Should performance review criteria be related to competencies and job analysis?
If you have clearly identified competencies for your company then absolutely you could include questions about these aspects.
You should already be recruiting, evaluating and training people against these competencies if they are embedded in your company. So the review would simply “wrap up” these components.
If implemented effectively, you would then be able to use the data to inform your future capacity building initiatives and succession pathing processes.
My only reservation with competencies is that many companies do not clearly define competencies that actually predict success.
Job analysis helps, but again, only if this is done well. As long as you are confident that your competencies are reflective of what your company should be focused on and your initiatives are all embedded or linked to these, then yes, this would be a great idea.
Q: When we do our performance reviews, would you recommend that managers are reviewed by their direct reports at the same time the direct reports are getting reviewed? If so, how do you prevent a situation where a direct report would be more critical of a manager if they have received a critical report from their manager then they otherwise would have been?
There are a few areas to consider here.
First, in relation to “reviewing the manager,” it is always a good idea to scope two-way feedback to give context to your data, such as if the individual feels supported by their leader.
Also, bear in mind that if you are implementing continuous performance management initiatives, managers would ideally be seeking feedback throughout the period from their direct reports. So you would be able to compare this feedback to those prior to get an indication of whether feedback post a review is particularly critical.
To ensure you don’t receive more critical reviews from individuals regarding their leader after a “not-so-positive” review, you could ensure that the individual is unable to see their manager’s ratings at the time of completing their review.
In addition, you could do as suggested above, which is regular pulse feedback on the manager over the time period (not just at the time of the review).
Finally, there is always the possibility a manager may actually be a little more harsh in terms of their scoring. Or perhaps, they aren’t equipped to deliver this kind of feedback to their employee leading to a negative employee reaction.
In this regard, it is worth having a central resource overview the process for fairness and notes any patterns in manager reviews (i.e. do they consistently give critical reviews, do they often have discrepancies with employees regarding their level of performance etc.).
I always try to bear in mind that the majority of people actually come to work to do a good job. If you factor in that only a marginal percent of those are in fact “bad apples”, we can then shift our focus to “what is going on in this process to invoke this reaction?” and then work to mitigate the negative impacts for all involved.
Q: Do you recommend linking both developmental and administrative goals to OKRs? If so, should you use the same goals but have different conversations or should the goals be differentiated in some way?
Many companies have both developmental and administrative OKRs. Sometimes, however, there is a bit of grey where they overlap.
For example, if an employee’s developmental goal is to develop their project management capability (that would tap into various competencies such as leadership, technical ability, coordination etc.) you may collectively decide they should take on a project that both focuses on their development, however, will also have an administrative focus and thus creates an OKR that reflects both aspects.
As long as your “review” format is reflective of an individual’s contributions over that time period, I wouldn’t necessarily see a need to separate them.
Setting a purpose for your review is more for the company to understand the purpose behind WHY they are doing the review and to then inform the kinds of questions, reflections and conversations that would need to occur within that process.
This doesn’t mean you need to separate out these goals. I believe you would need to determine this on a case by case basis for each review.
Q: If you’re pulling OKR data into performance reviews which are often linked to administrative pay decisions—how do you keep in mind the stretching nature of OKRs versus the targets that are set by a business area or line manager?
A lot of organizations will adopt and apply the OKR philosophy slightly differently (even within your own departments this may occur).
For example, those that adopt ‘the Google way’ will aim for a .7 out of 1 as truly performing (or 70% instead of 100%). If you achieve higher than this, then your target was not ambitious enough.
Other organizations prefer a more conservative approach and adopt a true 1 as their 100%. A few will sometimes adopt a phased approach where for the first year of implementing OKRs, they may look to achieve .7 (or 70% of their target) and keep that stretch initially, and over time adopt a less strict approach when people get the swing of pushing themselves to achieve more of their targets (while also implementing bonus and reward structures to drive desired behaviours).
Some leaders adopt this stretch by setting their departmental targets higher than required in order to ensure they hit their “true target”. So, if the organization expects $100,000 from the department, the department manager may set the goal at $130,000 and actually hit the intended $100,000 at the end of the period. Another manager may set this at $100,000 and only achieve $70,000 or something similar. This is often why we set stretch targets, to ensure we achieve more.
Our suggestion is to always ensure consistency across your business in terms of your method. This way, you have a robust understanding of your goal setting methodology to enhance the perceived fairness of the process.
If your employees are having regular 1-on-1s with their managers, then the “challenge” associated with the OKR should be discussed ongoing and the manager should still have a clear indication of the effort they have put into the process. A second area would be what we discussed process and outcome.
Many organizations focus only on the “outcome” in terms of targets or KRs achieved. It is just as important to focus on the process itself. In alignment with reinforcing a growth mindset and learning orientation, you need to ensure you have measures that reward effort. That effort will be reflected in the process they have taken to achieve their ultimate outcome measures.
Q: How do you tie ratings and compensation for companies that have creative roles and more traditional roles?
This will come down to the question of “what are you measuring them against”? If your roles aren’t clearly defined (which is often the case as many companies have a stronger agile focus these days) than using a stronger focus on your core values, behaviors and cultural attributes are usually a more accurate yardstick to use (in addition to their KPIs and minimum requirements etc.).
The other factor to consider is “what does success look like in our company?” then think about “what behaviors will get us there?”.
Once you start getting a stronger idea of this, then you should be able to create a robust enough idea of what needs to be demonstrated in order to achieve your outcomes ensuring that you have enough “wriggle room” for your criteria to be inclusive of all working styles (as is relevant or required).
The latest evidence tells us that one of the key factors in driving the collective intelligence of your teams is through enhancing the cognitive diversity of your team members.
Basically, you need people that genuinely think differently to drive more effective outcomes. So long as they are able to have enough emotional intelligence and social sensitivity to manage positive conflict in achieving outcomes.
Different approaches to achieving the same outcomes (i.e. creative or traditional approaches) are likely to have a far more rewarding outcome for your company overall.
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