The Most Wonderful Time of the Year

This is my favorite time of year. Always has been. Since I was a kid. Thanksgiving. Christmas. I love it.

Yet, for the past 25 years or so, there has been a dark cloud that comes around at this time of year as well. Performance Reviews. It's one of my "buttons" and it's hard to resist weighing in.

As "Mr. Performance Review" in several of my corporate gigs, I have had the opportunity to deal with this process up close, for many years.

There are two chief flaws in the way performance review is typically executed.

One is the linkage between performance and pay. While an organization should insist on people performing, the annual determination of who performed better is subjective at best. At worst, it is a flawed exercise in how to distribute a finite bucket of merit money that leaves folks feeling like they weren't adequately recognized or rewarded.

The other is the weak focus (or lack of focus altogether) on development.

If I had a magic wand, I'd wave the whole thing away and replace it with something that I believe would be quite different:

1. Spot Cash Awards that a manager (or team in a self-managing environment) would have available throughout the rolling year to give to employees "on the spot" when some exemplary performance is delivered. Criteria would need to be developed based on the job (e.g. sales) and the results expected (e.g. quota). All employees would be eligible. In non-sales jobs, the design of this program would take some thinkin'

There would no longer be an annual review of performance. Instead, everyone (except employees on a PIP) would receive a raise based on the company having a good year, and anyone who received spot awards during the year would be in the running for an annual recognition prize such as a trip to the Caribbean. In a given year, there could be many winners.

2. Annual Development Planning for all employees in the organization would replace the annual focus on performance appraisal. In this new world, the year would start with development goal setting aligned with the business plans. During the year, managers would be development coaches, working with their folks to learn and acquire new skills, knowledges, and capabilities. At year end, manager and employee would review the year with the accent on development.

In the appraisal paradigm, the end-of-year question is "How did you do?" While it is a legitimate question to ask, it takes you back to report cards and grammar school. It's de-grade-ing.

In the development paradigm, the end-of-year meeting would be a conversation between an employee and his or her coach. The questions would be different:

- How did you play?

- How did your game improve? How did you grow?

- What did you learn?

- As your coach, how did I help you? hinder you?

- In what ways are we, as an organization, smarter than before? a better team than before?

Accountability for performance does not go away; it is still important. Accountability for development ascends to a new level of focus and importance, on a par with performance.

What a different year-end this would be: a salary raise, maybe a trip to the Bahamas, and a conversation with my coach.


nerio said…
Bravo Terry!

I hope HR professionals reading this can implement what you've suggested.
Terrence said…
Hey Nerio
Thanks for stopping by my blog.

In my travels, I have met and worked with some HR folks who are very insightful and progressive in their thinking.

Trouble is, they are contained (and constrained) within a corporate hierarchy that doesn't like change, doesn't trust new ideas, and doesn't really value people.

nerio said…
Don't I know that, Terry. I'm currently doing a project with a family-run group and the biggest challenge is getting the "ole inner circle" to accept new ideas. It's tough.....but certainly worth pursuing!!
regina said…
yes...yes..I am sure I read this post and wasn't ready to hear it yet. Here is the thing...I've done performance systems both ways - 1) the purely development route and 2) the purely comp related route and both have pros and cons..which still adds to my confusion -- I like them both and think they both make sense at the concept level and then maybe it is the execution that sucks...I don't know yet...Will need some time to let go of my --hate this word-- paradigms.

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