Techniques for Getting the Most from an Oftentimes Dreaded and Misunderstood Process
“Annual performance reviews are usually a waste of time,” says executive F. John Reh, contributing author to the book “Business: the Ultimate Resource.”1 He believes performance reviews are “something managers feel they have to do, not something they see as a tool to improve the performance of their group.” Samuel Culbert, professor of management at the UCLA Anderson School of Management, stirred up much discussion in human resources circles when he wrote in a recent Wall Street Journal article, “I see nothing constructive about an annual pay and performance review…. It destroys morale, kills teamwork and hurts the bottom line.”2
It doesn’t have to be this way. These authors were discussing poor performance reviews, not performance reviews themselves. Other authors have expressed the same viewpoint. This author, on the other hand, believes that performance reviews can be developed into very useful tools that can help employees focus their efforts, enhance their performance and contribute to improving their employers’ bottom lines. Done well, performance reviews can even improve staff motivation and morale.
Improving employee performance
Coaching to improve performance often receives short shrift in performance reviews. Yet, from the employer’s perspective, this is the most important part of a performance review. It is more effective to conduct this coaching in a separate session, suggests Culbert. He calls these “performance previews” and says, “Performance previews are reciprocally accountable discussions about how boss and employee are going to work together more effectively than they did in the past.” Previews focus on the future while annual performance reviews tend to focus on the past. “Previews weld fates together,” he says. Whose fates? The fates of both the staff member and the manager.
Cascading goals are a way to ensure that each employee’s goals contribute to the overall goals of his/her work unit and to the overall goals of the organization. Cascading goals mean that the lab manager must break down each organization goal into individual goals for each laboratory work unit—departments and teams. This ensures that each work unit’s goals clearly and directly contribute to the overall goals of the organization. In turn, work unit goals must be broken down into more narrowly focused goals for each individual whom the lab manager supervises. Then managers must work with each employee to ensure that his/ her individual goals are tied to work unit goals and in turn to the overall goals of the entire organization. The performance previews suggested by Culbert are a good way to do this. These are best conducted at the beginning of the organization’s fiscal year.
During the performance preview the manager works with each staff member to define what the employee needs to do better and devise strategies to do this. This phase of the preview also includes agreeing upon the skills the employee needs to develop to be qualified for a promotion or coveted transfer.
Once improvement areas are selected, the manager and employee should work together to define how the employee can achieve this improved performance. Doing so may involve self-study, taking short courses, going to night school or taking on specific assignments that help the employee develop new capabilities. Then the manager and employee must agree on how to determine when the employee has achieved adequate mastery of the new skills.
The staff member and manager must agree on defining the improvement process, how long it will take, what fraction of the employee’s time will be needed to achieve the desired improvement and how much it will cost.
The best way to ensure that both manager and employee understand what was agreed upon during the preview meeting is for the staff member to write a short review of the discussion and include the action items and a timetable for accomplishing them. Then if the manager and staff member are not in complete agreement, they can correct the situation in a timely manner.
Annual performance reviews
Annual performance reviews are best held at the beginning of the calendar year or the organization’s fiscal year. Lab managers can discuss project assignments for the coming year and review what skills are required on the part of the staff member. The two can work together to propose a professional development program for the employee that will enable him/her to achieve high performance levels (making the later performance review a more pleasant experience for both the lab manager and the staff member). The disadvantage of this approach is that lab managers are often faced with conducting a large number of performance reviews in a very limited time span, which can result in managers not devoting enough thought and preparation to each review.
Some labs still conduct annual performance reviews on employees’ service anniversaries. This often has the advantage of spacing out reviews so the lab manager doesn’t have to conduct a large number in a short time span.
To be effective, performance reviews should be held more frequently than annually. Quarterly reviews may serve the purpose when working with experienced staff members. For newly hired staff members, perhaps the best way to help them get off to a good start is to have them work with a mentor and hold reviews one month after employment, followed by quarterly reviews and consultation with their mentors before the review.
Culbert notes that a major problem of many performance reviews is that managers and staff members approach them with much different mindsets. Managers usually focus on areas in which performance needs to be improved. Staff members are focused on raises and career advancement and therefore are eager to discuss past accomplishments in detail.
This difference in mindsets can result in communication problems during the performance review discussion as the manager and the staff member each focus on their own concerns and don’t really listen effectively to each other. Poor communication and insufficient manager preparation can derail a performance review discussion, resulting in loss of staff member motivation and a drop in morale. In addition, the manager can leave the discussions feeling frustrated with the employee.
Limitations of conventional performance reviews
Managers should not use annual performance reviews as an excuse to delay confronting performance problems when they develop. Many managers have no problem citing and praising good performance but are reluctant to confront problems with employee performance. Often they may see problems developing but fail to discuss them with the employee until the annual review. The result is an extended period of lower-than-optimum performance and a higher level of frustration during the performance review than otherwise would be the case.
Sometimes the manager, wanting to avoid a stressful discussion, will not confront the employee’s performance issues. This creates disconnects between what the manager writes in the performance reviews and the reality of how well employees are helping the organization achieve its goals. This scenario seldom does employees any favors. Without discussing performance inadequacies, action plans to improve performance are not developed. Should a layoff occur, staff members with nonconfronted performance issues are much more likely to lose their jobs.
Another problem that shouldn’t wait until the annual performance review is when an employee performs his/ her work very well but misdirects efforts so that the work has little to do with the overall work group goals. This problem is more frequently seen with recent hires who cling to an academic mindset and pursue intellectually interesting results that do not contribute to achieving the work group’s goals.
Performance reviews should contain no surprises. Reh advises that managers shouldn’t write anything in an annual performance review that they haven’t already discussed with the employee. This includes the overall evaluation of an employee’s performance and how that performance compares to that of his/her peers.
The role of teams
Team meetings can be used to assess employees’ performance on a much more frequent basis than annually. As team members discuss both their progress in achieving project milestones and how they help each other achieve these milestones, team leaders can assess individual performance on a frequent, often monthly, basis and supply this input to each team member’s manager. Alternatively, lab managers may wish to occasionally sit in on team meetings so they can form their own opinions regarding a staff member’s performance.
The end of the process
By the end of this process, the manager should have given the employee feedback on his/her performance and on how the employee is helping the work group achieve its goals. Each employee should understand in a general sense how his/her performance compares to that of others in the work group. If the employer uses a system in which the employee is assigned a performance grade, each employee should know what his/her grade is. Finally, the manager should prepare the appropriate written report and give a copy to the employee. The performance grade should motivate an employee to improve his/her performance.
Assigning a performance grade is in part a subjective process, no matter how objective a manager tries to be. Some managers are easy graders; some are hard graders. Yet in deciding how to award raises, bonuses and promotions, grades for one’s staff members will be compared to the letter grades other managers assign their staff members. Therefore, lab managers should make every effort to ensure that their letter grades meet the organization’s criteria for each grade assignment. Then one manager’s performance rating of “average” will not equal what another manager calls “outstanding.” To accomplish this goal, each lab manager should work with his/her supervisor.
To focus their efforts in ways that help achieve overall organizational goals while improving their individual performances, staff members need to know what is expected of them. Performance reviews provide a way for lab managers to communicate these expectations while motivating staff members to meet them.
Conducting performance previews and performance reviews throughout the year reduces the stress both staff member and manager experience during the annual performance review. Stress is reduced because both will already know how the employee is doing. Keeping records of these discussions makes the annual performance review less time-consuming, an important consideration if the manager has to conduct many performance reviews in a short time.
1. Reh, John. 2006. Contributing author Business: the Ultimate Resource. Basic Books. (No editor listed.)
2. Culbert, Samuel A. 2008. Get Rid of the Performance Review! Wall Street Journal. http://online.wsj.com/article/SB122426318874844933.html.