Earned Lessons

Twitter Summary:  Short-term focused performance reviews can help you deliver on tangible results.

I have a personal loathing for the yearly multi-page performance review where: A) All an employee’s past year’s work is reviewed, B) All their work for the upcoming year is planned and mapped to company, organization, and team objectives,  C) All their personal development tasks for the year are listed, and D) 360 review feedback is summarized, E) Everything is distilled to a single letter/number/score, and F) Becomes the basis of the employee’s compensation, bonuses and future path within the company.  The process is difficult and drawn out for the managers who have to assemble the information for their team. It can take weeks to assemble the information and craft a review and schedule a meeting for each  employee. The process is also difficult and drawn out for the employee who has to wait until everything is assembled to find out how the company thought they performed this year. This is further complicated by the opacity in what is going on with the reviews as it is taking so much time to do. The management gurus at Harvard Business School highlight that performance reviews are imperfect and are looking for better ways to improve the process suggesting that the best way is “continuous performance reviews”.

In startups and agile organizations this approach is especially problematic as the goals for the team and company can change over the span of a few weeks. Rewriting documents for each employee so that they can have the benefit of an accurate assessment for the employee’s performance review adds even more time to organizations that are striving to be nimble.

The best process I have seen to date has been to a) de-couple all the reviews bundled into the yearly review and spread them out through the year and b) set the employees expectations as to the goals of each review element and how it impacts their career growth.  The types of performance reviews that should be split throughout the year are:

• Company and team performance reviews can happen quarterly or bi-anually so that management can set expectations if the company is doing great, or if it is struggling to keep payroll and what everyone can expect in terms of compensation and future tasks.
• Employee performance reviews that happen quarterly can cover what happened last quarter and what needs to happen in the next quarter for the employee and the company to be successful
• Personal development reviews can happen 2 to 4 times per year covering what the employee would like to learn to do their job better and what the team would like to help deliver for the customer.
• Compensation reviews can happen 1 to 2 times per year, on a separate cycle where all the previous performance and personal reviews for the past year are assembled and the employee’s contributions and the impact of the team’ and company’s work can help reflect what types of compensation adjustment are necessary.

By splitting out all the reviews into smaller more frequent reviews you gain the benefits of:

• Less work for managers and employees who can focus on deliverables for the next quarter.
• Smaller focused reviews are easier for managers and employees to write-up and explain.
• Manager and employees have more frequent checkins as to employee’s performance in the context of the team and the company.
• Personal development tasks are given priority as it is not hindered by people thinking about their performance or compensation bundled in the same document.
• Decoupling the compensaton conversation from multiple performance evaluations helps the manager set the employee’s expectaions as to how much of an adjustment can be made.

The role of performance reviews is important in helping make sure that the team is focused on the correct things for the company to deliver on its goals.  By setting the employees, managers and company’s expectations for each performance review element covers, you increase the transparency in how the company will succeed.  This advice does take some extra scheduling steps for managers, but spreading the tasks throughout the year ensures that there is constant communication of managers with employees.  In addition anything that takes a company away from a 20 page per employee review is likely to be less onerous, and help move towards a clearer and better run performance process and happier employees.