In business, there is one single conversation that can cause high levels of dread and fear on the manager’s side, and anxiety and resentment on the employee’s side.
This is the performance review.
Second only to firing an employee, managers and business owners rate performance appraisals as the task they dislike the most.
The reaction is an understandable one. It takes skill, sensitivity and a calm approach to navigate this conversation successfully.
The current lockdown, with many team members working from home, has made the situation more acute. Managers may have less information and fewer observations to work with and bring to appraisal conversations.
The Ghost of Performance Reviews Past
Giving staff annual performance evaluations has for decades been widely accepted as an essential and valuable management tool, and there are lots of books and materials on this topic.
But there is a growing body of research which suggests performance reviews may actually do more harm than good, particularly in the way many are carried out.
For example, a study by the Society of Human Resource Management found that 90 per cent of performance appraisals are both painful and don’t work.
What's more, they produce an extremely low percentage of top performance.
This generally negative view of performance reviews is borne out in my own experience of most businesses.
The Ghost of Performance Reviews Present
Working with businesses ranging from small financial planning practices to large multi-national corporations, I’ve observed these firms often have better performance and appraisal systems in place today than they did, say, 10 years ago.
These impressive systems refer to best practice, link personal objectives to company objectives, use competency frameworks, and look at both deliverables as well as behaviours.
Significant investment has gone into this process, so the question is: does it work better for them now?
Well, while there has been some improvement, I believe there's still a long way to go.
Annual performance appraisals in medium and large businesses do take place more than they did before. Yet they aren't delivering desired improvements in performance.
Unfortunately, they are still often seen as cumbersome, time-consuming, tick-box exercises that simply must be endured.
The Ghost of Performance Reviews Future
So how can we transform the experience, and turn performance reviews into a tool for positive change?
I believe there are two aspects that need to be addressed:
- The quality of the appraisal conversation itself
- The feedback and conversations happening in between appraisals
It’s common for managers to avoid giving timely feedback and to take time to communicate the right message.
Positive feedback is often neglected, or doesn't come across as genuine.
Meanwhile negative comments run the risk of being confrontational and dispiriting. My fear is this will actually get worse during the current coronavirus lockdown.
Regular conversations about performance and expectations create clarity and a sense of security.
Whether your team is located across different offices or remote, managers need to be observant and communicate their expectations and feedback regularly.
Good managers foster the right conditions for continuous improvement, making it easier to adjust expectations and respond positively to change.
The formal appraisal should be more of a summary of experiences over the preceding period, rather than a series of surprise observations that have so far gone unmentioned.
If feedback is regular, the appraisal conversation can focus on more positive development coaching.
Coaching and performance
Bersin & Associates carried out research on linking coaching and performance management. They found that:
- Organisations where senior leaders coach very frequently had 21 per cent higher business results
- Organisations with excellent cultural support for coaching had 13 per cent stronger business results.
This is no great surprise to me.
When leaders are trained as coaches, they become skilled and confident in giving feedback to help development.
A coaching leader’s mindset is different from that of a directive leader.
When giving feedback the coaching leader is focused on building capability and helping staff develop and learn.
They are also more aware of the value of sensitive feedback, and become more adept at giving constructive appraisals.
Managers with good coaching competencies have a better ability to listen and build trust.
They are equipped to have quality conversations and nurture an open positive learning environment.
It also lays the foundations for good workforce relations, which in turn can lead to improved productivity, reduced staff churn and higher motivation.