Annual Performance Reviews Will NOT Ensure Employee Success

Performance Management Is Both a Process and a System to Develop Employees

The annual performance review should be part of a much broader system of performance management.
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Performance appraisals are a hot topic in management and organizations—seemingly in perpetuity. In fact, hundreds of resources exist that tell you how to do performance appraisal effectively. This is the wrong approach to helping employees manage their performance.

The better question is: should you do performance appraisals at all? People want to know how to do a performance appraisal, when to do a performance appraisal, whether to do them at all and how they overall affect employee performance.

Employees and Performance Appraisals

The employees who are the targets of these performance appraisals want to know:

  • how they affect income,
  • what they assess,
  • how they measure contribution,
  • how they are archived and used, and
  • how they affect career advancement and success.

Most of these questions are the wrong questions, especially when they focus narrowly on the performance appraisal instrument and the appraisal meeting with the manager. Ask instead, how your entire performance management system supports your desire to create a customer serving, motivated, accountable, reliable, creative, dedicated, and happy workforce.

Does the Appraisal Help You Meet These Goals?

Does the annual performance review help you achieve these goals? Highly unlikely. In "Why Employee Performance Appraisal Does Not Work," the downside of performance evaluation as traditionally practiced was discussed. Here, you'll have the opportunity to review the components of a performance management system, the recommended system for replacing the annual performance appraisal.

As a Human Resources or management professional, one of your major goals is to develop the capacity of your organization and its members to perform. You want to create a high-performance organization.

You lead company efforts to create a workplace in which people can develop their full potential. An effective performance management system, which line managers lead and own, guarantees you will achieve your goals.

Performance Management: Both a Process and a System

Performance management is the process of creating a work environment or setting in which people are enabled to perform to the best of their abilities. Performance management is a whole work system that begins when a job is defined as needed.

It ends when an employee leaves your organization. Many writers and consultants are using the term performance management as a substitute for the traditional performance appraisal system. You will find the term in this broader work system context has a significantly wider set of objectives and opportunities.

The goal of employee performance is to achieve the company mission and vision. Almost no one performs, for the organization, however, if his or her own mission and vision are not accomplished as well.

As Fred Nickols, Senior Consultant with the Distance Learning Company, said in an interview, "The blunt truth is that, if they have any work objectives at all, most people set their own. It is the era of knowledge work and the knowledge worker."

Many so-called "bosses" (if that term has any utility at all) are in no position to set work objectives, to monitor their accomplishment, or to supervise their pursuit.

The work, especially at the task level, is in the hands and the heads of the workers. To be sure, a manager could formulate goals and objectives having to do with improvement in work processes and the like, but if these must be left to the workers to realize, who needs the manager? An even better question is, "Who needs work objectives?"

An Effective Performance Management System Instead of Performance Appraisal

An effective performance management system sets new employees up to succeed, so they can help your organization succeed. An effective performance management system provides enough guidance, so people understand what is expected of them.

It provides enough flexibility and wiggle room so that individual creativity and strengths are nurtured. It provides enough control so that people understand what the organization is trying to accomplish.

Nickols summarizes, "Now, in the era of knowledge work and knowledge workers, where work is information-based, and working is a mental activity, work routines are configured by the workers in response to fluid, changing requirements."

"The task of management in this new world of work is to enable and elicit employee contributions of value to the organization. To continue with a system designed to exact and enforce compliance is folly."

Need more information about a performance management system? Find next the components of an effective performance management system.

Performance Management System Defined

Performance management begins when a job is defined. Performance management ends when an employee leaves the company. Between these points, the following must occur for a working performance management system.

Develop clear job descriptions

Job descriptions are the first step in selecting the right person for the job and setting that person up to succeed. Traditional job descriptions that ended with "and whatever else you are assigned by the manager" are not what is needed. Job descriptions provide a framework, so the applicants and new employees understand the expectations for the position. The preferred approach is to see these expressed as outcomes.

Select appropriate people with an effective selection process. 

People have different skills and interests. Jobs have different requirements. Selection is the process of matching the skills and interests of a person to the requirements of a job. Finding a good job "fit" is exceptionally important. Use a selection process that maximizes input from potential coworkers and the person to whom the position will report. See "What Great Managers Do Differently" for more discussion about the selection of an employee.

Negotiate requirements and accomplishment-based performance standards, outcomes, and measures. 

Ferdinand F. Fournies, in his long-lasting book, "Why Employees Don’t Do What They’re Supposed to Do and What to Do About It," clearly states the first reason why people sometimes fail to meet your expectations. He says employees don’t know what they’re supposed to do.

Provide effective orientation, education, and training.

Before a person can do the best job, he or she must have the information necessary to perform. It includes job-related, position-related, and company-related information; an excellent understanding of product and process use and requirements; and complete knowledge about customer needs and requirements.

Provide on-going coaching and feedback. 

People need ongoing, consistent feedback that addresses both their strengths and the weaker areas of their performance. Effective feedback focuses more intensely on helping people build on their strengths. Feedback is a two-way process that encourages the employee to seek help. Feedback is usually more effective when requested. Create a work environment in which people feel comfortable asking, "How do you think I’m doing?"

Conduct quarterly performance development discussions.

 If supervisors are giving employees frequent feedback and coaching, performance reviews can change from negative, evaluative, one-sided presentations to positive, planning meetings. Held quarterly, employees always know how they are performing and their next goals and challenges.

Design effective compensation and recognition systems that reward people for their contributions. 

The power of an effective compensation system is frequently overlooked and downplayed in some employee motivation-related literature. This is a mistake. It is often not so much about the money as it is about the message any reward or recognition sends to an individual about their value. Money has become a metaphor for value.

Provide promotional/career development opportunities for staff. 

The supervisor plays a key role in helping staff develop their potential. Growth goals, changing and challenging job assignments and responsibilities, and cross-training contribute to the development of a more effective staff member. Help to create an environment in which people feel comfortable to experiment and make mistakes.

Assist with exit interviews to understand WHY valued employees leave the organization. 

When a valued person leaves the company, it is necessary to understand why the person is leaving. This feedback will help the company improve its work environment for people. An improved work environment for people results in the retention of valued staff. If your environment truly encourages discussion and feedback, you will learn nothing new in an exit interview.

The Impact of the HR Professional on Performance Management

The impact of the Human Resources professional on this performance management system is powerful.

  • You can encourage managers and supervisors to take responsibility for managing performance in their work area and cooperating for performance improvement across the organization.
  • You can promote the understanding that even if one individual’s work area, shift, or department is successful, this will not result in a well-served customer. Because all components of your organization are part of a system that creates value for your customers, all components must be successful.

So, too, in your performance management system, all components must be present and working to create value for each employee and the organization.