No process in the HR toolbox is more loved and loathed than the performance review, but it’s time to put performance reviews back on the map as an HR program with real return on investment for employees.
No process in the HR toolbox is more loved and loathed than the performance review. As a profession, we have revamped, reimagined, tweaked and even thrown away this foundational process, always to land back where we started: With a process where investment in time and mindshare is not returned in business impact.
And yet, we can’t - and I would argue shouldn’t - live without it. Effectively measuring and motivating performance is likely the most important thing the people function can do to impact the business. So why has the performance review process become such a challenge to get right?
As a result of these trends, performance reviews have shifted significantly from being focused primarily on performance toward formats that focus on conversations about growth and development. While this can “feel good”, the result is a performance review system that does not clearly answer the question, “Did I perform my role as expected?” To be successful, performance reviews should not only answer this question, but shed light on why or why not.
Perhaps it’s time for the concept of performance to get a rebrand. And by this, I do not mean renaming performance reviews (we’ve all tried that!), but rather refocusing on setting clear expectations and giving direct and objective feedback on how employees are doing against those expectations.
Ultimately, measuring performance is as simple as an assessment of expectations vs. reality.
In startup culture in particular, there has been a tendency to shy away from defining roles and expectations. It can feel counter to an entrepreneurial culture to put any kind of bureaucracy in place that may inhibit an “all hands on deck” spirit. There is often a sense from founders of early stage companies that employees do not want this structure or will be turned off by being labeled and leveled.
I have found that quite the opposite is true. In times of rapid scaling, this lack of structure can lead to chaotic growth and frustrated teams, leaving employees craving clarity. The right amount of structure eliminates noise and confusion, provides a welcome sense of focus, and sets employees up to deliver even greater impact through periods of change.
Getting clear on expectations is often the hardest and most overlooked part of the performance review equation, especially in fast growing, fast changing companies. There are several ways to approach expectation setting, a few of which are suggested below. The key to each is keeping it as simple as possible, while providing as much clarity as is practical. These expectations are not necessarily detailed descriptions of workload (i.e. not job descriptions), and do not need to be function-specific. Rather they are an objective starting point for ongoing discussion.
However you approach expectation setting, the result should be shared, revisited and reviewed regularly with employees. The truth is, what you define may be less important than how and how often you discuss them. Employees should know, understand and remember these expectations (or at least where to find them) easily. Once engrained, they become the foundation of your performance review.
With a clear set of expectations in hand, you can build a performance review that assesses those expectations as performance standards. The simplest approach is to assess the employee against each expectation using a rating system, with limited opportunity to comment. Here are some examples, using the expectation options listed above
While ratings have come in and out of favor in past 20 years, when well calibrated, they are a clear and objective indicator of achievement, and have some real benefits for the quality of the performance review systems:
I recommend a three-point scale for simplicity and because it most concretely answers the question, “did I meet the expectation?” The answer is either “Yes you did” (meets expectations), “No you did not” (needs improvement) or “Actually, you did better than expected!” (exceeds expectations).
The first time I implemented a system like this, I was concerned that employees might feel overwhelmed by getting so many ratings - we had 7 expectations we assessed. However, through conversations with employees I learned that, in fact, the clarity and simplicity was welcome. One employee told me that they, “knew exactly what they needed to do to perform their job and exactly what they needed to do to get promoted.” If this isn’t the purpose of performance reviews, I don’t know what is.
While I don’t believe a performance review should be overly focused on development, an expectations-based performance review is certainly not void of it. Too often, development conversations lack a grounding in a clear understanding of performance in the role today. How can one grow into the next role if they are not performing their current job effectively? If development areas are selected without knowing the expectations for the current or future job, how will they become ready for the next step? Often, growth starts with learning within the role, before it can lead to promotion or new responsibilities.
With a clear assessment of each expectation, development conversations will come naturally within the areas that are not yet being met, or if all expectations are being met, the expectation of the next level or role. With a clear understanding of performance as a starting point, development plans and conversations are a natural and easy next step of the performance review and should be revisited throughout the year. Even the most eager performers will feel grounded and clear on what they need to do to continue to succeed and thrive.
A performance culture does not need to be harsh, unsafe or adversarial. Rather, it can be an unbelievably clear and transparent foundation from which to motivate, develop and reward employees fairly and accurately. Taking the time to align on expectations and simply and effectively communicating performance against those expectations will put performance reviews back on the map as an HR program with real return on investment for employees, leaders and the business.