How should brands approach a performance review?

Charting the process of an effective performance review is a delicate and complex balancing act. Executing and delivering performance reviews may be one of the most challenging tasks for a company and the manager, but there are some actionable steps and great models to glean helpful tips from.

In her commencement speech at Harvard in 2013, Oprah Winfrey said:

“I have to say that the single most important lesson I learned in 25 years talking every single day to people was that there is a common denominator in our human experience. The common denominator… is we want to be validated. We want to be understood. I have done over 35,000 interviews in my career, and as soon as that camera shuts off, everyone always turns to me and inevitably, in their own way, asks this question: “Was that OK?” I heard it from President Bush. I heard it from President Obama. I have heard it from heroes and from housewives. I have heard it from victims and perpetrators of crimes. Friends and family, strangers and enemies. In every argument, in every encounter, every exchange, we all want to know one thing: “Was that OK?” “Did you hear me?” “Do you see me?” “Did what I say mean anything to you?”

Humans like knowing how they are doing. It gives them something to celebrate, focus on and improve. Organisations today have a standard setup to evaluate, review and offer feedback. 

The inception of performance reviews can be traced back to the U.S. military’s merit rating system, created to identify and dismiss poor performers during World War I. This system eventually helped identify enlisted soldiers with the potential to become officers. Over the years, the process evolved and was adopted by others. 

A performance review is ideally not meant as a comparison between team members. It is a valuable tool to uncover an individual’s unique strengths and empower him or her to align with the company's mission and for his or her personal growth.

Since executing and delivering performance reviews is challenging indeed, here are some actionable steps and models to glean helpful tips from:

1. Identifying the objective of a performance review

Thoughtfully created and clearly defined criteria can contribute directly to a team member’s performance and a company’s growth. Before conducting a performance review, the company must clearly define the goals and objectives for the discussion. One crucial goal must be to spell out skill development methods for the individual to enhance their current skill set and acquire new ones. This is the perfect occasion to appreciate team members and motivate them to grow and do better. This increases employee retention and strengthens the company. The performance review may also be instrumental in enforcing a reward system for the most deserving candidates.

Deloitte spends close to 2 million hours per year creating ratings for its 65,000+ employees. In 2015, they realised that their current evaluation process was increasingly out of step with their objectives. After much research, they articulated three objectives for their new system: to recognise performance, clearly see it and fuel performance. They also set their process in three stages - the annual compensation decision, the quarterly or per-project performance snapshot and the weekly check-in. The new approach turned Deloitte’s focus from assessing past performances to fueling performance in the future.   

2. Developing a robust evaluation process

Often, managers and team members consider performance management as time-consuming, biased and demotivating. As a result, reviews rarely yield productivity. With the evolving scope of work, companies must adopt a performance management model which is more output-driven than process-driven, encourages critical thinking and innovation, and optimises overall organisational maturity.  

Companies like Microsoft that followed the stack and rank approach have replaced their annual system for rating and evaluation and introduced a new method of continual feedback. Similarly, Netflix scrapped its performance measurement based on yearly objectives since their objectives have become more fluid and evolve rapidly. 

Some companies might do just fine with the traditional methods, while others may need to rethink what constitutes individual performance, collecting more data for analysis. Such a fruitful process requires that the leaders must focus more on what they will “do” with their team members than what they “think” of them.

3. Balancing the positive and negative feedback

The performance review must balance the individual's strengths and weaknesses. One of the most significant assets a company has is its talent, but unfortunately, only a third of members can name their strengths. Therefore, helping individuals recognise their areas of strong performance might improve their ability to experience positive emotions, help them set higher goals and achieve near-perfect performance. However, focusing only on strengths can lull people into believing they have no areas of improvement. Instead of avoiding negative feedback, companies should focus on sharing action points for correction in the future. 

General Electric currently employs more than 330,000 people in over 170 countries. Despite such a diverse and extensive workforce, they introduced a unique  "insights-based" performance review system. There are two types of insights: “Consider Insights” and “Continue Insights”, offered by managers or fellow members. Continue insights encourage the individuals to perform well, while consider insights provide constructive criticism for mistakes. At the end of the year, the managers go over these insights and set future goals. 

4. Letting go of personal bias

It is impossible for managers not to have preconceptions about subordinates and their performances. As humans, it is easier to look for information that supports our existing beliefs and ignore any data that goes against personal opinion. While first impressions do have an impact, they should not be the sole criterion for judging individual performances. At times team members unconsciously start on the wrong foot, but they may hold good potential. While reviewing, it is good to remember that everyone is markedly different from others. Empathy is better than judgement. 

At the Stanford VMware Women’s Leadership Lab, a research team conducted a study on performance evaluation processes at three U.S.-based companies. They discovered that men received longer reviews focused on their technical skills and area of work. On the other hand, women received short and vague feedback with no explanation about the issue. Such evaluation is implicit bias in action.

Ambiguity in assessments can lead to bias. Having a set criterion to assess the performance helps to bypass the imperfect and compromised impressions and be fair to everyone.

5. Two-way communication feedback

Performance reviews should never be one-sided. Instead, managers and team members must work as a team to achieve common goals. A feedback culture is built on evasion and confusion because the managers don’t have a conversation with the individuals about their feedback. They resort to either focusing on the person’s strengths to evade hurting the person or overemphasise their weakness to ensure performance. When two-way communication powers performance conversations, the managers enjoy better relationships with their teams, and their feedback is understood, implemented, and brings joy instead of fear.

Sunita Malhotra is the managing director of People Insights and is referred to as a “feedback monster” at the Belgium-based coaching and consulting firm. As head of human resources for the European division overseeing 7,500 people, Malhotra solicited opinions from colleagues and subordinates by making three promises to people on her team. First, she would always give positive and constructive feedback; second, she would always ask for feedback in return; and third, they would all try to have fun. To create a two-way review culture, she still solicits feedback in all her meetings. 

Having a two-way partnership is a humbler approach to managing people where managers ask questions instead of giving orders. Managers telling their subordinates about what they (managers) are seeing is like “window gazing” - both have a different perspective. However, with a common view, the subordinates fail to share their actual perspective. This is different from “mirror holding” when managers guide employees where to look and engage them in thoughtful conversation about their current strengths, future goals, and how to bring those elements closer in line. 

6. Documenting the review process

Documenting the team members’ performance reviews has a multifold purpose. The documentation serves as a legitimate channel to make promotion or termination decisions. The documentation of the evaluation also pays off when there is a change in the leadership position. Records will acquaint a new authority on the team's performance history and help in implementing strategies accordingly.

IBM paved the way for a more enhanced documentation process by creating an app-based performance review programme called Checkpoint after crowdsourcing ideas from 380,000 staffers across 170 countries. On this platform, individuals are judged across five criteria: business results, impact on client success, innovation, personal responsibility to others and skills. The managers assess whether they have achieved or exceeded expectations or need improvement. 

It is essential to record the observations about a team member’s job performance as objectively as possible and tie the conclusions to hard data. Supporting the assessment with specific details will help the individuals take the feedback seriously and mitigate any possible legal ramifications in particularly egregious situations. In the event of a lawsuit or discrimination, the documented performance reports signed and acknowledged by the individual team member work as an essential defence tool for the company. 

7. Setting up an effective reward system

As Teddy Roosevelt once said, “People don’t care how much you know until they know how much you care.” Management should not expect employees to stay motivated if they are never truly appreciated or rewarded for the value they add to the company. An appraisal should ideally follow a performance review. However,  new research from the London School of Economics found that financial incentives may actually backfire as these incentives can reduce a team member’s natural inclination to complete their task without the expectation of a reward attached to it. Whereas other studies suggest that incentives such as promotions and salary hikes act as great motivators, and the employees tend to stay with the organisation for a longer period. Even when budgets are strained, genuine non-cash rewards may compensate for an appealing and effective alternative to traditional incentives. Small gestures like intently listening to people, checking on them, honouring their inputs and telling them how the company values them go a long way.

Heineken had an employee recognition programme, with only forty rewards worth about $1,400 available to a workforce of 2,400. This reached less than 2% of the entire staff every year, but clearly, everyone wanted to be valued. Realising this, Heineken decided to restructure their programme to “BREWards”, despite limited funds. 

In addition to the monetary rewards, they also rewarded the team with an extra day-off or dinner at one of Heineken’s breweries. This resulted in a 50% increase in the number of employees recognised by their peers across the business.

Ultimately, companies need to decide how they want to reward individuals, but recognition must always be due when earned and deserved. 

8. Coaching along with feedback

An outstanding review system does not end at providing feedback but continues with using that feedback to coach the team further, to direct and redirect work efforts and behaviours, and help them reach their full potential. Every business provides some training when they hire people, but workplace learning does not stop there. Whenever the company implements a new system or adopts a different strategy, the team will likely need additional instruction. When several team members struggle in the same area, they are underperforming due to an external factor and need a system to tackle the challenges. 

Ongoing coaching based on evaluation reinforces appropriate behaviour, facilitates the learning of new skills among individuals for different projects and nurtures their growth alongside company goals. The whole point of coaching is to help identify and solve problems before they get too big.

Sinclair Broadcasting Group is a diversified media and television broadcasting company that is deeply invested in its team members' professional advancement and well-being.  As part of the performance management programme, the company invests in talent coaches and development courses for their already skilled team. Little wonder then that the company has a proven track record of internal promotion and high member retention.

Final thoughts

Charting the process of an effective performance review is a delicate and complex balancing act. No company gets it right from the start. Like any other agile business process, it keeps evolving as per the nature and demands of the business. The best managers must strive to hold performance reviews and give better feedback, and the workforce should be open to receive and implement the feedback. By approaching this exercise in an open, mindful and systematic manner, the performance reviews will improve individual, team and organisational performance. 

About the Author
Priyanka
Priyanka began her career as a creative content writer. With over eight years of content marketing experience, she works on our content strategy.
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