All I Want for Christmas is to Ditch Performance Reviews

It's that time of year. Business owners, managers and their teams are gearing up for a familiar holiday tradition: end-of-year performance appraisals. While this is the most hated activity in companies, management still slogs through this process with little enthusiasm, accuracy or dedication. With performance appraisals being greeted with such animosity, we need to ask, "Is the performance appraisal as we know it really worth it?"

There are a few fundamental flaws with annual performance reviews. For one, no matter how good a manager is at documenting things, it's often too late to do anything about it. Having reviews just once a year hardly helps employees improve their performance.

Human Resource data shows that people change very little–if at all. The same issues appear in their performance reviews every year. This may indicate that either people are not taking the appraisals seriously, or they're not making the improvements required by management. We have to ask, "Is the system broken?"

The trend today, encouraged by the Generation X and Y workers, proposes organizations ditch the annual reviews and replace them with a different kind of system in which employees are more likely to be productive.

For example, meetings could occur on a monthly basis, giving a manager and an employee the opportunity to sit down and talk about the employee's performance the previous month. In terms of content, the meeting should generally focus on their accomplishments — what they've done, what they've done well, what improvements they've made. It also should focus on what they might be able to do better. The manager's job is to come up with a couple of things that would help the employee perform better. Managers will need to get away from the judgment aspect of performance appraisals and move more toward the coaching aspect. We have a client whose manager has a monthly "one-on-one" session with her team members to discuss issues important to their job.

Similarly, a key outcome of the meeting should be that the employee knows exactly what he or she needs to do to improve performance.

In any session with a manager and an employee, the latter should always come out of the meeting feeling energized and have tangible information that can help enhance his or her job performance. A manager might meet with a salesperson and say, "You need to be more aggressive." Well, what does that mean?. Managers will need to spell it out in terms of precisely what they want an employee to do. For example, they may need to say, "Make more calls every day." That might not be the critical behavior in terms of sales, but assuming it was, that is much more helpful than saying "be more aggressive."

This type of feedback can lead to improved on-the-job performance, which in turn yields bottom-line impact. The most rewarding job an employee can have is where they know at the end of every day how well they've done. Behavior change without feedback is almost impossible, so the more formal and the more frequent the feedback, the more improvement will be realized.