Performance reviews have a logical appeal. And isn’t grinding an employee's yearlong efforts into ratings a necessary "objective" basis for raises? To the contrary, this staple of company life may be hopelessly flawed.
The problem is insidiously simple. Four stars and a narrative is a great way to compare and evaluate the latest book or technological gizmo, but it's an awful way to treat people. Proponents of performance reviews fail to account for the inevitable and very human reactions that negatively impact performance.
For a way forward, consider ideas from these three blog posts:
1) Transform Your Employees into Passionate Advocates by Rob Markey "We have been studying the links between employee engagement and customer loyalty for a few years now, and we've found that the only route to employee happiness that also benefits shareholders is through a sense of fulfillment resulting from an important job done well."
2) When You Criticize Someone, You Make It Harder for that Person to Change by Daniel Goleman. Referring to research by Richard Boyatzis, a professor at the Weatherhead School of Management at Case Western: "Boyatzis put people through a positive, dreams-first interview or a negative, problems-focused one while their brains were scanned. ... the negative interview activated brain circuitry for anxiety ... the anxiety and defensiveness elicited make it more difficult to focus on the possibilities for improvement." It follows that if the purpose of dissecting and highlighting an employee's faults is to foster improvement, the strategy is misguided.
3) "In 100 Words: Where Do You Start When Your Employee Fails? by Robert Tanner "If you treat people the way they are, they get worse. Treat people the way they might be and they get better."
How can these ideas be sewn together?
Replace the annual performance review with a Contribution Statement. This statement is solely focused on how an employee contributed value to those that the company serves. It's a well-deserved written acknowledgement of how the employee impacted those upon whom your organization depends. It's a chance to reinforce the company's mission. It's a chance to say "thank you".
The Contribution Statement also provides the perfect forum for the employee to formulate goals for the year ahead.
Properly executed, your employee walks away from a Contribution Statement meeting feeling enthusiastic and emboldened. Contrast that with the standard performance review from which it may take an employee’s morale months to recover.
Concerns about serious on-going issues or suggestions about how an employee might improve should be communicated promptly, not as part of any review process. When a discussion about improvement Is necessary, the concept of a Contribution Statement paves the way. It makes framing the discussion in a positive manner natural and easy, e.g. "Here's how you can be even more of a contribution."
At a time when leaders and HR managers are befuddled by the lack of employee engagement, might the replacement of formal reviews with Contribution Statements make a difference? How would this change impact morale? In the evolving world of work, does a Contribution Statement make more sense than a standard annual review?
Creating a Culture of Unconditional Love (Relevant text begins with "Fascinating recent studies using fMRI ...")