It seems every week another company makes news by announcing it is abandoning the traditional annual performance review. The trend has become so popular that numerous consulting firms have started offering their services to help organizations with the transition. At Performex®, we believe each case should be considered carefully - some organizations may have an effective process that includes (but is not limited to) an annual review and others may need a change to spark change or engagement. Everyone at Performex® has experience working in Corporate America so we know the issues that can exist with annual performance reviews. However some of the fundamental issues may occur with every type of system if not executed properly. So the question that must be asked is, “what is the real problem to be solved?” Is it the performance management system itself or the execution of the system?
Some of the key objectives of a performance management systems are:
- Linking individual goals to the overall business objectives so everyone knows her / his part in attaining the overall goal.
- Creating accountability for results - reward excellent business results, fix poor results
- Creating engagement – maximum discretionary effort
- Building talent for the future.
We call #3 & #4 “moving the middle.” In the short term it is actively engaging the majority of the team to achieve or exceed the business goals. Long term, it is developing the talent needed to make both the individual and company successful in the future.
What is more critical to “moving the middle?”
- Leaders who are great coaches
- The performance management system
My personal experience is the former. During my corporate career I worked as an individual contributor and a leader with several performance management systems. Some of the early systems were merely standard annual performance review templates with a high level of discretion given to the manager as to how to set objectives and review progress throughout the year. I also worked with sophisticated systems that carefully cascaded objectives down from the overall business goals and forced quarterly progress reviews on both the goals and leadership capabilities. Throughout this time I had times when I grew tremendously as an engineer or a leader and other times I felt stagnant and disconnected to the business – regardless of the performance review process. The clear difference was not the performance management system being used but the leaders I had coaching me. The best coaches had the following capabilities:
- They challenged me to stretch my capabilities.
- They helped provide perspective I didn’t have.
- They made me re-think my assumptions.
- They asked me questions instead of telling me the solutions.
- They kept the dialogue going through regular monthly meetings.
- They shared “on the spot” feedback when appropriate.
At Performex® we successfully create effective coaches in our Summit™ and custom in-house workshops using a simple four step process and sound fundamentals that incorporate all of the capabilities described above and more. If you are looking to change your performance management system to “move the middle” – we encourage you take a closer look at your leaders too.
Performex® President & COO