Dump Your Annual Performance Review and Try This Approach Instead


I have often wondered why some of my clients would wince when I asked if they conducted regular performance reviews. I have learned over the years that the reason most do not consistently conduct them is because they are awkward, time consuming and stressful.

The employee looks at them as a way to justify a well deserved raise and the employer looks at them as a way to debate a raise. Put another way, it is often a lose-lose-lose situation. That is where the employee the company and the customer all lose out.

Yet, it never ceases to amaze me how most companies, if they do use them, continue to use outdated performance appraisals with their employees. Let’s take a look at why this approach may not be the best way to grow and develop your team.

As Bob Kelleher, employee engagement expert says, “Performance appraisals represent a significant opportunity for supervisors to build a mutual commitment with employees—which is a key engagement driver—but more often than not, this opportunity is wasted. That’s because performance appraisals focus on trailing feedback, rather than leading feedback. In other words, managers don’t spend nearly enough time on the developmental side of the meeting.”

Kelleher goes on to suggest that we need to shift our thinking about how we think about how we motivate and guide our team members. In essence, that is the purpose of any appraisal, that is, to help our employees tap their potential, develop their skills, and help them develop their performance potential.

Kelleher recommends that we stop calling them, “performance appraisals”, or “performance reviews”, and start calling them “employee development plans”.

That is a powerful way to look at the opportunity you have to build your team members by building their “development plans”.

In other words, we need to think about the results we want our employees to achieve, and put them into the form of incremental goals they can reach.

Think about the last time you felt stagnant in your company, position or career. Did you start to consider greener pastures and begin to look into working for some other company? Our employees are no different. According to research, one of the top reasons an employee will leave your organization is because they feel their professional growth is stagnant. In other words, as far as their career is concerned, they don’t feel that the bus they are riding on is headed to the right destination.

What do you think about this strategy? Instead of just having an annual performance appraisal, why not consider replacing it with quarterly meetings to discuss the progress your employee is making towards the four to six major goals you mutually agree upon for the next 12 months.

These goals should be based on what needs to happen for this person to fulfill their job responsibilities for the present and the future. It should take into consideration the career ladder or path they need to take to move up within your organization.

What kind of training or cross-training will they need? What type of resources or equipment will they need to accomplish the goals that are being set? What type of support and encouragement will they need from you and the rest of the organization?

In addition to the four meetings, have regular, but informal discussions on how he or she is doing and what they need to succeed. It could include a quick chat in the hallway, lunch room or on the shop floor.

This may be a good time to give them “instructive feedback” on how they are doing and what they need to start doing or stop doing to stay on track and make progress toward their goals.

Remember the old but golden saying, “your employees don’t care how much you know, until they know how much you care.” That care comes from you in the form of you taking the time to talk with them, guide them, and coach them on their journey to becoming better at what they do.

One of my clients shared with me how, on one occasion, he used this approach with one of his managers. This manager is a hard working, diligent individual, but sometimes he did not think through how he managed some of his direct reports. He was leading his department meetings in a non productive manner. The meetings were dry and not inspiring. There was no time allotted for informal conversation or development of camaraderie.

With a little coaching from the owner, this manager learned how to make the meetings more meaningful and productive. His new approach had a direct impact on the effect of his relationship with his team members. As a result, they became more involved and contributed to the meetings.

They helped to identify what needed to happen to improve productivity. They took ownership of what needed to happen. This led to them being more motivated to follow through on the actions that needed to be implemented to get the results the company wanted.

When the goals that you help your team members to identify are in alignment with your company’s overall mission statement, they become even more powerful. This is why I am constantly encouraging my clients to make sure their mission statement is current and up to date.

So, let’s talk about your company’s mission statement in your company. As a leader in your organization, it is mandatory that you make sure your mission statement is current, relevant and up to date. There is no better way to update your company mission statement than by revisiting it on an annual basis.

This is the perfect time to get your leadership team involved. Remember, “People don’t argue with their own data”. As the supervisor I used as an example above proved to us, when team members have a chance to be part of the process that creates solutions, they are more apt to take actions to ensure they become a reality.

A good time to tackle the revising of your mission statement is at an annual retreat held off site. Holding it off site helps to minimize interruptions and build camaraderie. I recommend you bring in an outside consultant to facilitate this activity. It allows you to be a participant and not have to worry about conducting the event.

By getting your team to clearly focus on this opportunity to shape the future of your business or organization, you are tapping into their creative talents. As it has been said, “No one is as smart as all of us”. Everyone’s IQ goes up when they are able to tap into each others’ intelligence.

So, to summarize: stop doing performance appraisals. Start doing employee development plans. Tie them into your revised mission statement and watch your company soar!

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For more information on how he can help you and your company call   (734) 404-5909 or email him at: tom@tomborg.com or visit his website at: www.@tomborgconsulting.com  

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Tom Borg

My name is Tom Borg. I am a business expert who works with small and mid-size companies to effectively and profitably improve customer acquisition and retention. I help these businesses through his use of my consulting, speaking, training and coaching. To ask me a question or to hire me, please contact me at: (734) 404-5909 or email me at: tom@tomborg.com or visit my website at: www.tomborgconsulting.com

Tom Borg