For many organizations, end-of-year performance reviews are a chance for leaders to provide their direct reports with honest feedback. However, in recent years, performance reviews in many organizations have become an outdated practice, ineffective at producing meaningful change.
Employees often dread reviews, while leaders at varying levels of management approach the review process with differing expectations. As a result of this lack of alignment, some employees may commit to improving their performance post-review while others stagnate. In light of these inconsistencies, a number of major corporations — including Netflix, Adobe, GE, and Accenture — have done away with end-of-year reviews entirely.
Every company can reimagine its standard end-of-year reviews to create meaningful change, cultivate higher levels of accountability, and propel the entire organization toward its topline objectives. Read on to find out how.
Define Key Results
For many organizations, end-of-year reviews are ineffective simply because they do not link the measurement of an employee’s performance to a specific set of criteria that drives overall company performance. Nine out of ten corporate leadership teams fail to define their Key Results — the three to five meaningful, measurable, and memorable top priorities. If leaders do not know what they are measuring, the outcomes of these reviews are bound to be inconsistent, failing to provide a comprehensive picture of the organization’s successes and employee performance gaps.
The first step toward a more effective performance review structure is to identify Key Results and communicate them to every employee, giving them a target around which all of their daily work should be aligned. Further, Key Results provide a crucial gauge by which to measure each employee’s performance at any point during the year.
Establish Key Expectations
According to Gallup’s State of the American Workplace survey, some 70% of the U.S. workforce is not actively engaged at work. Employees disengage from work because they feel they have no personal stake in the success of the organization. As such, it’s critical that leaders meet with each of their direct reports one-on-one to jointly establish Key Expectations — “no excuse” professional growth objectives that serve as a roadmap to propel employees toward their desired goals. These expectations can relate to each employee’s personal aspirations but must be objectives that support the achievement of Key Results.
When employees have specific goals around which to center their daily work, they feel connected to the performance of the organization and motivated to achieve Key Results. This sense of purpose deepens employee engagement and provides a clearly defined framework for exchanging feedback throughout the year. Ultimately, Key Expectations promote professional growth for the individual employee while elevating organizational performance as a whole.
Promote the Exchange of Open Feedback
Perhaps the most important step in reframing performance reviews is to establish a regular exchange of feedback in the workplace. Too often, feedback is viewed as a punitive, top-down exercise, creating a sense of anxiety for many employees. When employees are fearful of being punished or criticized, they do not actively seek out feedback. This avoidance creates a lack of growth that ultimately hampers the achievement of both Key Expectations and Key Results.
On the other hand, in a thriving company culture, feedback is practiced as an honest, egalitarian, two-way conversation between leaders and their direct reports and cross-functionally as well. Parties regularly solicit and offer appreciative as well as constructive feedback, real-time, to immediately reinforce desired behaviors and performance and correct undesired behaviors or performance. Frequent, formalized opportunities for feedback exchange should be established, centered around employees’ Key Expectations and, most critically, the achievement of Key Results. When organizations establish a pattern of open feedback among leaders and direct reports as well as cross-functionally, peer-to-peer throughout the year, the need for end-of-year reviews diminishes, as employees are always aware of where they stand and how they can improve their performance to achieve desired results.
Foster an Accountable Culture
Even if leaders clearly define Key Results and all employees practice regular, open feedback, topline performance can fall flat if a lack of accountability pervades the organization. When a project does not go according to plan or a benchmark target is missed, do your employees actively take ownership for correcting course or do they point fingers at one another and offer excuses? In many organizations, the latter is more common.
To prevent employees from falling into a pattern of blame and apathy, corporate leaders must help to shift employees’ mindsets toward higher personal accountability for overcoming obstacles and achieving results. By effectively demonstrating the steps to accountability — seeing the problem, taking psychological ownership of the problem, creatively solving the problem, and fulfilling the promise to complete the task — leaders can inspire their teams to take higher accountability for achieving Key Results.
Leaders who demonstrate and foster accountability in the workforce create a culture in which every employee takes personal ownership to deliver on results, see a reduced need for performance improvement plans (PIP) because every team member enthusiastically fulfills their role in driving organizational success.
Performance Reviews in Real Time
Many flourishing workplaces have begun to depart from the traditional model of centralized end-of-year meetings in favor of a more dynamic, proactive approach to reviews through real-time coaching and feedback.
By clearly articulating Key Results for the entire organization, defining personal Key Expectations for each employee, implementing open feedback loops, and collaborating to create a more accountable culture, employees are always aware of where they are excelling and how they can improve performance to reach their personal goals and move the needle on topline priorities. This comprehensive alignment positions the whole organization for high performance and continual growth.
