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Performance Utopia

By, Randy Rothschiller; January 2016

Purpose of the performance review: to improve employee performance.

In recent years, theres been a continual and growing number of executives calling
for death to the performance review. In January the Human Resources Executive
Form (HREF), a peer learning group facilitated by Suzanne Elshult, owner of HRNow,
met to share experiences with transforming the performance review process.
Interested to pick up a practice here or there, I always look forward to hearing from
other HR professionals. Three of our members agreed to spotlight their process.
One company recently streamlined the process, another has been evolving towards
elimination of the review form, and the culture of the third company drives an
approach that is nearly invisible to its employees.
In a quick survey of the room many expressed their interest in some form of
transformation. Many of us are looking for performance utopia; a state of existence
where managers deliver results by coaching performance through their savvy
leadership. For some, a performance review revolution entails elimination of the
form. Others seek it through a transformation of certain other elements. And the
most bold of us seek utopia by shaking up their performance culture and eliminating
the entire process, form and all.
Isnt it curious? It seems for many, eliminating the review form is synonymous with
eliminating the review process. The form is a component of the process, but does
not define it. This curiosity is common. Just this month the HREF experienced it.
News reports, consulting firms, blogs and other articles; they all have expressed the
confusion. As an example, it was reported last year that Accenture would do away
with the performance reviews for its 330,000 employees. And Microsoft did it in
2013. The reality, however, is that neither of these organizations has abandoned
performance reviews; their processes have simplified and the form is absent. These
giants are joining a small but prominent list of major corporations seeking
performance utopia. They have had enough with the forced rankings, the timeconsuming paperwork and the frustration engendered among managers and
employees alike. Their course has been modernization where the best is kept, and
worst is thrown out. And youll see a range of this in the processed spotlighted in
our January HREF meeting.
To Change or Not To Change
Within the January HREF, an interesting question provoked the group. It pursued
adopting a new process based on not using a review form and instead providing
good leadership. How many of you, if starting from scratch, would adopt a process
based on leadership, without a review form? Awkwardly, the question was
returned by few hands and many blank stares uncertain as to how to answer it. Are
we just too close to the problems in front of us? No, while the problems are obvious,

the solution(s) depend upon the companys specific objectives for performance
review, and its culture. Socializing a formal position statement about performance
review changes is a great first step in order to answer questions about change.
Objectives can be surfaced, clarified and even redefined. With that in hand youll be
able to rip right through questions like that one.
Regardless of the specific change, amongst executive chambers questioning a
familiar, yet frustrating, performance driving program causes hesitation, and fear.
There are those who cling to the known, and those who question it, in search for
something better. Many executives continue their defense of the old system
believing reviews, ratings, and rankings bring a sort of disciplined rigor to the
overall management process. It's no wonder the annual performance review has
persisted for so long. They've proved useful to employers for keeping employees
accountable, rewarding those that excel, and tracking performance over time. As
Im sure youve experienced, I have exchanged more than a thought or two with
executive power players and board members who continued to carry a torch for
yesterday, even in the face of so much strife. Quite frankly, on occasion I might
have been tempted to set that system ablaze, with their own torch.
And then we have a camp of executives who clearly see that performance reviews
now cause as many problems as they solve. They say it is true, the annual
employee evaluation that many business executives consider a pillar of best
practices may in fact be an outdated process in need of an overhaul. Instead of
guiding managers to coach employees, companies continue the old way of training
them merely to cover their bases. With so many reviews based on traits,
assessment is subjective and biased, and the conversation lacks credibility.
Burdensome and stressful, managers seek the necessary data, attempt to
remember a years worth of performance examples, and attempt to squeeze in the
time to write a properly worded review and tell the employees how their
performance has been characterized. This costly process is stressful for employees
too, and wen its over, they reject an assessment of their performance as lacking
credibility. It simply doesnt achieve the goal of driving better performance, and
may actually hurt performance. Samuel Culbert, a professor at UCLA's Anderson
School of Management, told The New Yorker he doesn't think performance reviews
work "in any form. I surmise he supports total annihilation and he too would set
torch to process paper.
The Case for Change
What a bold move that would be. 100 years in the making, performance reviews
entered our culture in the early 1900s. Let the ashes of the old give rise to the
performance utopia phoenix. Changing the performance review program is
tantamount to the French Revolution in 1789. It forced thinkers all across Europe to
reassess the ideas of human rights, political equality, and the rights of women.
Revolutionizing the concept of the performance review will change a companys
performance culture as everyone, everywhere will be required to reassess how they
lead their teams performance. This change is a loaded proposition not to be
considered lightly. Those HR executives were right to withhold their responses to
that provocative question about adopting a new approach to performance reviews.
Heres a great answer, Hold onto your horses, lets clarify our objectives. Wise

words, indeed. Isolating and discussing the problem is the first step. Thoroughly
exploring performance review objectives, vetting the problem and solutions, and the
importance of changing those specific elements over other elements. Your case for
change should include both the positive outcomes expected, along with negative
implications to the success of both people and the firm.
To address a comprehensive transformation, each element must be called out so
that it may be understood in its current state and how it drives value in the future.
Im simply suggesting that a change of this scale is served best through a position
statement that will likely stimulate a re-evaluation of what the performance review
is supposed to gain. What if these become more focused? Wouldnt the process,
via its elements, be equally focused? Hopefully the focus is high performance.
Now that would be position others would adopt. Make the case more compelling by
including testimony of credible, trusted employees at all levels and functions,
from every corner of the organization. One of our member HREF companies
referred to this as their canary group. Think about coal mines and the practice of
canaries alerting the miners to danger. They will ensure the proposition wont go
down a wrong path, and instead will be invaluable in identifying the critical issues
and addressing them with realistic solutions. Remember, youre proposing a
performance revolution, so be specific, clear, credible, thorough and compelling for
the best chance of being heard, adopted, and implemented.
Fix These Three
What do you think? Is your performance utopia built through transformation or
elimination? My advice: STOP. For many, the problem is not about having a
program. Its with the program itself. Perhaps starting your search in the three
troublesome categories surfaced by the HREF. Those three categories are listed
below with some of their common hallmarks.
Demotivating, leading to disengagement. Traditional reviews simply do not
promote good manager/employee relationships. At many companies, the
performance review process is incongruent with their values-based, vision-driven
and collaborative work environments. Traditional reviews use a biased, one-person
point of view like a film critic giving their own opinion, based on their preferences
only. Managers can remember what their employees did yesterday, let alone six
months or a year ago. That must certainly disengage employees. The one-way
delivery of assessment, including a full list of positive and negative drains the
managers energy, and with so many reviews, it becomes an exercise on the
checklist. Its just as stressful for the employee whose expectations plummet. As
barrister, jury, judge and executioner, the manager has tough role to play, and it
doesnt serve to strengthen relationships. Employees certain dont look forward to
meeting with the manager who is taught to find something to fix in everyone. Oh,
its supposed to add value with a developmental purpose. Unfortunately, managers
have much of a role model to follow. They dont receive feedback from their bosses
any better than they provide it. Todays review, in fact, further impedes personal
growth when employees, in the face of intimidating power. Their refusal to bring up
weaknesses that if were improved could help them perform better, for fear that

information will be used negatively against them. Communication preferences,

work styles and generational differences are not factored into todays performance
process, all chipping away at engagement.
Lacking relevance and usefulness. Performance reviews are actually hard work
which would be fine if they were also useful. But what usually happens is
managers spend a lot of time gathering a lot of information on employees, and that
information goes nowhere and isnt converted into action and results. Or, it only
finds its way, through an administrative process, up to the executive chambers.
Employees may know about executives having their information, but theyll never
see or hear about it again. Its summarized and reported, only. The process is
backward looking. The form collects information against goals so that employees
know how they performed against yesterdays objectives. And, anything waited
on for a year to give meaningful feedback on is already old news. Managers do not
use yesterdays performance to inform tomorrows success. Use of reviews in
that manner is equal to a boat anchor holding back progress. Forced bell curves
normalize people and performance, rather than showcase and unleash
performance. That is not relevant and useful to growing high performance
employees in charge of company success. Corporations use the form to create
documented legal trails which guards the company against fired employees
grievances. If employees, managers and HR all hate it, then it cant be relevant and
useful to guiding performance and making people better while theyre at it.
Reviews and their rankings are complex and burdensome. Todays reviews
are commonly referred to as too time-consuming, expensive and generally
ineffective. Its true that a vast number of performance review processes focus on
process over outcome. Boxes must be checked and milestones satisfied. Its a
bureaucratic process nobody likes, and everybody wants off their shoulders sooner
than as quickly as possible. These things are generally rules-based and
bureaucratic, existing as an end in itself. There is a form in every process, whether
a one pager, or 10 pager (youve seen them all) not a single manager looks forward
to gathering twelve months worth of data to properly complete the required fields.
Nor can one be certain that the review criteria definitions are clearly and
consistently understood, rating formulas applied appropriately, or that the ranking
credibility is trusted or that rankings are aligned across teams. What information
goes in what space? Is it worded properly? Depending on the review form, its
completion can be frustrating and time consuming, and the same is true for those
who must oversee the process; bosses, executives, HR, compensation, payroll, etc.
In many companies this task is a two to four months long chore. This could be
longer depending on time necessary to train the process, explain and calibrate the
vast number of ratings, and writing the form to ensure good, ironclad
documentation, rather than guiding performance. This one-time event makes its
annual approach like a dark, burdensome cloud anxious to suck time and energy
from managers, employees, and HR. HR doesnt like to force everybody to the
review, its not a good use of their time to police a process everybody hates. The
world isnt really on an annual cycle any more, for anything, and the accelerating
pace of change has caused many companies to realize that annual goals set at the

beginning of the year may be completely out of date by the end of it. Unless
managers check in with employees more often, a single conversation at the end of
the year can be pointless.
Examples of Change
Three HREF executive volunteered to share how their companies approach
performance reviews. One firm, Company A, recently completed a change in which
its executives sought to replace a complex rating and ranking process with an
objective performance and talent management process. A 41-point complex rating
system gave way to five simple buckets. Moving from quarterly to twice per year,
quarterly objectives which flow from level to the next, are evaluated. Each objective
is comprised of metrics and deliverables removing previously subjective ratings.
Where there are now objective ratings, once existed very subjectively evaluated
competencies whose definitions were often misunderstood and lacked consistency
of assessment. Now, competencies are addressed throughout the year, on the job
and outside the review process. Still requiring an understanding of the performance
across the company, Executives are provided a comprehensive, department level
bell curve, which today is not forced is in the past. Executives use of the curves is
their way of normalizing results. Comparisons between departments stimulate
discussions amongst executives making comparison between departments. A
leader by go back his/her team as they listen again to performance and ratings,
seeking calibration from the performance of one person to the next. But,
performance levels, or rankings, and associated ratings, are not reported, rolled up,
or cause an individual to be spotlighted at an organizational level. That stays at the
until level where performance is actually managed.
Company B took another approach, yet with some similar elements. Recognizing a
complex and burdensome process that needed to morph into something lighter
and easier was all these executives needed to get started. Establishing
performance objectives was inconsistent and subjective. Now, organizational
objective setting serves in the center of the performance review. Goals are truly
objective and they are checked in on at mid-year. The believe the objectivity and
ease of performance ratings enabled a more credible salary merit process, which
has been automated taking the administrative burden out of the managers
workload. They also recognized that performance was getting lost as employees
identified themselves with overall ratings, 1-2-3, etc. Such fixation distracts from
discussions about strengthening performance. In fact, it wedged strained
relationship between bosses and employees. No surprise, overall ratings were
eliminated. Individual performance objectives remained, as employees and
managers alike found them helpful. Another key to simplification, and increasing
effectiveness, is the new role played by HR. These professionals are now helping
leaders with making the performance review, especially the discussions, more
effective. Employees are provided regular and continual feedback. As the company
works toward the end of the annual performance review form, HR is helping leaders
with effectively providing daily feedback, and performance coaching, to their team
members throughout the year. Done properly, annual performance objectives will
be assessed as the year unfolds. Continual coaching ensures on-target and off-

target performance can be adjusted. By year-end, review discussions would only be

redundant. As such, managements goal to eliminate the review form will be
attained as it is replaced by everyday performance management.
The traditional performance review has never been a good match for the peopledriven culture at Company C. In fact, its culture, not performance reviews, that
bonds performance and people in a highly competitive environment. Missing
performance targets is not an option in this culture, and putting the people who
create results comes as a no brainer to managers. Ensuring employees wear the
culture means fiercely scrutinizing new hires t ensure each one is predisposed to
high performance. This is why they are people-first. This is the first element of
their performance review hiring performance driven people. Great managers, or
coaches, is the second component. Executives easily show their trust for their toptier managers who also wear the culture and show it through their actions. They
are sophisticated, high performance managers who are empowered to do their own
thing in order to achieve their results. The how is left to managers, as only they
are accountable for the performance of their unit. Its their job to ensure a high
performing team, working side by side, and giving feedback all day long, every day,
all through the year. Their feedback, natural and fluid and people-first, centers on
guiding performance. Next up is the boss-employee relationships as the third
critical element. Working side-by-side in the job forges trust build credibility. They
know one another at a personal level, treating one another as a family. Good times
and bad times are easier to handle, whether its celebrating a win, or discussing a
disappointment. Managers can leverage such relationships with their team
members, and the team member benefits. Another practice rooted in a people-first
culture which drives performance. The final ingredient in this process is
performance and people discussions. In January, managers plot annual deliverables
in great detail. At built in milestones, they report in to the boss on a bi-weekly basis
to discuss the business, and performance of his/her team members. Congruent with
a foundation of people first, these discussions are steeped with examples of
training, coaching, counseling and other performance discussions regarding every
member of the team. These collaborative, objective conversations are documented
and used at year end for no surprises compensation purposes. Because of the
empowerment and people first approach, dictated structure and formatting are
nowhere to be seen or heard. Another approach to eliminated control and
oversight, HRs role as the cop of process has given way to a consultative one.
They serve as partners building a high performance culture.

Creating Performance Utopia

Companies who overhauled their performance culture have certain common
hallmarks of success. These are non-negotiable to build the foundation on which to
change your performance culture. These companies recognize that the sole, and
most important objective for the performance review is improving employees'
performance. There exist just five hallmarks that must be built into the

organizations norm of performance management. They are EFFECTIVE FEEDBACK,

LIBERATE MANAGERS AND HR. Each is discussed here.
EFFECTIVE FEEDBACK. No matter what you call it: performance appraisal, review,
feedback, development, etc., ongoing formal and informal feedback must be a part
of your culture. Employees need instant performance feedbackthat is, ongoing
performance developmentto know when theyre moving in the right direction or
how to make a positive change. What was once done at set intervals, often only
once per year, must now be real time where open, collaborative conversations
focus more on the future, and how to improve, than dwelling on the past when
performance cannot be changed. Managers must ensure projects are summarized
at time of completion, rather than discussing their success or failure 3, 6 or 12
months later. Scrapping the old school way of doing performance reviews and
moving to a continuous feedback driven approach puts the mantra of employees
are our most valuable resource into practice.
GREAT COACHES. Managers must be great coaches. Coaches seek to understand
performance, and seamlessly provide feedback, while working in the business
alongside team members. Accurate reflection enables objective feedback, which
great coaches use effectively to guide team members performance toward success.
Converting feedback into developmental and performance progress is a skill
demonstrated by great coaches. Great coaches ask, How are employees
performing this month, this week, today, or even on this assignment? Not six
months ago, or last year. They dont wait months for the next scheduled
performance review to bring up an issue or reward for a success. Their feedback is
timely and frequent. They seize every chance to motivate and inspire employees
today, or help support their long-term goals. Performance management is not
solely about the company anymore; its time to focus on the coaches and their
employees our most valuable resource, the source of the companys success.
RATINGS AND RANKINGS. The most effective at instant, ongoing feedback will
appreciate perhaps the most controversial performance review change. Leaders of
the movement are transforming their programs by replacing the concept of
rankings and ratings with a more fluid system of timely feedback from managers
on an ongoing basis following assignments. Without a scorecard checklist, they
claim, it is much easier to have objective and honest, continual feedback sessions.
Taking place on the job, these discussions are rooted in a collaborative fashion
involving others familiar with the work, including the employee. With their
backward focus, ratings and rankings simply report performance. Eliminating them
and focusing on todays performance actually impacts tomorrows performance.
What has more value, reporting news, or creating news?
ELIMINATE THE FORM. Another potentially disruptive shift is to eject the form
from your system entirely. The firms enjoying the best results from review
transformation dont use performance scores as the centerpiece of the discussion as
noted above. Therefore, the need for a form evaporates. Further, instead of
leaning on the performance review form as a legal record of past performance, they
use conversations to improve performance, and to create strong results. And, great
coaching, which is on-the-job, in-the-work, etc., is unscripted, spontaneous, and

genuine. Which means the form has no role in effective feedback and
LIBERATE MANAGERS AND HR. Liberate the role of process cop. Separate it
from the Human Resources job description, and instead expect them to serve as
performance consultants and coaches. Have them focus attention on ways they can
help grow the high performance culture. Expect HR to help train managers to be
great coaches. They should consult with managers on the effectiveness of their
ability to coach and lead toward high performance. In liberating HR from the cop
role, managers must then be empowered. For starters, managers wont have HR
looking over their shoulders, which means that theyll need to use their own
judgment. Those who understand great coaching in a culture of high performance
will police themselves. Empower your managers by fostering open communication,
ensuring clear context, allowing safe failure, clearly defining roles, requiring
accountability, supporting their independence, and appreciating their efforts. If
they are a cultural fit, and you trust them, theyll do whats right.

News coverage will continue to shed light on this process that creates a tense
relationship between employees, managers, and the company that employs them.
Many will call out the diminishing role such an old process has today in growing
organizations. Such news will cause many HR teams to take a hard look at their
performance review processes, with 100 year old roots. These antiquated
processes are demotivating, lack relevance, and have become overly complex and
burdensome. Armed with these facts, HR directors will bring their case for change
before two camps, one clinging to the familiar, and another willing to embrace it,
yet blind to its form. What both sides may not clearly understand is that theirs, like
most firms, performance management systems don't need to be replaced; but they
are crying out for change. Nonetheless, for some, transformation of any sort may
be far into the future. Whatever is your definition of a performance utopia, and
whatever or whenever your transformation may be, ensuring your managers are
great coaches, providing ongoing, effective feedback and open communication cant
wait another day.
What will you do next?