Out with performance reviews, in with leadership conversations

“It’s time we seriously think about eradicating the outdated annual performance review,” says Helene Vermaak, business director at The Human Edge.

In fact, millennials [who according to Gallup. Inc will by the year 2020 make up 50% of the global work force] don’t understand why they must wait an entire year to learn how they’re performing on the job – they’re accustomed to instant gratification. They want and need daily feedback in real time and thus we need to be conducting leadership conversations.

When it comes to annual performance reviews, there are five psychological obstacles that come into play, explains Vermaak:

1. Infrequent feedback - Timely feedback is more likely to be helpful and feel constructive, while delayed feedback seems more like an evaluation and criticism of past mistakes.
   
2. Lack of clarity - Traditional annual reviews not only provide feedback too infrequently for it to be actionable, but their ratings and rankings are often too vague to help employees know how to improve their performance. A fundamental flaw in most annual performance reviews is that managers do not tailor them to reflect what they expect of each employee, and they do not help employees prioritise how to move forward.
   
3. Manager bias - Ratings often reflect the manager’s often-unstated expectations and implicit bias.
   
4. Adverse reactions to evaluation and feedback - When employees have a negative reaction to evaluation and feedback, they are unlikely to be motivated to perform better following their performance review. If this only occurs annually, it is a long wait before managers can counteract those negative feelings.
   
5. Too much focus on pay and incentives - If workers feel that the evaluation system is inaccurate and unfair, they assume they will be paid and promoted unfairly as well.
   

Vermaak adds that the performance review approach does not result in better employee retention, or improved employee satisfaction and there is not a better link between performance and pay. So, we know that everyone comes to work wanting to do a good job, and you can help people do this, says Vermaak, by:

• Giving clear direction and priorities
  
• Agreeing on the performance standard expected
  
• Identifying support and development to help
  
• Keeping in touch and providing feedback on progress regularly

Managing is done minute-to-minute in a series of conversations. More specifically, Vermaak describes five Leadership Conversations that drive performance and strengthen employee relationships:

1. Goal setting and expectation clarification – The purpose of this conversation is to have a dialogue that focuses the person on exactly what needs to be done, by when, how the manager will measure success, and when and how regularly the manager should follow up and provide feedback. All good performance begins with mutually created, clear and compelling goals.

2. Progress review, re-directing and feedback – This conversation should ensure that employees are clear about the work they need to do and what qualifies as successful. It should create a shared understanding of what needs to be done today, tomorrow, next week and into the future. Managers and employees should collaborate to determine performance expectations based on the employee’s abilities, aspirations and developmental needs. Together, they should clearly identify performance targets and determine the most important objectives to prioritise. Managers should help employees understand why their role exists and how their role expectations align with team and organisational objectives.

3. Quick connects – Managers should assess quickly how an employee is doing and identify successes and barriers.

4. Formal review (wrapping-up conversations) - Formal reviews of progress on goals, expectations and planning for future opportunities. This conversation should focus on celebrating accomplishments and discussing any new knowledge or skills gained during the process.

5. Developmental and career aspirations – This conversation should focus on strengths and talents, opportunities for growth, learning and development and innovation and continuous improvement.
   

Vermaak offers five tips for positive leadership conversations:

1. Operate from a facts base
   
2. Ensure psychological safety
   
3. Emphasise mutual purpose
   
4. Works towards joint solutions
   
5. Document who will do what, by when, how will we measure, follow up and give feedback