Podcast Transcriptions

Pursue What Matters

Episode 181: If You Hate Performance Reviews, do This Instead

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Dr. Melissa Smith 0:00
It’s that dreaded season. Yep, performance reviews. If you’re like most organizations, you hate performance reviews, and you keep doing them. This is insanity. Listen up for a better alternative.

Dr. Melissa Smith 0:14
I am Dr. Melissa Smith, welcome to the Pursue What Matters podcast where we focus on what it takes to thrive in love and work. So what’s up? we all hate performance reviews. And yet, why are so many of us still doing them, you might feel like you’re stuck in a system or you have no choice. But hopefully with today’s podcast, we can help you make a better case for why you would or wouldn’t do performance reviews. So you might not have the power to decide. But you could have compelling evidence for the powers that be. So this is what we’re going to take a look at today. And like I mentioned, will provide you with hopefully a better alternative. And here’s the best part. It’s simpler. And it’s way more effective for assessing a team members progress. And it’s more efficient, way more efficient, because one of the things about performance reviews, they’re wildly inefficient, they take up so much time and money. And so of course every week with a podcast, my goal is to help you pursue what matters by strengthening your confidence to lead in one of three areas helping you to lead with clarity. Do you understand what matters? And why? Second, leading with curiosity? Do you are you self aware? Are you curious about your experience? Are you curious about the experience of others, and third, leading and building a community, you got to be able to work well with others and understand those leadership principles that make for effective communities. And so primarily Today, our focus is really on helping you lead and build a community. And performance reviews are a big part of that.

Dr. Melissa Smith 2:08
So it is important to be able to assess the progress of team members and make sure they’re on track and that they’re contributing at their highest levels. But doing performance reviews may not be the best way to assess that or even near the close the best way. So let’s first jump in with our first point, which I’ve already mentioned, we all hate performance reviews. So for millions, the annual performance review. So this comes to us from Marcus Buckingham, from the Wall Street Journal, I’ll link to this article, I absolutely love this quote. So for millions, the annual performance review is akin to going to a bad dentist. Before you go, you dread it while you’re there. It’s painful. After it’s done, nothing’s fixed. So, of course, we don’t want you to be in that situation. But I can tell you for the years when I was involved in performance route reviews, that’s how it felt. It just it felt like a waste of my time, I sure my manager felt the same way. And there was nothing useful about the performance review. So what was useful was having a conversation with my manager about my progress and my growth and opportunities. But that really wasn’t much of the focus of the performance route review.

Dr. Melissa Smith 3:29
So 81% of companies are considering redesigning performance reviews, right. So we all kind of acknowledged that we hate them. They’re not helpful. They’re clunky. But here’s the catch, right? 63 to 80% of organizations still do them. And so right that I think this is a good point around inertia, that we can recognize a process isn’t working very well. But we can feel very stuck in how to do something better, or how to develop a better process. And again, sometimes that’s because we we might not we don’t have the power to make that change. A lot of times, it’s because we are so busy in the daily work, that we don’t actually take the time to step back and be intentional and improve our processes. But right the the fact remains based on some of this research is that we’re doing them but we we really don’t find them helpful. So you know, what’s true with performance reviews is that most companies both large and small, determine bonuses and variable compensation annually, right, and the performance review is serves an important function in this. And so for them having a once a year discussion about performance might make sense. But it usually never make sense for team members. And it often doesn’t really even make sense for leaders. So it’s kind of that number crunching game. And so from the Wall Street Journal right, they just document that the annual performance review is expensive and time consuming. So in a case study for Harvard Business Review, Marcus Buckingham, indicated that Deloitte calculated that the process of the performance review took the firm’s managers up to 2 million hours a year. So this is at Deloitte, where they did a case study to really look at this 2 million hours a year. That is, I mean, if you just think about how can we improve productivity, and even profitability, get rid of the performance reviews, like you’re gonna clear up a lot of hours. If you’re like Deloitte, of course, we know delights quite big. But think about that on your scale. It’s not a small number. And so, again, from the Wall Street Journal, the annual performance review, pays no attention whatsoever to the unique loves loadings, passions and strengths of each team member. And that’s the real failing, right, have the performance review. And it’s what team members really need in order to stay engaged, to keep growing and to be productive. And so instead, it’s just vague feedback about whether they’ve hit their goals this year. And what rating number this Warren switch? Hat makes me crazy. So let’s head to our second point, which is, what is the performance review anyway? Right. So I’ve kind of mentioned it a little bit. But a performance review is a formal regulated assessment mechanism in which managers and other key stakeholders evaluate an employee’s work performance, did a little bit of your soul die right there when you heard that definition? So includes here that the purpose is to learn more about team members strengths and weaknesses, offer constructive feedback for skill development in the future, and assist with goal setting. But I would say practically speaking, I just don’t think that that happens very often, to look at strengths and weaknesses, they might do some goal setting goal setting. But I would be very curious to see how many people actually go back and look at those goals. And I have, I have a little bit of data on that in a minute. So with this definition that comes to us from employee performance reviews, they identify three key goals. So to learn more about strengths and weaknesses of team members, that’s great. And I think it’s important to pay attention to this idea that you as a leader or a manager in that meeting, you’re not telling the team member about their strengths and weaknesses, you’re learning about them.

Dr. Melissa Smith 7:37
So it’s important to have the perspective of the team member for them to be able to say, hey, this, this is what I’m seeing in myself, and for them to be self reflective. And so not for you to say, Yeah, boy, you really blew it on that. And this is a big weakness of yours. And so I think that’s one way that those performance reviews get off the rails right from go. So the second goal that they identified is offer constructive feedback for skill development in the future. Now, this is a really important goal. But if you’re only doing that once a year in the performance review, but it’s a total waste of your time, like that change will not happen. So for sure, constructive feedback on skill development is really important. But doing that in real time, will be so much more effective. And then the third goal that they identify is to assist with goal setting. And like I said, I think that this probably happens. But I have a you know, I have a question of like, how useful these goals are, are these goals tied to management goals? Are these goals personally compelling to team members? And you know, the big point is, does anyone look at these afterwards. So it might be a manager that’s looking at them.

Dr. Melissa Smith 8:54
But if they are manager driven goals, then that’s not compelling enough for a team member. And so good luck making any progress on that. So, you know, what I would say about this definition and these three goals is that while they are not necessarily bad goals, we really want to think about how could the performance review be conducted more effectively. So really, looking at what’s important, why it’s important, and how we can we can set up assessment to to really help people improve. And I think that’s, that’s the key opportunity here is how we conduct these performance reviews. There’s a there’s a big opportunity for some improvement there. So now let’s move to our third point. So we’ve got four points today. We’ve already talked about one, which is hey, we all hate performance reviews. Second, we looked at what is the performance review. Anyway, I gave you a draft ignition with three key goals. And now point three performance reviews fail in three ways. So I want to help you understand where performance reviews go wrong. And this isn’t just from me, although I’ve certainly seen it. So this isn’t just anecdotal evidence. This is some research that’s documented by Buckingham in the Wall Street Journal, of course, I’ll link to that. So the first way that performance reviews fail, is that they’re too infrequent. So goals set at the beginning of the year, are irrelevant by the third week of the year, and just reflect on your own experience with that, it’s probably fairly accurate, right? Like we don’t, we don’t stick to goals. And often that’s because, you know, setting up a goal in a performance review feels a little artificial, it feels a little forced. And it doesn’t respect the nature of work, which is evolving, right. And when I look at goals that I have set for my business, and like I’m a goal setter, I review my goals every week, I really pay attention to them. But it’s not uncommon to develop goals that were never on my radar at the beginning of the year. And it’s also not uncommon to abandon goals that were on my radar at the beginning of the year. And as I’ve looked at that, right, it’s not because I’m like, Oh, can’t be successful, let’s choose an easier goal or anything like that. It’s that work involves and opportunities come up and constraints come up. And you have to work in the in the world and the reality that you live in, not the sepia colored reality that that may have been your perspective when you set those goals at the beginning of the year.

Dr. Melissa Smith 11:50
And so data from from ADPs human resource system, right. So it’s a huge tracking system for HR, it reveals that After inputting their goals, so this is for team members, fewer than 4% of people go back and check their goals, even once during the year. So right I’ve mentioned earlier, I don’t think if people set those goals, they don’t really go back to them. It is confirmed they do not less than 4%. ever go back and check the goals even once in the year. So it really makes the case of how irrelevant these performance reviews are. And just not helpful. And so the sad reality maybe maybe it’s sad, maybe it’s not. But our daily work has little to do with our goals. And so either we need to connect, connect those better, right, connect our daily work, to our goals more effectively, or forget about the goals, right or be willing to be nimble and to pivot as needed.

Dr. Melissa Smith 12:53
So of course, work unfolds on the daily and team members needs support as the work unfolds. So more important than, hey, let me help you set a goal, which is just a little offensive. Leaders can really help their team members by problem solving, and troubleshooting and celebrating and encouraging, right, so you’re providing this high level view of hey, I see what you’re doing. I see where you’re getting stuck, I see where you’re really succeeding. Let me help you. Let me give you some perspective. share with me what you’re doing, how can I support you? How can I open doors for you? How can I ease some of the stuck points. That’s what’s really powerful, much more powerful than let’s set a goal. So saving up a discussion. So this is back to the first point that these performance reviews are too infrequent. And one of the ways that they fail that saving up a discussion about work for once a year is totally pointless. You need the support in the daily work. So once a year performance review adds pressure on team members to remember and document all they’ve done and on leaders to also remember what you’ve been doing. And that’s just not very realistic. So it puts a lot of pressure on these once a year meetings. So my girlfriend is in the military, and they have a different name for it. But basically every year he has to complete a document that documents everything that he’s done. And it is a big pain in the neck. It takes hours and hours and hours because not only do they have to do their own, they have to review others they you know, and so like the idea behind it is good. But the execution is is right, less effective, because it’s not very relevant.

Dr. Melissa Smith 14:40
But one thing that he has done so if you’re forced into one of these situations, is he tries to keep a running list throughout the year of what he’s doing. So that when he gets to the end of the year, he’s not left there trying to remember what he’s been doing but he has a good organized list. have, you know everything he’s been working on? So that’s the first way that performance reviews fail, they are too infrequent. Let’s add to the second way performance reviews fail. And that is they can be very dehumanizing. So once a year, performance reviews often reduce a year’s worth of work to a number. So whether that’s a percentage raise, or $1, bonus or a ranking. And that’s one thing that we really have seen in the past 20 years with performance reviews, is, you know, businesses trying to become more objective and metric driven. And there are ways that it strains too far right, that it has taken it too far. And so I think that metrics can be helpful. But in our effort to force everything into an objective measure, we lose a lot of meaning we lose a lot of context, we lose a lot of data that is equally important and valuable. And so, you know, this really shows up with the performance review where, where team members are ranked, right. And if you have a group of 10 people, you have to have rankings from one to 10. How, like, that’s not reasonable. And that is a horrible way to have to manage and lead a team. And right, think about that on the receiving end, if you’re a team member, and it’s like your ranking is a four or a three. It’s like, how, how is that helpful for you? Right, it’s actually just incredibly demoralizing and dehumanizing. So that’s the case that Buckingham makes.

Dr. Melissa Smith 16:36
So the thing to remember about these is that they’re often forced curves. So it’s not like everyone could be a 10. Right, we got to have a one through 10, or, you know, there’s only 25% that can get that can get the highest percentage raise. I ran into that in another setting where I worked and was just like, Well, why on earth would I push hard and do my best, if I know like, there’s always a ceiling. And there’s always like a pecking order. It was, it’s just, it’s de motivating. And it it sets up some perverse incentives for team members if we’re not careful. And so these force curves are often more about managers fitting everyone in that curve, rather than it being an accurate reflection of a team members performance and promise. And so we really need to pay attention to that if we could just change one or two things, that would be a good place to start. And so you know, as a result, the focus becomes about the number, not the team member. And it’s right, like that’s supposed to be a meeting about the team members development. And the team members lost in it right there just objectified right out of the room. And so that’s the second failing of performance reviews. And so now let’s head to the third failing of performance reviews, and that is that they are irrelevant to real world performance. And so from the Wall Street Journal, they document some research from the ADP Research Institute’s series of global studies on more than 50,000 workers in from 27 countries, right. So this is a really, really big study set. Right. So this is a series of global studies, that reveals that workers who report they find love in what they do, and are good at it, our form are far more likely to be engaged, resilient, and experienced less stress on the job, regardless of what their job is. Right.

Dr. Melissa Smith 18:41
Okay. So, when it comes to these performance reviews, we’re not tying the performance reviews to real world experience and what what’s true. And what we learned from these ADP studies, is that when we set up conditions, where our team members are able to do work that they love to do, they’re able to get better at that work, they, they will stay, they will stay engaged, they stay resilient, so they don’t, they don’t start to accumulate the impacts of unmanaged stress, they experience less stress on the job. And you as a company have lower turnover, you have higher profitability, you have really productive team members. And so under these conditions, right, team members are far less likely to express an intent to leave, or even to be actively interviewing for a new job. And so from Marcus Buckingham, and the Wall Street Journal, he says that these performance reviews that really tend to be very irrelevant to real world performance, miss the gritty, granular, unique raw material of real performance, so it’s such a lost opportunity. So we will want to be really careful about that. And so that was our third point is that performance reviews fail in three ways. They’re too infrequent. They’re dehumanized, dehumanizing, and they’re relevant to real world performance. And so now let’s finish up with our fourth point. So do this instead.

Dr. Melissa Smith 20:17
So I want to provide you with an alternative to the annual performance reviews. So one solution that Buckingham offers, is to split the annual review into two parts. So the first part would be performance measurement. And the second part would be performance development. And so for the first part performance measurement, you can do that once a year, if your company hands out variable compensation once a year, right. So you might be in a big system, it’s like, this is how they do compensation. And so you’re not going to get away from that structure. But that would just be a focus on performance measurement. And so if you still need to do that, do it. But here’s the recommendation, drop the rating, and go straight to offering the team member the variable compensation you feel they deserve. So this is where those metrics and trying to objectify everything about work goes way too far. And it’s less effective. And so stay away from rankings, that can be very dehumanizing, and really just focus on what did I deserve. And that forces you as a leader to really understand what they’ve been doing to make a case for the value that they bring, or to make a case for the missed opportunity around value. These require difficult conversations, and most of us avoid them. And I sure hope that that you don’t that this is one of your most important responsibilities as a leader. And so as part of that performance measurement, right, so drop the rating, don’t use numbers or for aren’t forced curve rating. So, you know, just stand by the offer that you think is reasonable for the team member and have a rationale for that. Right.

Dr. Melissa Smith 22:04
So having more objective measures, certainly, there’s been good intent with that, right, that we have a rationale for why we’re doing one ranking over another. And so even if we’re dropping the ranking, it doesn’t mean we dropped the rationale, that’s just part of good leadership, like you need to have a good case for why they why they really contributed a lot, versus Hey, I think you missed the mark. And this is what we need to see, in the coming year, that information is helpful for team members. And so you still very much need to have a rationale for that. So that’s the first part right to split the annual review into two. So first, the performance measurement, which we just talked about. And then second, is the performance development part. And what the what they recommend is do the performance development the way all good coaches and parents do in real time. And if we just take a step back and think about this, it’s so completely logical, it’s intuitive, it makes perfect sense.

Dr. Melissa Smith 23:07
So why are we making things harder than they need to be? And so the recommendation from the Wall Street Journal is that each manager checks in with each team member that they have direct supervision of, for 15 minutes, every single week. So in these check ins, you just ask a couple of questions. Okay. So the first question, it’s, it’s two questions in one. So there’s actually kind of four questions. But what did you really love doing last week? And what did you love? So what did you hate? That’s such a powerful question, to really build an insight about, about where team members can do their best work? And then the second question, what are your priorities this week? And how can I help? This is like a perfect blend of autonomy, and support. Right? So is autonomy in terms of the team members get to identify their priorities they need, they need to know where they’re steering their ship. And then the second part of that question is all about the sport? How can I help? What do you need to be successful on that? And so it’s really important to remember that these check ins are not for delivering feedback. And I think that’s probably the biggest mistake most of us would make if we shift to this sort of performance development. But here’s here’s the case for why it why these sessions are not for delivering feedback. So from Buckingham workers want attention, not feedback, and mostly attention on where they’ve shown glimpses of something good, and how they might show more of them. So think about that. It’s so true. Whether you’re at work or whether you’re whether you’re at home, we want attention. We want to see that we’re are seen and that our, our good work is valued and appreciated. And we want to be encouraged, so that we can even do better. And so Cisco, of course, very large tech company tracked more than 3 million of these check ins.

Dr. Melissa Smith 25:18
So they started doing these check ins over the past four years, continuing them as a way to stay connected to their employees through the pandemic. So it’s a four year study, 3 million check ins, and this included during the pandemic, right, which you could kind of see there could be big disruptions into performance development during the pandemic. But this is what they found. And I think it’s, it makes such a compelling case. So if you, you know, you could take this case to your manager, to make make the plea for a shift in how and how and how performance development happens. So those managers who check in with each employee for 15 minutes, every single week drove employee engagement. So employee engagement, of course, is a measure of how committed and excited each team member is at work. And so they, they drove employee engagement up 77%, that is such a huge number. So having these 15 minute check ins, resulted in a 77% increase in employee engagement. And that was even during the pandemic, right when engagement fell off a cliff for most team members. And we saw the great resignation where people were leaving, they weren’t engaged, because they were working remotely, they felt disconnected from team members, they felt disconnected from purpose. These numbers from Cisco are so incredibly compelling. And that’s not it. Another finding that they had is that the actual first year voluntary turnover was down by 67%. So this really reflects that great resignation, right that during the Great resignation, and it continues, even in 2022, we’re seeing droves and droves of people that are choosing to leave the workforce. So they’re not getting fired, they’re not getting laid off, but they’re choosing to leave. And that was up to almost 50 million Americans in 2021, which is the highest number of Americans choosing to leave work in a single year since they started tracking data. And so it’s a huge problem. And so, of course, what does that mean, so much turnover at work, but doing these check ins, boosts employee engagement by 77%. And we’re when we are engaged, we don’t leave, right. And so that leads us to that second number that the first year voluntary turnover was down 67%. So a huge increase in engagement, and a huge decrease in turnover.

Dr. Melissa Smith 27:54
Or a sorry, a huge, yeah, a huge decrease in turnover. Right? These are very compelling numbers. Like even if you had a quarter of a higher engagement or lower turnover, you’d be really pleased with those results. But we’re talking 77% and 67%, respectively, that really should lead you to think twice about implementing something like this. And so from the Wall Street Journal, when we humans get this sort of frequent, light touch, in the moment attention on what we love to do, and how to do more of it, we stay, we stay connected, and we stay productive. When we don’t we up and quit. And that’s exactly what we see. And what’s reflected in Cisco’s check ins over the past four years. So really compelling.

Dr. Melissa Smith 28:45
So another point that I want to make as it relates to this, is that, you know, we need to shift our perspective on management. And so for many, many organizations, the focus is on span of control, right? So you can have some nurses that were managing up to 60. Staff members at at one point, especially during the pandemic, okay, there’s no way you can do 15 minute check ins with that many people. And really, you can’t lead 60 people effectively under your direct supervision. And so, we want to focus on span of attention instead of span of control. So when it comes to leadership, how, how many, how many individuals? Can we lead, lead effectively based on our attention, not just control, because when you when you get to control, that’s where you need rankings you need to objectify you need objective measures because you can’t attend to them all. And so right when we think of span span of control, many team members under one manager, it makes check ins difficult. It increases the likelihood of turnovers. Yeah, It increases the likelihood of of disconnection and disengagement. And so instead, we really want to shift our focus to span of attention. And so managers manage those who they can attend to and support. So we want to check in with team members, not check up on them, right.

Dr. Melissa Smith 30:19
So think about the 15 minute checks, we want to replace expensive annual performance reviews, with a weekly light touch check in. And we want to the right, this process really helps us to address hiring and attrition issues. But also, and this is the really good news, the bonus, but it also helps us to address wellbeing and productivity challenges. It’s effective, it’s more effective on every single level, it’s less expensive on every single level, it’s more efficient on every single level. And so I hope that I hope that you are convinced, at least to consider to consider taking a closer look at what you do for performance reviews to take a closer look at what you do for performance development. And I think that these findings are really compelling, and can give you some really good practical guidance. As you look at improving your, your process. So, you know, I have been implementing this not only with my own team, but also with those team members that I’m training and coaching. And it’s been really helpful for them. And so today, we talked about how we all hate performance reviews, we identified what is a performance review anyway, right? Like what is the purpose of those, we talked about how performance reviews fail in three key ways. And then we gave you an alternative to the annual performance review, which is much more effective and efficient.

Dr. Melissa Smith 31:52
And so head on over to my website to check out the show notes with the resources for this episode at www.drmelissasmith.com/181-ihateperformancereviews. So one more time I do by the way, it’s true. www.drmelissasmith.com/181-ihateperformancereviews. Of course, you can follow me on Spotify or Apple podcasts and then you’ll get all the new podcasts updated weekly. And then of course, if you want to follow me on social media, you’ll hear about the podcast and on my email list and we’ll send you an email each week to let you know what we’re talking about on the podcast. And and hopefully it can be a valuable resource for you. And so of course I’ll link to the Wall Street Journal article that document some of this research and a couple other research connections related to the discussion today. Connect with me on Instagram I always have a lot of more content about the podcast on Instagram. So @dr.melissasmith, I’d love to hear from you want to know what you want to hear about. In the meantime, I’m Dr. Melissa Smith. Remember love and work, work and love. That’s all there is. Until next time, take good care

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