Lean Organizations: Stop the Madness of Performance Review

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In a ritual similar to getting children to eat brussel sprouts, human resources badgers their managers to complete their obligatory performance reviews. The only difference is that eating brussel sprouts has some benefits. The review process has three main attributes, it displays that your manager can only remember your performance over the last 3-months, the goals that were laid out at the beginning of the year are no longer relevant, and raises are woeful. A typical performance review takes several weeks to recover from, longer if you a not a red wine drinker. So what should companies do instead?

Lean Organizations Focus on Where Improvement Comes From

If you want to encourage people to improve their performance, help them find opportunities to gather new skills and ideas. Instead of a spending time on performance reviews, develop a Career Development Plan for each employee. Review the plan at least a couple of times a year and make changes as necessary.

Lean Organizations Pay for Skills

If the idea is to give everybody a cost of living raise, simply do that on January 1. Don’t bother meeting with everyone to try to convince him or her why 3% is a really a good raise. It doesn’t work. Raises over and above the cost of living should come for the acquisition of new skills and responsibilities. Do not tie raises to the review process. The compensation discussion will derail your conversation. Use bonuses to reward outstanding performance, it encourages people to keep it up and prevents a spiraling payroll based on deeds of yesteryear.

How Well Do I Play with Others

One of the most important tools for giving feedback to people is a 360- review process. This provides a more balanced perspective of how an employee is working as a member of the team. It’s hard to ignore feedback when it comes from multiple sources.  This type of feedback can help people make adjustments to their work habits to improve their effectiveness in the organization.

Lean Organization Know When to Say Stop

Many managers use the performance reviews as a chance to tell an employee what is driving them nuts. Regardless of the delivery, talking about the three things that a person could do better, rarely has the intended consequence. It mostly makes an employee more nervous and less confident. The better approach for giving constructive feedback is to provide it when an issue arises. This gives the issue relevance and does not feel like an avalanche of disappointment. The same is true when an employee does something above and beyond. Praise them in the moment and remember a gift card goes a long way as well.

Stopping the performance review process takes courage and perseverance. If you’re successful, you will have the satisfaction of knowing that you made your company a better place to work.

About the Author

Tom Petersen is the Managing Partner of ThreeCore, an operational consulting firm in Beverly, Massachusetts.  Tom consults for multinational companies engaged in the design and manufacture of high-tech products. His team is dedicated to helping companies create competitive advantages using innovative strategies and process-driven improvement. For more information go to www.threecore.com or follow Tom on twitter @3CoreConsulting.