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The Annual Performance Review is Dead, Now What?

It’s been a slow death, but the Annual Performance Review is for the most part, dead. Soon, we will no longer hear about the annual performance review from companies large or small. It’s a giant, unproductive exercise in project management for the CEO or HR leader with ineffective outcomes.

If you’re like most of the small business leaders that I know you have...

  • Decided not to performance reviews anymore
  • Forgot, ignored and have not done performance reviews in the past 1-2 years
  • Never did annual performance reviews

 

 

 

Why are annual performance reviews so darn ineffective?

  1. They are a recap of a year’s worth of performance. The employees in the 2018 workplace want to spend time looking at the present and the future. They don’t want to look back at 12 months of performance whether it was good or bad. They are asking, what’s next for me, now? What’s coming in the next 3 months?

  2. Our workplaces are fast-paced.. Employees and employers need to have more regular communication about performance and waiting 12 months between reviews is simply too long to build any momentum or plan for development.

  3. Managers were never really good at them. That’s right, when you do something only one time per year you never really get in a steady cadence to be consistent and effective. Besides, most managers begrudgingly did them just to check to a box.

And, I’m sorry! I have pushed the annual performance review in the past and even rolled out new systems to organizations. With a lack of employee/employer feedback it feels like an obvious tool to communicate but alas I think we can do better. We can communicate in better ways to create workplaces where feedback, goal setting, and coaching are frequent and executed with ease.

Now What?

Small businesses are embracing quarterly reviews. This can be a game changer for your culture, business goals aligned with individual goals, and communication. Let’s look at why and how to do this right.

I am a humongous fan of dropping the annual performance review and replacing it with quarterly reviews. This can be a game changer for your culture when business goals aligned with individual goals and communication. Let’s talk more about why and how to do this right.

 

 

5 Benefits of Quarterly Reviews

  1. Cadence - Setting a quarterly cadence helps keep the goals top-of-mind and allows managers and employees to get good at having quarterly performance dialog.

  2. Set achievable, top-of-mind, goals - Set goals that set are small bites (or at least bites of a bigger goal) which makes them easier to digest and accomplish.

  3. Accountability - With a quarterly cadence, and setting meetings in advance, there is accountability built into the process.

  4. Lightweight - Quarterly review are lightweight. They should be thought of a process that is used to manage performance and not an annual event that you do.

  5. Feed Forward - Annual reviews were a tool to provide feedback. Think of quarterly reviews as a way to feed forward and look ahead at goals and performance for the coming quarter.

 

Here is how to start implementing a quarterly review process

Follow these steps below or use our Quarterly Performance Goals download to get started. The download includes a how-to guide, sample review, and a fillable PDF and it can be found on this site under Premium Content.  

Lay the Foundation - Develop a structure for your quarterly reviews including basic guidelines (who, what, when, where, why and how). Communicate the process to your team and allow time for questions. Also, communicate your goal for continuous improvement in this process. For example, at first we are going to start by using only 3 questions and a 1-page form...in the future, we may add questions and perhaps even utilize software to help manage the quarterly reviews.

Monitor and Improve - Once everyone has completed the first round of dialog seek feedback. Ask managers and ask employees so that you can get a sense of how things went. Look at the results of the review conversations (the quarterly review forms or documentation) for feedback.

 

Sample Quarterly Review Questions

Assuming you and your team member know the company’s overall goal and mission for the year let the quarterly review be a dialog. Both of you will come prepared to chat and come to an agreement on the following questions:

The beginning of the quarter:

  • What are your goals for the quarter?
  • How will you make progress towards those goal(s) this quarter?
  • What tools and resources will you need to accomplish your goals?
  • How does your goal contribute to the company’s overall business goals?

The end of the quarter:

  • What was your biggest accomplishment in the past quarter?
  • Describe where you struggled
  • What’s one thing that could be going better?

Then, document what has been discussed (Google Doc, blank piece of paper, napkin, use this guide, whatever!) and make sure that both the employee and the manager get a copy.

Set a date for the next quarterly review 3 months out. Rinse and repeat.

Keep this process lightweight. One downfall of the ‘annual performance review’ has been the heavy burden that it creates for people. Your goal by changing your process is to make it effective and simple. If it’s too heavy and difficult you’re doing something wrong.

 

Download your How-to Guide and Quarterly Performance Goals Worksheet. Your guide to ditching the annual performance review and replacing it with employee-driven, actionable quarterly goals.

Ready ditch the annual performance review and replace it with employee-driven actionable quarterly goals? Consider joining The Exceptional Workplace premium content. There you will find the intuitive How-to Guide and a Quarterly Performance Goals Worksheet specifically curated for small and medium-sized businesses. Download your copy today and get started.

 

 
 

Love practical tips for creating an exceptional business? We’ve got loads more in The Exceptional Workplace! We help small business leaders (CEO, Owners, HR, Controllers) cultivate exceptional workplaces through strong HR and people practices. Learn more here.

5 Things to Know About Your Workforce…If You Want to Keep Them

This might seem like one of those posts you can pass by — because c’mon, of course you know your workforce. If your business is small enough, then chances are you were the one who hired them!But actually, studies show that there’s often a huge disconnect between the management and the workforce of an organization. And if you’re not connected with your workforce, it’s only a matter of time before you start having serious problems.

The good news is that you can avoid so many issues with just a little bit more knowledge about your people. So if you’re starting to wonder if maybe you don’t know your workforce as well as you thought you did, ask yourself, do you know:

The #1 Gripe Going Around the Office

If you do nothing else after reading this post, I’d really encourage you to find out the #1 thing that’s bugging people in your workplace. It might be an easy fix that you’ve never even thought of simply because of your position in the company — by knowing what it is and addressing it, you’ll show people that you’re actively invested in making work better for them, which will go a long way to inspire loyalty and improve productivity.

As an example, a client in Portland recently upgraded their workplace coffee, water, and snack program to the absolute delight of their employees. Perrier sends a message of class, high-end, and engagement while tap water might send the message of unremarkable, ho-hum and unimportant. Every workgroup is different so it’s important to ask, and ask more than once.   

 
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Even if it’s something that you can’t fix right away, you can at least let your team members know that you hear them and the lines of communication are open, which goes a long way towards easing tensions. Besides, there’s a good chance that this issue is related to the second most important thing to know about your workforce:

Why People Leave

You probably have some sort of idea of your turnover rate already — and if you don’t, you need to get on that ASAP. But it’s not enough to know that people are leaving. You need to know why people leave, and especially why your best people leave, otherwise you could be needlessly hemorrhaging talent and knowledge capital. Is it more money, better career opportunity, workplace culture, are they burnt out?

How do you figure this out? By asking and observing. Make it a point to include questions about this sort of thing in every exit interview, and make it clear that you really do want to know to improve, not to harp on people or defend the company. If you are afraid that employees will not be honest with you to the extent that you need have an HR Consultant or another key leader in your company conduct the Exit Interview. In the digital age, exit interviews can even be conducted electronically.

Why People Stay

Similarly, you need to know why people stay in your workforce, both the things that keep the great employees and the things that keep the not-so-great ones. That way, you can keep doing those things that encourage the people you want to stay, and stop doing the things that encourage the underperformers.

The best way to find out why people stay is to conduct Stay Interviews. Here are some great Stay Interview questions taken from the book, Hello Stay Interview, Goodbye Talent Loss.

  • What about your job makes you jump out of bed in the morning?
  • What makes you hit the snooze button?
  • If you won the lottery and resigned what would you miss the most?
  • What can I do to keep you?
  • What would entice you away?

Have you ever heard an underperformer say that they like your company because they are on easy street while a top performer likes your company because of the rigor? This insight is valuable. The solution here is to balance the rigor with the goal of losing underperformers and attracting and retaining top performers. Hint; 1:1 meetings and mid-year reviews are a great way to balance the rigor keeping tabs on each team member's performance.

The Ambitions of Your Key People

You may already get a sense of this as you’re finding out why people leave and stay, but make sure you really get a good sense of the ambitions of your key people. This allows you to support them in achieving those ambitions (which is a very important part of leadership, and one of the top intangible things employees want from companies). This alone may keep you from getting caught off guard by one of your key people leaving to pursue an ambition you knew nothing about. You may even be able to keep them if you can find a way to support that ambition while still having them work for you!

An example of this is when a client of mine found that their right-hand gal had aspirations of working in the medical field in an auxiliary role. My client pursued clients in that industry, which satisfied the curiosity of her employee. Small businesses have a way of being nimble to meet these needs. Don’t be afraid to ask.

Something Personal About the People You Work With

So you already know that people are not widgets or computers … but it can be hard to remember that when you’re head down in paperwork, schedules, and payroll. The truth is, most employees work to live, so make it a point to find out what they’re living for outside of work, and ask them about it! It doesn’t have to be a big production; something as simple as “Claire, how was your hike to Mt. St. Helen’s?” works just fine.

Doing this keeps you connected with the pulse of the workplace and makes people feel well cared for and not just as one more number on the payroll, both of which are characteristics of an exceptional leader. (Not to mention being crucial for a happy, productive workforce.)

 


 
 

Love practical tips for creating an exceptional business? We’ve got loads more in The Exceptional Workplace! We help small business leaders (CEO, Owners, HR, Controllers) cultivate exceptional workplaces through strong HR and people practices. Learn more here.

 
 
 
Phishing Scheme Targets HR

Dearest blog reader,

I don't normally report on bad news or scary things but this is worth sharing - it's scary. I have been told that identity theft is hitting companies hard with a clever phishing scheme targeted at HR and accounting.

 
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It would be devastating to find out that someone from your own team unknowingly turned over all of your valued team members W-2 information to a crook. This is what is happening in businesses. Yes, it's absolutely happening and the emails the crooks send are extremely clever. The nightmare of it all, and the long-term impacts on everyone is what is driving me to send this message.

None of my business clients have been hit, thankfully, but I hear it is rampant. Below are two links to the FBI that will help you understand the phishing scheme and what you can do to protect your company.

PLEASE share this with your HR team, accounting team and employees. 

Building a Digital Defense - Part 1

Building a Digital Defense - Part 2

Stay safe my fellow entrepreneurs and business leaders.

~ Amy McGeachy

 


 

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