You’ve finally caved in. After years of complaining from managers and HR — especially at the end of the year, you’ve given the go ahead to get rid of annual performance reviews. The company-wide email has been sent saying the annual reviews are done! You feel good about the decision. After all, this decision was about eliminating waste and inefficiency. The months of Harvard Business Review articles and case studies won — it’s a big announcement and with all the new time your managers have (particularly at the end of the year), the new time will be distributed throughout the year towards developing and coaching their teams. A big win for the culture and morale was made.
You’re the conscientious leader which means there is still anxiety in your chest because the one (and arguably only) value annual performance reviews offered was it was something! Before, there was a process in place. Remember, it’s not HR’s sole job to own performance management, your managers own the relationship with the team members and the CEO owns the performance of the company. By destroying annual performance reviews, you’ve given incredible autonomy to your leadership to make sure they are executing all the performance management requirements. Whoa, that’s a big ask for all your managers.
Do not worry, we’ve learned from numerous CEOs who have had sleepless nights (for you) about company performance — especially with their sole performance management tactic previously in place (annual performance reviews) gone. Before, they could at least sleep better because there was something there. The next 5 steps successful CEO’s took after they killed the annual performance reviews.
Take these 5 steps after your company has just ripped out annual performance reviews.
1. Set new expectations for your team.
Just because the annual performance review is gone does not mean performance management is out the window too. We still need to make sure managers are having the right conversations around performance, holding their team accountable, delegating, and asking for more. The quarterly performance reviews is one tactic to do this. Regardless, letting your entire company know that just because annual performance reviews are gone does not mean performance management has dropped in priority. If anything, it’s the opposite because you’re making major decisions to improve the process.
2. Decide and implement your ideal performance management process and timing.
CEO’s get their greatest anxiety around performance when there is no clear path or plan replacing the annual performance review. Key note here: do not wait solely on HR to make the decision. You are the CEO and your company’s performance is at stake. Sure, delegate the research of tools or process improvements, but if you are a CEO and have no idea what the solution of your performance management system is going to look like, then you might as well not buy it. Think about the importance of this decision compared to how serious many CEO’s evaluate solutions. Would you ever sign up for a gym membership without walking inside and seeing the amenities or join a golf club without playing the course? A simple performance management process will have quarterly reviews, one on ones, a way to keep score and visibility into who is doing it.
AVOID THIS MISTAKE: One mistake we see many CEO’s do is get caught up on one aspect of a more agile performance management plan. For example, 360 reviews. Do not try and implement a complex performance management tactic before getting the basic correct. Also, do not let it delay you as well.
3. Document your conversations.
Many leaders in your organization will suggest that “they are always talking with their team.” This may be the case and it’s probable they are doing a good job building a relationship, talking about performance, delegating, and asking for more. However, if key conversations are not documented, it’s very difficult for a manager to know and track the performance and progress of every direct report. It’s impossible to report this bias-free without some form of documentation.
4. Provide some numerical scale internally.
Name any professional environment that does not keep score in some form or fashion. Many CEO’s do not like the idea of putting a number on an employee around core values or competencies, but if you do not they will never know where they stand. Of course the big problem is always, a 4 to one manager is way different than a 4 to another manager. That’s why it’s important to clearly communicate expectation and give guide like the one below.
5. Get feedback, iterate, and adjust.
Most CEO’s are doing this regularly whether it’s systematic or ad-hoc, but listening to your leadership team around the frequency of feedback timing and functionality of the new system is important. Employee surveys or just picking the manager’s brain in the lunch line are great ways to learn how life after annual performance reviews is going for the team. In an ideal world, you’d be able to map that feedback with the level of usage in the product. Implementing a more agile performance management is definitely not a destination and a constant journey as you grow and develop the team. Feedback from your team is the fuel to staying agile.
Leverage these 5 steps after destroying your annual performance reviews and you’ll be in good shape in the next iteration of your more agile performance management.