Rethinking the performance review for a pandemic (and beyond)
For many companies, the sudden shift to remote working, along with the added stresses of lockdowns and quarantines, has many business leaders wondering how they should approach the performance review this year. Companies that have been significantly impacted by COVID-19 may be thinking that it’s unfair to conduct performance reviews during a time when business goals may have changed and employees may still be adjusting to working from home.
But far from doing away with the performance review altogether, companies should take this opportunity to rethink and improve the entire annual review process. Even prior to the pandemic, performance reviews were a major sore point for employees, often being described as “toxic” or “soul-crushing” with almost “no impact on productivity.” According to Gallup, only 14% of employees strongly agreed that performance reviews inspired them to improve, and that traditional feedback approaches actually make performance worse about one-third of the time.
First of all, business leaders must change the traditional approach to employee reviews. Many companies approach the review retrospectively, meaning that employees’ past performance is used to justify rewards or punishments without giving thought to future performance, which can ultimately foster bad incentives and undermine collaboration. When done well, however, the performance review can be an incredibly effective tool for employee growth and development. Here are our tips for improving the performance review—not just for a pandemic year, but for well beyond:
Provide regular feedback to employees well before the annual review.
One of the biggest frustrations of employees during annual reviews is that they’re often hearing for the first time feedback from situations that are now distant history. If it was negative feedback, the employee no longer has a chance to correct course, and if it’s positive feedback, the employee doesn’t have the opportunity to build upon that skill.
Feedback only has an impact when it’s given regularly. This is even more important in a world where remote working is the norm, and employees can no longer rely on non-verbal communication and the spontaneous environment of working in the office.
Many managers often forget to provide their team with regular feedback, so the best thing to do is to build the process into a weekly one-on-one meeting with each team member. Make it a point to provide at least one piece of feedback to an employee per week, whether positive or negative. The key is to ensure that the feedback is very specific to a behavior or action and that the individual can actually use it to improve. For example, it’s not enough to say “good memo” or “bad presentation.” Rather, you should always point out how and why: “The memo was concise and well-written and made smart arguments for why we should increase the project budget.” “The presentation was 30 minutes too long and you shared too many details; they just needed to hear these points so that they could sign off on the decision.”
By regularly communicating and keeping track of this feedback, the annual review will become an overall evaluation of performance, rather than giving an assessment score based on specific situations alone. The feedback document will make it easier for managers to spot overall trends in behavior, by showing general areas of excellence and where employees need improvement.
Realign your employee review criteria to reflect your values.
In many performance reviews, employees are assessed on hitting specific objectives, such as a sales quota or project deadlines. When that is the primary or sole criterium for the review, however, it can create perverse incentives for pay increases and promotions. For example, imagine a star salesperson who always exceeded the sales quota, but did so by undermining other colleagues’ deals and by being aggressive with customers. An annual review that judged primarily on the basis of meeting sales targets would end up rewarding this employee, in spite of this person not living up to the values of the company.
If performance reviews are to serve as a tool for growth and development, then the review criteria itself must reflect the values, skills and attitudes that the company wants to foster within the organization. First you’ll want to identify the key competencies that you want all employees to exemplify. There are core values that remain evergreen, such as teamwork and accountability, but you may also want to consider other areas that will be important in helping the company better weather the pandemic crisis, such as adaptability, creativity, and resilience.
Once you have your core skill areas, then you’ll want to build out descriptors to identify behaviors that exemplify these skills. SHRM provides some example templates, such as these for Creativity and Innovation:
Turns ideas into action, puts creativity to work and develops strategies for innovation.
Rethinks routine processes and finds unique solutions for adding customer value.
Searches constantly for new methods, techniques and tools to improve work processes.
Regularly encourages greater collaboration and open discussion with peers and team members to foster a culture of innovation.
Once you’ve updated your review template, share it with the entire team well ahead of the performance review (ideally at least six months). If your team is small enough, you may even want to get feedback on some of the items before you fully implement it. The most important thing is that your team is not surprised by it and that they know why and how they are being reviewed. It will also be helpful to share the review template with any new hires during your onboarding process as well.
Incorporate open-ended employee feedback.
The performance review is not only an opportunity to assess employees, it’s a good time to get feedback from the employee about the company as well. While you’ll want to be collecting employee feedback regularly throughout the year, the performance review is a good time to ask thoughtful open-ended questions that will provide more meaningful insights into the well-being of your organization and can help shape your strategic plan for the coming years.
It helps to organize questions into past- and future-oriented topics. Retrospective questions ask the employee to reflect upon major lessons and observations of the past year, while future-oriented questions ask the employee to consider ideas and trends to help the company move forward. For example:
Retrospective Questions
What are the biggest lessons about the business that you’ve learned over the last 6-8 months since the start of the pandemic?
What do you think went well or not so well about the way the company handled the transition to remote work?
What are the biggest positive changes and negative changes for you this year?
Future-Oriented Questions
How do you think our industry will need to change in order to weather the uncertainty of the future?
How might you approach accountability and productivity if the company were to work remotely for an indefinite period of time?
What tools or processes would you want to implement so that you can work better or more efficiently?
As with the review criteria, don’t spring these questions on your employees by surprise. Give the questions to them at least a week in advance so that they can come prepared with thoughtful responses. There are no right or wrong answers here; this is about collecting honest feedback, as well as seeing how employees approach their work—are they mired in the details, or can they see the big picture?
Some employees may see this as opportunity to vent frustrations or be brutally open about their complaints. Remember that as a leader, you’ll want to approach this with empathy and a listening mindset. Don’t take anything personally, and refuse the urge to address complaints immediately in the moment. It’s better to collect all feedback, identify the most important concerns, and then address those issues at a company-wide level.
Implement a two-sided action plan.
Lenny Rachistky, a former product lead at Airbnb, thought he had delivered a solid performance review to an underperforming report. He had spent hours preparing the review, identifying development areas and sharing lots of suggestions. A month later, he revisited the discussion with the report and it felt like it had never happened. As he put it, “95% of the message was lost.”
He learned an important lesson as a manager: “I was treating the performance conversation as the end, when it’s really only the beginning of the performance development process.”
The solution was simple: create a two-sided action plan that identifies five to seven concrete actions from the performance review that both the employee and the manager should work on over the next several months, and track the status monthly on a spreadsheet. The list should include concrete suggestions that were noted on the performance review, things that the employee wants to work on, and things that the employee needs from you as the manager in order to be successful.
In addition to weekly one-on-ones, he also recommends building in monthly career coaching sessions between managers and employees. Instead of talking about day-to-day work, this is an opportunity check in on the progress of the action plan and ensure that their development is moving in the right direction.
Time worth investing
A truly effective and structured performance review, one that is informed by regular manager feedback, thoughtful review criteria, open-ended questions, and a follow-up action plan, takes a significant amount of time and effort. Managers with direct reports may resist implementing such a process because it takes away from day-to-day activities.
As a business owner or leader, it’s important to stress that the performance review process is time well invested. When senior managers invest time in each individual report’s growth, the entire team performs better as a whole. If possible, try to structure your organization so that senior managers can focus more on the role of training, coaching, and delegating work to junior talent without having to spend too much time on hands-on, day-to-day tasks.
The stats are clear: companies that implement regular employee feedback have 14.9% lower turnover rates, and 68% of employees who receive accurate and consistent feedback feel fulfilled in their jobs. Companies that treat the performance review as an important tool for employee development, rather than a dreaded administrative burden, will ultimately increase employee engagement and build team trust.