Performance reviews are dreaded by employees and managers alike, and are usually unproductive. Let’s change this to make it a productive growth experience instead of a mechanical and hollow process to get through.

Back in the days when I was the Director of HR for Central Parking Corporation, we did a massive amount of performance evaluations.   It was a people-intensive business, and so the preparation and time spent on this activity was great. However, for all the forms filled out (let alone following up to push managers along to actually complete the reviews), the results were less than uplifting. A too-brief conversation between manager and employee, and an adjustment in compensation where warranted. Then everything was filed away until the next year. Box checked!

In a way, this process is very comforting. It is just the continuation of how we were graded and ranked in school. The problem is that the system of conducting reviews can be very disconnected from actually managing and developing people. The focus is on the process rather than the purpose.

So, let’s create a better way to do performance reviews. Here are six rules to guide you.

RULE #1: Start with the purpose of performance management, which is to achieve the goals of the organization. This means setting goals.

Goal setting starts at the top. The owner/CEO should set the company goals, and make these known to all employees. Everyone else should set their own goals based on this. That way, there is alignment between everyone in the organization.

RULE #2: Goals should be broken down into Objectives and Key Results.

Focus on what can be measured. Not everything can be quantified, but try to quantify where possible.

RULE #3: Your performance evaluation form should be simple and focused.

Don’t create more performance categories than absolutely necessary to measure performance on what really counts. At Central, we had a category for “Dress Standards.” Everyone, especially underperformers, could count on an “Excellent” in that category. Enough said.

RULE #4: Rating choices should be simple as well.

Four or five rating choices are optimal. For example: Excellent, Exceeds Expectations, Meets Expectations, Needs Improvement. Ten choices will not create more accurate ratings.

RULE #5: The more reviewers involved in the process, the less chance for bias.

One of the major weaknesses of performance evaluation is the importance it puts on the opinion of one person (i.e. the employee’s manager). A major source of mistrust in the whole evaluation process is the feeling that the evaluator is not being fair.

A more effective system is getting the input of a group, including the employee’s manager, other managers, and co-workers.

Get the bonus content: How to Avoid the 5 Most Common Evaluation Biases

RULE #6: You also need to focus on development, to help people grow and improve.

Use the performance evaluation process as a great way to discuss personal development. People tend to equate performance ratings with compensation and rightfully so. But focusing on development is the key to motivating employees in the long term.

Create a two-part review process. The first part should be a discussion of performance, using goals, objectives and key results. This will determine their salary increase and bonus, if any.

The second conversation, held separately, should focus solely on helping employees to grow and improve. What tools/training/education/exposure do they need? How will that be provided? People want to grow. Help them.

Apply these rules to create a fairer performance evaluation process, and to encourage a culture of development and growth in your organization.

Get the bonus content: How to Avoid the 5 Most Common Evaluation Biases

Want to create a performance management system that works for you? Contact me.

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