We’re in full swing of the Performance Management season again. You know it’s time when Human Resources professionals have inboxes crowded with forwarded articles citing merits of doing away with the process. Pleas are made to make the process simpler, complaints about the time commitments ring through every meeting. In some organizations, year-end reviews are as welcome as the bathroom scale on January 2.
In fairness, some performance management systems have terrible design flaws. Employees and managers complain that only a narrow range of evaluation points is used because of cultural or financial practices. As a result, ratings and rewards don’t differentiate performance. On the other extreme, some misguided organizations still insist on relative force ranking of employees, despite the evidence that this destructive process harms, not helps, overall organizational performance[i]. Efforts to instill consistency can make the process onerous.
All of these design flaws produce legitimate complaints, but each can be fixed with the right leadership attention. Don’t allow bad practices to interfere with the organizational benefits of performance management, including year-end reviews.
Five Things Great Leaders Get from Performance Reviews
Great leaders look beyond the practice of performance reviews to its possibilities. As Edward Mone and Manuel London (2009) describe in their book Employee Engagement Through Effective Performance Management, great leaders look beyond the stacks of forms and meeting schedules to opportunities to develop more engaged employees who feel “involved, committed, passionate and empowered” through performance management.
1. Great leaders get information to make the next year better than last year.
Great leaders use the year-end review process as a point to gather critical stakeholder information from a 360 perspective. What does this employee do well? How can I leverage their talents in new ways? How can I help them maximize their potential? What can I do differently? Great leaders know it’s not about the forms; it’s about the insight.
2. Great leaders get maxim benefit from rewards and recognition.
They know that year-end bonuses and merit pay are more meaningful when employees’ understand what they did to earn it. Great leaders don’t just deliver the number, but offer feedback on how employees can enhance or change their performance to achieve their compensation goals for the next year. They know that it’s not only dollars that increase employee motivation, but also the knowledge of how they can grow as people and contributors.
3. Great leaders get improved self-monitoring by employees.
They know that the ultimate goal of feedback is to develop employee self-awareness, which fosters greater understanding into why they get their results. Once employees understand why, they can change how they approach situations for different outcomes. Through constructive feedback with specific, relevant examples and description of impact, employees become more aware of how to utilize their strengths and minimize their shortcomings. Great leaders shift the burden of monitoring behavior to employees through constructive, helpful feedback.
4. Great leaders get more optimistic, higher performing employees.
Medlin and Green ( 2009) examine the relationship between goal setting, employee engagement, optimism and individual performance through a survey of 426 employees. They conclude that goals engage employees with the organization by informing them of their specific responsibilities and available opportunities. Measuring performance and experiencing progress against goals increases optimism among employees. Medlin and Green cite numerous studies that show the relationship between optimism and higher performance. Great leaders know that, like athletes, achievement oriented employees’ want to know how they performed against goals, and competitive ones want to do better next year.
5. Great leaders get even better through performance reviews.
They use the process to seek feedback from subordinates, customers, peers and supervisors on what they can do to be a better leader. Great leaders use the performance review to address questions or concerns that may have impeded their development or that of others. Through the performance management process, great leaders improve their ability to set goals, communicate, evaluate results, coach and listen.
Maybe you know of leaders who don’t want to be better next year, don’t benefit from offering rewards, enjoy the burden of monitoring employees, demoralize achievement-oriented employees and don’t care if they get better. These will probably be the leaders moaning about the forms. They will be hounded to get year-end reviews done. On the other hand, great leaders will use the same process but get far more out of it. Chose the outcome that best suits you.
E.M. Mone and M. London (2009). Employee Engagement: Through Effective Performance Management. New York: Taylor and Francis Group.
B. Medlin and K.W. Green (2009). “Enhancing performance through goal setting, engagement and optimism.” Industrial Management and Data System, vol. 109, no. 7 pp. 943-956.
(1) S.G. Roth, A.M. Sternburgh and P.M. Caputo (2007). “Absolute vs. Relative Performance Rating Formats: Implications for Fairness and Organizational Justice.”
International Journal of Selection and Assessment. Vol. 15, No. 3, pp. 302-316.