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Reviewing the Annual Review

“It’s time for the annual reviews.” This is scarcely a welcome announcement for any of the parties engaged in that process.

The Managers charged with giving the reviews are busy with a thousand other things. The last thing they wanted was to try to recall a year’s worth of incidents that in some way justify their current opinion of any particular employee’s performance. This is not to mention the task of translating that opinion and those memories into the proper format as prescribed by human resources. Then, of course, they must consider how the reviews will be judged by their own boss and how that impression will contribute to their own annual review. There are also the many political forces that must be considered, plus the current state of business and any potential storm on the horizon.

Those to be Reviewed recognize that their many outstanding achievements that occurred during the previous three quarters are only a vague memory in the mind of their manager. The unfortunate minor gaff last week, however, is in clear definition. Their only real hope is that the reviews will not be given as late as they were last year. Once that is over, they can get back to work as usual.

The HR department immediately morphs from helpful professionals into a pariah, nagging hard-working executives to please complete the review forms and schedule the delivery of the reviews to their team.

The Boss of the Managers sees his team distracted by a process that he also finds frustrating and of minimal value, in contrast to the much more immediate demands of the business. In fact, his frustration with that situation has a great chance of impacting his reviews of those same managers.

All in all, annual reviews are most kindly characterized as “a necessary evil” or “that’s the way we’ve always done it.” It is quite difficult to find a champion of the practice, and it does make a grand target for the slings and arrows of articles such as this. However, perhaps within these volleys of criticism, there are some practical insights for extracting a measure of value from the review process. At the very least, it may present a more cogent call for a complete overhaul and muster some brighter minds to lead the way.

Two Glitches & A Suggestion

Now that the cast of characters and a brief description of the plot are in place, it is time to examine two of the more troublesome glitches in the typical annual review process and suggest a slightly different, but highly productive twist that has the possibility of transforming the whole show into what it was always meant to be.

Glitch #1 - What Happened to the Rest of the Numbers?

Many review programs use a 5-point rating scale such as the example below.

  1. Major Improvement Needed

  2. Some Improvement Needed

  3. Meets Expectations

  4. Often Exceeds Expectations

  5. Consistently Exceeds Expectations

In theory, this 5-point scale provides a sound means of quantifying job performance and of providing some foundation for evaluating an employee’s future potential and compensation. In practice, something quite different happens.

An experienced manager within a large company knows that:

A rating of (1), no matter how well deserved, will be viewed by the company as a complete failure on his part. How could he have tolerated such a subpar performance by one of his team members? Could he not have done something to correct this at some point during the year? Was he incapable of affecting the performance of his team members? That (1) may well be an accurate indictment of that employee’s incompetence but he will be charged with a clear case of aiding and abetting that incompetence.

A rating of (5), aimed at rewarding the stellar performance of his best employee, will also be personally disastrous. How could anyone be performing at that level? Was he just not paying attention or was he naive? If that person was that good, they would have been promoted long ago.

NOTE: Effectively, it is now a 3-point rating scale, and there are still other distorting forces to be considered.

A rating of (2), indicating less than satisfactory performance, has its own consequences. The manager will need to explain how this happened; why they allowed it to happen; what they are going to do about it; and what they think will be the ultimate outcome. This means a minimum of 30 minutes pulled from somewhere in an already impossible schedule, and that is for each employee rated a (2).

A rating of (4), calling out the marvelous performance of a few of his key employees, often results in similar consequences to a (2). That (4) carries with it an increase in salary or bonus of some kind and implied progress toward a promotion or increase in responsibilities. Of course, these are increased expenses and therefore call for him to justify the (4). What are some examples of this exceptional performance? Is it constant or were these just isolated events? How do they translate into higher levels of responsibility? And so on… requiring more of the time that he does not have now.

At this point, the hard-working, diligent manager recognizes with undisputed clarity the value of rating each member of his team (3). It recognizes their accomplishments and at the same time, forgives as it were, their miscues. A clear Meets Expectations is cheered for its satisfactory rating and welcomed by all for its efficiency and economy of time and energy. Of course, from time to time, a few employees will either commit an error so egregious as to demand a (2) or perform some service so exemplary that anything less than a (4) would constitute a dismissal. Still, the manager knows that the bulk of reviews can be consigned to the safe haven of (3) and all parties are happy.

Glitch #2 - Anyone Can Do That…Right?

A fundamental premise of annual reviews is that the employees are capable of doing the job in question. The second premise is that if the employees are not performing the job in question to a satisfactory level, it is simply a matter of training their skills to a higher level, having them acquire more experience at that job, or motivating them in some way to put forth more energy or hard work for them to improve their performance. In the past two decades, however, extensive research has shown beyond a shadow of a doubt, that if an employee lacks the hard-wired traits or abilities necessary for certain job behaviors, it is virtually impossible for them to deliver satisfactory performance in that particular job for any extended period. This is true despite extensive training, rich experience, or any type of motivation.

To facilitate annual review processes for executives, a common practice is to identify a set of executive competencies that all executives must have. The review is then oriented to those competencies and the extent to which each executive has demonstrated them during the year. The glitch is that, in effect, the competencies are a bad marriage between a wish list for the perfect executive and a one-size-fits-all prescription for how to ensure executive excellence.

The competency-building process tends to be comprehensive. Everything that can be of value to any executive position is added to the list for all executive positions. If baseball teams did this, they would expect the same batting average from the pitcher as from the outfielders; the catch would need to steal bases; the shortstop would need to throw a mean curve ball. Instead, baseball teams recognize that each position requires different strengths if they are to be a successful team. That knowledge enables them to maximize the performance of each player on the team. Conversely, businesses bundle everyone into the same set of competencies. An executive with tactical responsibilities is expected to exhibit a strategic vision. Executives who manage complex processes are challenged to show strong people management skills. At times, competencies compete with each other, with unfortunate executives being asked to be master planners while at the same time being responsible for handling any unplanned situations or events. Can they really do that? Yes, to some extent, but they cannot optimize their potential under those circumstances.

A Suggestion - What If We Focused on Tall?

Today it is possible to easily see the hard-wired strengths and abilities of each employee. These are the foundation of any competency. That information connects the employee’s capabilities with the job behaviors required in their position. It assists the manager in determining what are reasonable expectations of performance. The manager can then provide personally meaningful feedback and coaching that is far more effective than standard review processes. They can focus the employee’s responsibilities into areas that depend on their strengths, and they can minimize the areas in which they lack strengths. It is a connection that lives on a daily basis. It is relevant to each new project. It is key to each moment of feedback. It can ultimately provide the core of an entirely new level of talent management.

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