How to Conduct the Perfect Annual Performance Review
When correctly done the annual performance review (APR) can be a powerful process, improving results and inspiring growth. If you find yourself dreading the annual process of writing and discussing annual performance with team members, here is a methodology that turns the process from an annual slog into an energizing experience with a high return on the time invested for both you and your team.
Let’s start with why. What is the purpose of the APR? Far too often leaders and team members view the APR process as a grading exercise. Almost like an extension of high school and college. This foundation sets the tone of critique and justify critique and is the primary flaw of most APRs. A better “why” for the APR process is to improve employee engagement. Improved team member engagement is the ultimate win-win. Engaged team members are happier at work, and at home, and contribute more strongly at work. Changing the APR narrative from “here’s your grade” to an inspiring conversation that spurs employee engagement is a critical mindset shift for us all to make.
Transitioning the purpose of APRs
Old: Critique performance
New: Grow team member engagement
Team member engagement is one of the leading indicators of company results. Among many other things, companies with a highly engaged team have 59% lower turnover, 17% better productivity, and are 21% more profitable (1). In reviewing research over 20 years there are three themes that clearly and directly drive team member engagement: feeling respected, challenged, and inspired. These feelings result in team members showing up at work with a higher sense of entrepreneurial spirit and focus. The goal then is for managers to write each APR such that the team member leaves the APR feeling respected, challenged, and inspired.
The goal is for managers to write each APR such that the team member leaves the APR feeling respected, challenged, and inspired”
This new purpose and more strategic goal for the APR process creates a positive mindset for providing feedback. The next step is framing feedback following the respected, challenged, and inspired (RCI) model.
Respected: What things do you respect the most about the team member’s performance and work style? Consider projects completed, work ethic, times he/she helped a teammate, something new they learned, when they demonstrated high customer focus, a clever idea, …. the list is endless. If you established Objectives and Key Results (OKRs) or goals at the beginning of the year evaluate each objective with this respectful lens. Even if the objective wasn’t a full success, acknowledging the elements that were achieved is critical to being a respectful leader. Articulate why you value him/her and what specific things they have done to demonstrate that value. Specifics make this much more powerful than general statements. Take the time to prepare.
Challenged: Being a respectful leader doesn’t mean accepting mediocrity. The best companies have leaders that set a high bar. What can the team member do to be ever better? What skill or knowledge needs to be gained to grow their impact on the organization and grow their career? Frame the team member’s opportunities in the form of a challenge and make it future oriented rather than focusing on the past. Skill, knowledge, and behavior gaps are not negative. Everything has a next level of greatness. Think of yourself as a coach helping an Olympic athlete get to the next level. “I think you can contribute at an even higher level if you….” A positive, stretching expectation is very motivating. Another powerful tool here is to ask for their perspective. “What is one thing that you can learn or change that would make you a stronger (engineer/product manager/tester/analyst/whatever)?” Build from their own intuition.
Finally, inspire them. If you have done the first two well, 90% of the inspiration job is done. People who feel respected and challenged will be inspired. Augment this with why you are excited for the upcoming year and why you are confident in your company’s future. People want to work for winners. The APR process is a great time to remind them of all the good stuff happening in your organization.
The APR session should end with each team member you talk to bouncing out of the meeting with energy. Sub-conscientiously they are saying to themselves, “I feel appreciated, I’ve got a plan to grow, and I’m on a winning team.”
Sub-conscientiously they are saying to themselves, “I feel appreciated, I’ve got a plan to grow, and I’m on a winning team.”
A final procedural recommendation is having team members complete a self-assessment prior to your review. Most leaders/companies are already doing this, but if you aren’t it is a great tool for you and the team member. Reflection is a healthy exercise. In addition, it gives you a good sense of the alignment between the two of you and helps make sure you haven’t forgot anything that was important to them during the year (which would be viewed as disrespectful 😉).
The RCI model of conducting APRs transitions what is often a “ugh, do I have to” exercise into a tool to improve employee engagement and a highly engaged team is a clear competitive advantage.
(1) https://www.gallup.com/workplace/321725/gallup-q12-meta-analysis-report.aspx