Is your year-end performance review process an anchor or a springboard?

Whether you are a senior leader, manager, employee, or even an HR professional, you may anticipate the year-end performance review process with dread. The workload is daunting: self-assessments, written performance reviews, alignment of performance with compensation decisions, stressful performance discussions, education of new managers, seemingly endless forms and process, and so…much…time. If you are a C-suite member, you then must calibrate the output into current-year corporate goal achievement and next-year planning. This whole effort can stretch from October through February or March of the following year, resulting in real opportunity costs.

The process of measuring performance shouldn’t be an anchor. If you focus on what’s important with the proper perspective, a well-planned year-end performance measurement process can be a “springboard” for future strategic business and scientific vision execution.

What does a year-end performance process springboard look like?

Leadership’s continuous focus on the big picture. Start with the simple questions: What kind of year are we having? What do we think we should have achieved by now when we set this year’s goals? What did we do well? What did we not do well, and can we improve? If you collectively align on the big picture, you can create a consistent narrative that can be rewarding, developmental, and objectively supported throughout your company. This narrative will support richer and more productive discussions with your board of directors, executive team, and employees.

Assessing functional and team performance. Oftentimes performance management is hyper-focused on corporate and individual performance. But what role did each corporate function play in the year’s goals execution, and how did teams contribute? The executive leadership team can set the tone by setting topical goals requiring multi-disciplinary functional and team collaboration. Provide context to each function about their specific role in ensuring execution of all corporate goals, and then create a cross-functional team that continuously assesses progress and results. If the executive team models this approach, it is more likely that sub-functions will follow suit with increased collective ownership, development, teamwork, and recognition.

Addressing the state of your culture. Most performance reviews provide self-review and manager feedback on the “what” and the “how.” In other words, how were the company’s values reflected in how you performed your job, since the values underlie all that is important in how the company executes on its vision. Unfortunately, examples of these behaviors (good or bad) are often relegated to the individual performance review and performance calibration discussions. What if you collected and summarized this information to reflect on the overall state of your company’s culture? If you then have something more tangible and universal to calibrate with other data, such as engagement surveys, the company can take actions to recognize and reward the right behaviors, create modeling/mentoring opportunities, and identify themes within the company, functions, and team.

Transcending compensation as a reflection of performance. If your year-end performance process ultimately boils down to a mechanism for calculating bonus and merit pay and approving promotions, it’s no wonder your process is becoming an anchor. Instead, the process should lead to productive discussions and action plans about career growth, publicly recognizing achievements (including failed outcomes but with the right approach), balancing efforts with results, providing transparency and reality to enhance trust, making difficult decisions that have broader long-term positive impact, and, most importantly, tying tangible examples of individual performance to corporate achievement. Career growth, new opportunities, recognition (even a “thank you”), and context for how a person’s job relates to mission accomplishment can contribute real value beyond compensation and can accelerate a vision-driven culture.

Committing ruthlessly to “process light.” All of this takes a lot of work and commitment. But that doesn’t mean the process can’t be efficient. Focus your up-front planning to eliminate unnecessary process, forms, meetings, and approvals. Consider integrating preliminary goals and performance discussions now with your team members, rather than waiting for the evaluation form to be completed. And consider reducing your evaluation form to one page. The best performance reviews are safe and honest feedback discussions based on concise bullet points. If you need lengthy paragraphs to describe performance feedback, then you should reflect more on the discussions you are having throughout the year. There should be no surprises. Eliminate numerical or descriptive “expectation” rankings and forced peer comparisons in favor of objective and subjective factors in determining individual, team, functional, and corporate achievement. Compensation and other rewards can flow from there and within budget without requiring a distribution curve. Most human beings are not inspired by being categorized, labeled, and objectified.

Communicating and celebrating – well. Lastly, communicate in a way that celebrates all the good things that happened in the previous year, highlighting those who contributed, whether they are being promoted or not. To cast a broader net, recognize team achievements and those who model desirable behaviors. And reflect on the narrative: what did we collectively do well, what can we do better together, and what should we be excited about in the year ahead. You don’t need to wait until bonus payouts to deliver this message. The performance year is too short already – start building and delivering those messages and actions now!

Performance management processes take years to perfect and are understandably different in every company. By partnering with your HR experts and aligning your process to what’s important, the result can be a year-end process that is no longer an anchor of drudgery, and instead a springboard toward performance-driven vision achievement!