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Episode 19 of “The JoyPowered™ Workspace Podcast,” extends our “Constructive Performance Reviews” episode and is eligible for one SHRM credit. JoDee and Susan discuss how to do employee reviews right, with input from “Measuring to Manage” author Mike Hill and trainer and speaker Catherine Schmidt. They talk about using data to measure performance, whether you should have performance ratings, and their recommended performance review processes.

There’s been talk in the news lately about the death of the annual performance review, and since most people hate them, people are excited about this. Not having annual reviews doesn’t mean you don’t need to do any performance reviews at all, though; just think about doing it in a different way. If you can create a culture of communication, where you’re constantly talking about performance, holding people accountable, and sharing information that helps people be better, then you can stop doing formal reviews, but if not, you need some type of formal conversation about performance and goals. And make sure performance is documented; if you have to defend action or decide on merit-based raises, you’re going to want to have something written down.

Often companies don’t want to have discussions because of the uncomfortable dynamic between managers and employees, the amount of time it takes, and disbelief in the correlation between ratings and actual business results. There are ways to make performance reviews meaningful, credible, and effective, though; be sure to train the people giving the reviews, and give those people great reviews that will make them want to pass their experience along. Have a true heartfelt conversation rather than checking off boxes on a form, and focus on what they’re doing well without ignoring weaknesses. Rating systems can be tricky; people don’t like being labeled, and they make it easy for a manager to check a box rather than writing a narrative. “Meets expectations” and “exceeds expectations” are often better ways to rate performance than numbers.

JoDee and Susan talk with author, public speaker, and business consultant Mike Hill, who wrote a book called “Measuring to Manage.” He found that successful companies were measuring everything and found metrics that his sales team needed to pay attention to if they wanted to achieve their goals. After creating these metrics, the team exceeded the company’s goal for sales by about 17% in the first year. Measurable data gets everybody on the same page so there’s no confusion about what is to be produced, and employees can go home and know whether (and why) they had a good day or they need to try harder tomorrow. It also helps you back up wanting to fire someone for not performing when you hold everyone in the group to the same metrics. To put this in practice, determine the number one goal for the position, identify the action steps that help accomplish that goal, have discussions more than once a year, and separate meetings about compensation from meetings about performance.

Trainer and speaker Catherine Schmidt calls in with her thoughts on performance reviews. She discusses the negative connotations for the annual review process, where managers feel like it’s an administrative burden, HR feels like the police, and employees are only thinking about ratings and raises. Catherine recommends doing away with ratings and rankings, and if you need them to determine compensation and raises, creating “shadow ratings” that are only used internally and never shared with the employee. Formal annual review meetings should be replaced with more frequent feedback, with annual “stay interviews” where the employee is able to give their own feedback about the organization. Catherine also talks about how increased turnover can be good, how millennials are affecting performance reviews, and potential issues with moving away from annual review meetings.

In this week’s listener mail, Michelle, a nanny, wants to know how to remind her bosses that they promised to increase her pay when all the kids were home for the summer.

Mentioned in This Episode:

• Purple Ink, the HR consulting firm JoDee owns
• Susan Tinder White Consulting, the HR consulting firm Susan owns
• JoyPowered, JoDee’s book
• “Want to Do Away with Performance Reviews? Think Again” a Corporate Executive Board study that says only 6% of Fortune 500 companies have stopped doing annual performance reviews
• Adobe, GE, Netflix, and Accenture, companies that don’t have an annual performance review process
• Measuring to Manage, guest Mike’s book
• Mike’s website
• StrengthsFinder, an assessment JoDee and Susan promote