I know what you’re thinking: An enormous waste of time…destructive to the relationship between managers and their teams…useless paperwork…

For years, performance reviews have been criticized. There is a current movement in the literature decrying the annual performance review ritual as archaic and ineffective, irrelevant, and possibly even counterproductive. (One high tech software company, Adobe, (under the leadership of my good friend Donna Morris, Senior VP People Resources) has attracted a lot of attention in the business press in the last year for abandoning the annual performance appraisal system and introducing instead The Check-In – an informal system of ongoing, real-time feedback.) This despite the fact that employees frequently report in surveys that they lack adequate feedback on their performance and behaviour.

And it’s unfortunate. Because the annual performance review is a key event in the ongoing cycle of managing expectations. It provides a crucial opportunity for a manager and his or her employee

[s] to openly discuss, one-on-one, the employee’s work, challenges and career ambitions.

One of the principles of performance management is that the appraisal process is an ongoing matter, one that should occur frequently throughout the review period (this is what Adobe wants to emphasize in their new process) so that the annual review report is a summation of conversations that have occurred already. There should be no surprises. This is the theory of effective performance reviews when done properly.

We are of the view that the annual Review of Performance is a necessary and powerful tool for monitoring and sustaining the performance of key individuals, especially in leadership positions.

But that said it must be done effectively or it is an empty exercise. The principle of frequent evaluation and review is still paramount but consolidated in an annual review. Despite the criticism, employees still want to know, on the record, where they stand.

An effective performance review contains these four components:

1. A comprehensive Position Description which contains a clear descriptions of the basic ongoing responsibilities of the position, and,

2. A set of personal competencies necessary to the performance of the duties and responsibilities of the position.

3. A set of performance goals that directly flow from the organization’s strategic and operational plan.
There should be no more than five and these should be the priority goals for which the incumbent is directly responsible and may actually do a substantial amount of the work required for the goal to be met. (If the person being evaluated is a manager or executive there may be many more goals for which he/she is accountable but can’t be evaluated for personally; no one can be held personally responsible for more than five performance goals, especially step-out goals.)

4. A set of personal development goals (one or two) which enables the Employee to remain current in her skills, prepare for future responsibilities and engaged in their own development.

In Part 2 we will examine the process steps in an effective annual review.