What Typical Performance Reviews Miss

Let’s imagine you are going into your quarterly performance review, armed with all the great results you’ve achieved over the last 90 days. You’ve tackled a few big projects and collect the data to show your results. You’ve rated yourself on the skills and competencies listed in your job description, and you’ve even identified a few areas for growth, since you know that’s going to be part of the conversation, too.

What a lot of HR systems that track performance reviews fail to connect the dots on is how your individual performance or projects or results impact the company’s business performance. At the end of the day, if you are wonderful and working so hard and getting great results, but your efforts and energy don’t move the company forward on its key results, then how valuable are your contributions?

In order to make the best case for your performance, you need to be able to connect it to your company’s goals. You’d be in a powerful position to ask for a raise or make a case for that performance compensation if you could say, "Here’s what I achieved, and here’s which specific company-level priorities and metrics I was able to impact with my work this quarter."

As an individual contributor, you need to know how your work is important to the business as a whole. If you aren’t able to clearly connect those dots, you should go ask your leader today: "What is the most important thing for me to focus on in my current role to move the business forward?”

If you have this role clarity and understand the connection between your goals and your company’s goals, you will be able to focus on what’s most important to achieve - this is not only helpful to you in your quarterly performance reviews, but it’s critical to your company’s success. If you don’t know what to work on, your company can’t harness the power of its talented people to work on the right things to move the company strategy forward.

If you are a leader or HR professional heading up the performance review process, consider the Gallup research which states, "Traditional performance reviews and approaches to feedback are often so bad that they actually make performance worse about one-third of the time.”

It may be time to reconsider this practice as it could be incentivizing the wrong behaviors in your organization. Rather than annual or quarterly reviews, consider the following instead:

Agree to a set of KPIs and priorities with each member of your team at the start of each quarter. The goals should align with the company’s quarterly plan. Using a software tool like Rhythm, you can make the appropriate connections to see how each person's goals fit into the company’s overall strategy.
Share the goals with the whole team; make them transparent. Don’t have team members working in isolation on performance goals that could be at odds or overlap with other team members’ efforts. Set them up for productive collaboration by making the goals visible for all.
Every week, ask your team members to update their progress on those goals. Provide coaching and feedback in real-time. Don’t wait for the quarter to end with missed numbers and failed projects; ask probing questions, brainstorm solutions and coach to improve skills along the way.
Rethink your compensation plans. Make sure you are incentivizing the right behaviors with your comp plans. If you want team members to work collaboratively, don’t incentivize competition between team members. If you want team members to set ambitious goals and really stretch, don’t tie their bonuses to achieving those stretch goals (otherwise, they may sandbag, and your company will miss out on the innovation that comes with stretching to hit an ambitious goal).
If you want a more formal review process in place, in addition to the ongoing feedback, consider using 360 performance reviews instead of traditional reviews. This may not be possible for every person in the company, but it could be a good way to help your high potential future leaders identify areas of improvement from multiple perspectives.