Globe and Mail: Why and how to overhaul the annual performance review

This article was originally published in the Globe and Mail

It’s no secret that the annual review stirs anxiety among employees as well as their managers, who usually dread its tediousness and potential for confrontation. Yet despite being widely documented as ineffective and demotivating, the annual review remains a continued practice with changes over the years made only to the format and tone.

What it really needs is an actual overhaul.

Today’s reality is that, for the first time in history, any given company may have multiple generations working alongside each other, with millennials influencing as much change on policy and procedures as their boomer predecessors did.

These differences bring their own challenges, especially when older workers may find themselves reporting to someone younger. In addition, the increased pace of modern business has led to new and rapidly changing roles, making the traditional annual review an antiquated exercise, at best.

While a formal, on-the-record summary of performance is still necessary, the annual review should be just a step in a continual process of performance management throughout the year. Employers must shift their mindset as to the performance review’s function and value for the employee, while balancing the individual needs of each generation in the workplace when it comes to the following three points:

CADENCE OF CHECK-INS

Thanks to the digital age we have all come to expect instant responses. And having grown up in an era of “instant gratification” from social media, instant messaging and text, millennials and their younger counterparts are especially more likely than older workers to require constant feedback and more frequent check-ins.

This is actually a good thing.

While managers have long been encouraged to provide regular feedback and periodic check-ins, what actually makes feedback meaningful is when it’s given in a timely manner. Employees benefit more from in-the-moment praise for a successful achievement, while immediate coaching for a “teachable moment” provides a stronger learning opportunity, regardless of age.

A more formal structure may include a weekly or monthly meeting with each employee to discuss their progress, performance and their developmental needs. Other programs may be less formal but, in all cases, they should keep to the spirit of frequent and regular “coaching” rather than evaluating, with the focus being on the employee and what they need to succeed.

HOW YOU COMMUNICATE

While all generations value communication, each has a different opinion on what is the best way to communicate. For example, older employees tend to prefer face-to-face interaction while young people tend to favour digital communication.

Generally speaking, preferences should be taken into consideration, but when it comes to performance-related communication, this is still best done face-to-face (or video conference calls for remote workers).

Most employees appreciate a tangible expression of their worth to the company, demonstrated by your time and full attention. This also helps provide more certainty that feedback was clearly received through body language and other visual cues that could provide useful positive – or even negative – insight.

That said, feedback should never flow in one direction only. Managers need to build trust with two-way dialogue that encourages the exchange of candid feedback, so employees feel comfortable sharing ideas. Save the digital communication for sending out timely meeting summaries and confirmation of next steps.

CATERING THE CONTENT

Just because something was always done a certain way doesn’t mean that’s how it has to be done now. There’s a new kid on the block, literally. Compared with older generations, who were more concerned with tenure and loyalty, millennials are more likely to change employers often and therefore will want specific feedback that relates to their career progression.

So, while “how you can help the company” may resonate with older workers, it means little to the younger ones. In this case, think about how you can shift the conversation to opportunities for growth and development and demonstrate how they can achieve their career objectives. Be clear on the competencies required for success and be prepared to discuss how you can help them further develop them.

Working together to set goals that actually have meaning to the employee, as well as the business, will help with motivation, engagement and retention, while encouraging ownership of their own development. Hence, some companies are shifting to a more supportive system of frequent coaching that focuses on the future, rather than dwelling on the past.

While a mechanism for providing feedback and supporting the merits of a raise, promotion or even termination are still necessary, to think that the annual review and one style of process works across the board just doesn’t make sense. Instead, design for a more flexible performance system that can be tweaked, and that provides frequent and better opportunities to engage and grow employees in an efficient and meaningful way.

Globe and Mail: Evaluating leadership performance beyond profitability

Originally Published in the Globe and Mail

Anyone who has worked for someone else can usually distinguish between good and bad leadership skills. The reality is that most leaders fall somewhere in between, striking some balance between doing certain things right but often getting others wrong. While nobody is perfect, if you're an entrepreneur, job seeker or middle manager aspiring to climb the career ladder, developing the right leadership skills will be key to your success.

While financial results are often used to evaluate performance, there's a need for leadership metrics beyond just managing a spreadsheet. A cursory read of the recent woes at big companies such as Uber and Google point to the fallout of corporate leaders' shortcomings.

But do you really know what aspects of your performance are being evaluated? Delivering on your quotas or the bottom line may be a given, but beyond profitability it's critical that employees in leadership positions focus on doing what's right, rather than simply doing it right. When you're evaluating yourself or the management team of a prospective employer, you'll need to objectively assess skills and abilities in leadership, strategy and people management – and identify areas that need improvement.

Leadership lessons: Great leaders don't just happen. Most have had the benefit of a good mentor, but also invest plenty of time reading, learning and absorbing the experience of other successful leaders who they admire. While the perfect mix of skills and traits may be arguable, there are several abilities that every leader should have or develop.

Commitment: This is a basic requirement, especially for entrepreneurs. How committed are you to achieving the business's goals? Do you have the perseverance and resolve to carry through with and mobilize others in the pursuit of your or the company's vision? Are you able to effectively sell that vision and keep the momentum going?

Communication: While public speaking and persuasiveness are important, active listening is key to being in touch with what's really going on, especially the higher up you are. You need to be engaged enough to read people and gain their trust. If you have a good person in the right role, but they don't seem to be thriving, take a deeper look at yourself to make sure you're effectively communicating your vision and listen to feedback on how you could improve.

Making decisions: Leaders often possess qualified expertise in one or several areas, but also need the courage to push forward despite uncertainty. Do you have the confidence to take risks and make sound decisions? If you don't have sufficient knowledge or skills required, do you learn them or find others who can provide it?

Developing talent: As the leader of an organization, one of the most important mirrors to your company's success is how the people under your leadership are developing. Are you actively developing and motivating staff? Do you encourage coaching and mentoring among the team? Are you seeing progress and growth in their roles?

Managing people: Employees take their cues from the top, so make sure you're setting the right example and culture. If a leader is authentic, and demonstrates interest in employees' and customers' well being, while encouraging open communication, that is how employees will behave – toward each other and toward customers. A leader who is rude and dismissive will only foster a culture of similar behaviour. Look at turnover rates, success of internal initiatives, employee involvement and other culture indicators. If there is a culture issue, employees either leave or they aren't engaged. If you identify an issue, it likely means you haven't been making workplace culture a priority.

Future strategy: The first question to ask here is, do you have a strategy? To be a leader, you'll need to plan for the way forward. Initially, this may simply be a plan for your own career trajectory, but once in a senior leadership role you'll need to articulate and sell your strategy for the company to the executive team and the company at large. Take a hard look at what you have in place. Can you show progress? Do you have everyone's buy-in or merely lip service? Is there a succession plan, and is it realistic?

Being good at your job does not necessarily translate into a promotion or invitation to the president's club. Many people are effective in their role but don't have, or perhaps aren't interested in learning the necessary leadership skills that can catapult them up the career ladder. By taking an honest and objective look at yourself in these and other areas, you'll be better able to hone the leadership skills that will help you stand out no matter what your position – to employers, staff or customers. Even if your ascent is already under way, there's always something more to learn on the path to leadership greatness.

CEOs: Do you really know how you’re being evaluated?

Uber’s scandals over the past year among the top echelons – along with those of other companies ­– points to a slew of failings at the CEO level. From allegations of sexual harassment and gender/racial bias to legal violations and general bad behavior, the company’s actions have revealed critical gaps in its leadership evaluation, whether that evaluation was self-imposed or external. If it isn’t already, this should a wakeup call for leaders and boards across companies everywhere.

Most businesses ultimately exist to create a profit, yes, but businesses are built on people. Leaders have a clear understanding of the financial metrics that they need to meet, often focusing on these as the primary indicator of the company’s health. But with a single mindedness on the numbers, you might not be giving enough thought to the other aspects of your performance that your stakeholders, board or advisory committee are taking into consideration. In an era of fraud, ‘bro culture’ and persistent gender or racial inequality, there are critical performance metrics beyond finances that must be measured if a company aims to succeed in the long run. And for a CEO to truly define what great leadership is.

So do you really know what aspects of your performance are being evaluated? It’s not uncommon for a CEO to feel blindsided when they are evaluated beyond the financial metrics. But beyond profitability, a critical role for the board of directors is also to determine the values to be promoted throughout the company, as well as act in the interest of the employees.  Here are some of the other aspects of performance that a good board is – or should be – evaluating for:

•  Developing Talent: Are the members of your executive team being developed?  Are you seeing progress and growth in their roles? Are they being encouraged to coach and mentor their staff? As the leader of an organization, one of the most important mirrors to your company’s success is how the people under your leadership are developing. Communication is important, but so is listening. You need to be engaged enough to read people and gain their trust. If you have a good person in the right role, but they don’t seem to be thriving, take a deeper look at your own leadership to make sure you’re effectively communicating your own vision.

•  People Management: Look at turnover rates, success of internal initiatives, employee involvement and other culture indicators. If there is a culture issue, employees are either leaving or they aren’t engaged. Culture starts with you at the top. If you identify an issue, it likely means you haven’t been making workplace culture a priority. Turnover and low productivity will cost you in the end, so make changes now to keep your organization running smoothly.

•  Future Strategy: First question to ask: do you have one? As the senior leader in your organization, having a plan for the way forward, and communicating it effectively is your primary goal. Take a hard look at what you have in place, and whether your people know about it.

Without these performance metrics a CEO, and the board, are not doing their job with due diligence. And ironically, with an eye focused solely on the finances, profits will soon take a dive, as Uber learned, ending Q1 with a $700 million loss. And it doesn’t take a lot of evaluation to know that’s not a good thing.