5 Performance Review Makeovers

Performance reviews suck. The process of annual performance reviews, ratings and rankings are universally reviled. Not only that, according to an in-depth analysis by Deloitte Consulting, tying compensation to performance reviews has a boomerang effect. It demotivates employees. Here's a better way...

"Rather than directly linking ratings and salary increases or bonuses, compensation decisions should be based on the critical nature of an employee’s skills, the cost of replacing them, their value to customers, and the external labor market." Deloitte University Press 2014.

If you are a CEO, you have the power to choose a better way to motivate and reward performance. Here are five alternative strategies used by Google, Deloitte, Adobe and Netflix. All of these strategies rely on continual coaching and gradual improvement. Which of these could work for your business? Check out the company match-ups at the end!

1. High Frequency Check-In - Either the employee or the manager can request a check-in every three months. During check-in managers seek to understand any performance challenges and follow up with practical suggestions such as training, shadowing, coaching or tools to assist employee growth.

2. Manage to Their Strengths - Design the work so that people are working on what they most enjoy and are best at. Then coach them to do even more even better. If a talented employee is struggling, the right conversation may be to change the nature of the work rather than push improvement in an area of weakness.

3. Peer Review - Groups of employees provide feedback on teamwork and performance. Along with manager perspective, peer reviews done right form a net of mutual respect, commitment to collaboration, teamwork and continuous improvement.

4. Focus on Context - Why are we doing this project? Why does a task have value? Leaders must continually reinforce why we do what we do the way we do it. Hire and train managers to communicate the "why" of work to their direct reports.  

5. Employee Selected Goals - Leadership defines the "why and what". Let employees select the "how". High performers crave autonomy. Innovation-centric companies find that allowing employees to set their own lofty goals and learn from failure fuels new ideas for better products and services.

Which of these strategies might make a positive difference in your business? Here's what's working for four of today's top companies:

Netflix - High Frequency Check-Ins and Focus on Context - the famous Netflix Culture Doc says: “When one of your talented people does something dumb, don’t blame them. Instead, ask yourself what context you failed to set.”    

Google - High Frequency Feedback, Peer Reviews and Employee Selected Goals  

Deloitte - High Frequency Check-Ins and Managing to Strengths              

Adobe - High Frequency Check-Ins and Employee Selected Goals