What do Performance Reviews and Santa Claus have in Common- 3 Years On.

For three years I have suggested that while Santa is fictitious, he adds real value to our lives and inversely, performance reviews are real and add very little or no value to our lives.

The Covid-19 impact on 2020 has only reinforced this conclusion.

Performance Reviews did not drive business outcomes this year. Neither did sales commissions and incentives drive the massive increase in the sales of home office and computer equipment. EBA’s and other centralised regulatory processes also failed to provide the platform for change. Rather, rapid adaption of work practices and work design did drive business outcomes.

The consensus seems to be that yesterday’s way of doing business needs a permanent shake-up.

In response, following is an alternative to the traditional performance appraisal model that I have successfully applied for many years:

1. Separate the disengaged employees (2%-ers), use a policy setting to exclude them from step 2 (below) and then manage the problems they cause through a Proactive Reengagement Program process. Note: While you might think they are the poor performing employees, there is no doubt they can do their job; it is just that they are choosing not to.

2. For all other staff, focus on Engagement and Continuous Improvement rather than reviewing performance.

3. Where you want to pay bonuses, start with a fixed budget figure without condition as to if it will be spent. Pay groups or individuals based on recognising results that they achieved in the past financial period and can be demonstrated as being ‘head-and-shoulders’ beyond the employee’s job description.

While this may seem counter intuitive at first, I ask you to honestly reflect on how well performance reviews increased business outcomes in your organisation. If the answer is ‘not really’ then perhaps yesterday’s way of doing business needs a permanent shake-up.

Focusing on engagement over performance has worked in the following industries:

· Mining

· Education

· Public Sector

· Not-for-Profit

If you are going to consider a change in the way you manage and reward staff performance, implement an alternative with a proven track record.