THE PERFORMANCE REVIEW CHALLENGE
Performance reviews are some of the most stressful conversations of the year. No-one likes being judged (and no one likes passing judgment)! So everyone gets uncomfortable! Even your more positive reviews can be a challenge, and here’s why -
Most companies follow the same review process, and they tie “performance evaluations” and “merit increases” together. You’ll be asked to rate each employee into a performance category, and that category will determine the merit increase you can give. (You don’t get much latitude! )
There are two common disconnects you can anticipate -
- You give a very positive review, but can only give a modest pay increase. Or
- You have to give a really good employee a 'meets expectations' rating.
We call them 'disconnects' because the employee is caught off guard. They're disappointed because they expected something more.
Here's the challenge: Inflation is still around 5%, and the average bonus payout for most companies is going to be about 3%. You might be able to give your top performers a 4 to 5% increase, and that's going to be disappointing.
When you tell someone who's been getting good feedback that they're 'meeting expectations', they're going to be disappointed too, because they've worked really hard and they interpret a 'meets expectations' rating as being 'average', 'acceptable', or just good enough.
The only way to avoid this is to manage expectations upfront, and you want to do it in a team setting. If the average merit increase is going to be 3 to 4%, everyone needs to hear it at the same time.
You can expect the group to be disappointed, so let them vent and process that news together. You need to empathize and acknowledge the group's emotion. You're not asking the group to celebrate the news, and don't try to sell it as good news.
When bad news applies to a group, let the group cope together and let them cope proactively. Bad news always gets delivered, and when it trickles out, people cope reactively and emotionally, and you just prolong the pain.
If most of your people are going to fall in the 'meets expectations' category, you've got to frame that rating in a more positive way than just being “good enough”. Acknowledge how hard people have worked and how appreciative you are, and the value you place on people that meet your high expectations. When you manage these expectations up front, people can prepare, and when you meet one-on-one, you're going to have much more productive discussions.
When you schedule all your reviews, start with your high performers first. And start with the people getting the higher end of the merit increases first.
People are going to talk, and you want your top performers talking first. They're the standards you want the rest of the group to shoot for, and you want them influencing the post review narrative.
Try to schedule your reviews earlier in the day, when people have more psychological energy; and set aside plenty of time because you don’t want to cut the conversation short.
You have to prepare in advance! And the best way to prepare is by giving constant, consistent and timely feedback throughout the year. The best way to support your evaluation is by referencing the feedback that your employee has already heard.
Consider breaking the performance review into two separate meetings. Use the first discussion to focus on their review and merit increase, and the second discussion to set goals and discuss plans for the upcoming year.
This follow-up discussion is critical! And you should prepare for them in advance, as well. This is when you offer resources, guidance and training opportunities that support their growth.
The best performance reviews are 2-way conversations. You have to listen and be willing to accept their feedback. You can empathize with them, but don’t back peddle.
Remember - each performance review that you deliver is also a reflection of you! Their performance is your responsibility! You own their performance, so you’re actually reviewing a joint outcome.
When the review cycle is over, managers tend to breath a sigh of relief, but performance management isn’t an annual event! It needs to be an ongoing process! When your feedback and coaching is part of your normal routine, the annual performance review becomes much less stressful for everyone.