I cannot think of many human resource activities more certain to conjure up more groans and cries of “bureaucracy,” “busy work,” “outdated” and “not this again” than the dreaded performance review. This of course results in procrastination, unproductive if not uncomfortable conversations, and complaints about “this form is stupid.”

Managers take comfort!  Your employees dread this process as much as you do!  What could be more de-motivating than an unprepared,  incomplete, irrelevant and/or dismissive process by which you are “graded” looking back on things you did not know were important , or worse, really aren’t important!

Okay, maybe that’s too harsh.  But the reality is performance reviews are generally looked on as a once a year administrative task, wasting time and money, that HR people force on you.  Yeah, sort of like taxes.  What you might not know is that the best run companies, big and small, take this process seriously and reap the benefits – perhaps at your expense.

You’ve heard it before.  “Good performance appraisal is not an event, it’s a process.”   But what does that really mean?  It means the year-end review and the forms are mere milestones in a much larger, more relevant approach to managing your business.  The best run companies see performance management as a method to “operationalize” their business or strategic plan.  It is THE plan for each individual to insure your company achieves its goals.

I generally avoid sports analogies, but it is useful here.  Imagine a highly successful pro football team where the coach sits with each player at the end of the season to tell them what they did well and where they should develop and improve.  Checking boxes on a form and writing a summary such as: “Peyton is a real team player and contributes to our success.  Next year I hope to see him throw for even more yards.  Thanks for your hard work.”

Not real useful or specific and certainly not timely.  Real teams have specific plans for each player, prepare those players for their role, coach them week to week with specific feedback– both positive and for improvement, and discuss future development.  Year-end “reviews” are a mere summary of the coaching and planning that has taken place all year long and a time to reflect and gain input on the year ahead.

Performance management, and the reviews in particular, are a headache because as leaders we make them irrelevant.  Creating a few focused objectives for each employee — the specific “whats” and “hows” for executing your business plan — should be the aim.  Managers should be using this all year long to check, coach and refine the performance of their employees.  It is a win-win.   Managers are less likely to avoid discussions with employees because they can focus on objective performance issues and give ongoing coaching instead of vague, uncomfortable  feedback that strays into personalities or subjective perceptions.   And employees win by seeing  the relevance of their work.  By the way, meaningful work, feedback, and growth opportunity all rank higher than pay when it comes to motivating employees.

As I have told clients, I would rather you use a blank sheet of paper and crayons to capture a few clear, specific objectives that are tied directly to the business plan than a fancy form with lots of check boxes and generic language and behaviors.

So what about those best run companies?  In an in-depth study (Bernthal, Rogers & Smith, 2003) their improvements after implementing an effective performance management process were astounding.  Managers found:

39% improvement in innovation
30% improvement in employee grievances and complaints
54% improvement in job satisfaction
62% improvement in customer satisfaction
44% improvement in quality
69% improvement in employee productivity
50% improvement in financial performance

In a new era of competition and strain on business success, who wouldn’t like to see this type of impact?  When you set up performance objectives as an extension of your strategic plan for success, and not another “tax” on managers and employees, coaching and reviews will bring employee motivation to life, not death.