New Performance Ratings Get Mixed Reviews

a partial view of a performance review rating form

Based upon feedback from thousands of performance management training participants, we know what employees and their managers don’t like when it comes to performance management. We know they don’t like the overly formal and not very effective annual performance evaluation. But the ratings systems that have replaced that old stand-by are getting mixed reviews. What actually works to improve an employee’s future performance?

Some companies have gone so far as to eliminate rating systems altogether. The reaction has been similar to what happened when some schools discontinued grading their students. Some pupils thrived with the no-grade system. Even though it felt “really weird,” they felt they could focus more on learning the actual material rather than cramming for the perfect test score.  But some, especially the best students, missed having a gauge of just where they fit in their class. They missed the feedback and they wanted those “A’s”. Not surprisingly, employees reacted similarly.

Many organizations that scrapped the rating systems completely claim that the conversations around performance were much richer because they were focused on outcomes rather than the rating labels. Employees at these companies felt less threatened, had fewer distractions and were not consumed by internal competition. On the other hand, in some organizations where ratings were dropped entirely, many felt that performance discussions were less valuable. Many perceived that the performance conversations were less focused, managers spent less time on performance overall, and employees were confused about where they stood. Additionally, the link between performance ratings and pay raises became blurred.

So where does that leave us? After two decades in the field of performance management training, we advise that you adopt a performance system that helps to align your corporate culture and talent with your business strategy.  Some cultures thrive on competition and employees actually want quantitative feedback on performance. They want to know where they stand vis-à-vis others on their team. Other cultures value a more free-wheeling approach to evaluating performance where the learning process is more valued than the measure. 

If you think your organizational culture would support, and actually benefit from, a less rigid performance management rating system, test out more flexible grading with a pilot group. Give it a year or two, survey the group and their managers for their reactions and then decide if the experiment should be expanded throughout the company. 

3 Factors to Upgrade Your Performance Management Program

A huge upwardly directed arrow with people around

The better your performance management training, the better your performance management system works…and the better all-around for your high performance organizational culture.

If you really want to tune up the overall performance of your employees, you need to consider three factors:  alignment with the organization’s strategy, talent capabilities for now and for the future, and a corporate culture that fosters positive employee engagement. Let’s take them one by one…

Organizational Alignment
We define organizational alignment as the optimum combination of business strategy, corporate culture and talent to maximize performance.  Our organizational alignment research shows that highly aligned companies grow 58% faster, are 72% more profitable and outperform unaligned companies in terms of:
Customer Retention 2.23-to-1, Customer Satisfaction 3.2-to-1, Leadership Effectiveness 8.71-to-1, and Employee Engagement 16.8-to-1.

Unless your work force understands, accepts, agrees with, and commits to the values, vision and purpose of your organization, their energies will be diffused in different, and perhaps competing, directions. All functions need to be clear on the company strategy for success so you are all pulling together and toward the same goal. Performance goals in sales and marketing should align with performance goals in manufacturing, for example. Imagine if those in manufacturing were pushed to sacrifice product quality for on-time-delivery while the performance of sales was dependent on product quality and reliability.

You need to have the right people in the right place at the right time with the right competencies and attitudes to execute the business strategy. When you align your talent with your strategy and culture, performance is more a matter of continuous improvement than measuring the status quo. But you need more for overall organizational success…you need the resources and knowledge sharing that supports your talent. Talent, timely information and resources need to work in concert to maximize performance.

Employee Engagement
You have the strategy, you have the talent, you now need the culture that engages, retains and grows your work force. When workers are fully engaged, they almost manage their own performance. They look at the agreed-upon success metrics for guidelines and then figure out what they need to get even better. The key is that they care. They want to do their best because they want to contribute meaningfully to the company enterprise, they are committed to team goals and they have their own high standards for excellence.

We recommend companies involve their employees as much as possible in the performance management experience. Define together the goal of performance management and performance management training. Ask individual employees what they need to get even better at what they do. Agree upon goals and measures that will be tracked and then discussed on a frequent basis. And, most important, make sure your managers have the communication skills to give and receive feedback effectively…always with the desire to support their team’s growth and success.

2 Actions to Improve Your Performance Management Approach

illustration of the 80-20 rule where many employees are in the 20% sector of the circle and only one in the 80% sector

Performance management training experts know that, on average, 20% of employees deliver 80% of the value.  Wouldn’t you love to shatter the 80/20 rule and get more of your employees operating in the higher performing sector of the circle? 

Sometimes, all it takes is improving your performance management effectiveness from good to great.

From our perspective, the purpose of performance management is to improve employee productivity and engagement through clear expectations and constructive feedback combined with the right mix of motivation and support.  But the purpose is often lost in the process. 

Here are some alarming statistics. According to Watson:

  • Only 30% of workers believe their performance management program truly improves performance
  • Only 20% think that such programs help sharpen the skills of low performing employees. 

It seems organizations should re-think what we are doing in the name of performance management.

With over two decades worth of experience helping our clients in the field of 
performance management training, we have come to believe that you need to focus on two factors to take your performance manage system from good to great.

  1. Make sure you are measuring the activities, behaviors and skills that matter most.
    First clearly define what success looks like for the job, for your team, and for the company as a whole. Then identify the critical few goals, activities, behaviors and skills that matter most in terms of success.  While assessing against generic or “best practice” competencies is tempting, our experience tells us that they are of little help in terms of moving the needle for your unique strategy and organizational culture.  Do the hard work required to work with the specific set of behaviors and competencies that spell success in your particular situation.
  2. Establish an ongoing feedback and performance exposure system.
    Rather than relying upon an annual review by a single manager, you will gain far more accurate, useful and motivating information from a process that welcomes more consistent feedback from all levels and at any time the behavior is observed. Consider using technology to provide a way to take advantage of simple-to-use, micro-surveys. Your range of data on an individual employee will be broader and provide a more accurate picture of desired behaviors and areas for improvement. Feedback that is frequent and to-the-point will do far more to move behavior and performance in the desired direction than once-a-year observations by a single individual.

To improve performance, make sure your performance management system is the best it can be.

Is Your Performance Management Training Performing?

a measuring tape is held under the word "performance"

Performance management is no longer just about improving an individual employee’s performance. The vast majority of leaders at our clients tell us that performance management is a critically important lever to drive business performance.  They are right; done well, setting, exposing, managing and improving performance can and should have a huge impact on an organization’s success. 

Though many organizations are changing the way they implement performance management processes, research shows that almost three-quarters of those surveyed believe that more change is still needed. The question you need to ask is whether or not your performance management system is doing what you need it to do to meet your business challenges in a way that aligns with your corporate culture and talent management strategy. 

Here are a few guidelines to help you decide if and how you should adapt your performance management approach to better meet current needs.

  1. Don’t just manage performance…improve it.Maintaining the status quo just doesn’t cut it these days. Organizations, and their individual employees, need to constantly learn, adapt and improve in order to stay competitive. This requires consistent and targeted performance coaching so that every learning opportunity is leveraged for better and more sustainable performance.

  2. Individualize the system.|Performance management becomes real only when it directly applies to individual, team and organizational performance. The better you can tailor your approach to the way an individual learns best, the more effective your performance coaching will be. Know what critical few behaviors you want to improve that matter most. Share behavioral goals with your employees and co-create a performance plan for personal development that includes an effective way to monitor progress, learn as you go and reward performance.

  3. Keep the process transparent.There should be no secrets here. Performance expectations and exposure should be clear and transparent to all. Though the goals are likely very different for each employee according to their job description, each team member should know what others on their team are striving for and where they stand. With so many businesses depending upon collaboration and teamwork to get things done, teams should know how and how well each member is contributing to the overall goal.

  4. Agree upon what high performance looks like.Behavioral and performance goals should be set with the end result in mind based upon what specifically constitutes high performance for each and every job. As individuals and their teams move in the right direction, take a break to acknowledge and celebrate the progress. This way your employees will feel more appreciated, encouraged and engaged in the process.

3 Steps for Better Performance Management

3 cartoon hands point to 3 steps on an upward growth graph

The field of performance management has had a fascinating evolution.

It began in 1950 with the Federal government requiring an annual review of all employees for a 3-level rating (outstanding, satisfactory, or unsatisfactory). Next came the “management by objective” philosophy in the 1960s, followed by Jack Welch’s concept of “stack ranking” at GE in the ‘80s. 360 degree reviews were introduced in the ‘90s and still reign today. But there are other methods as well: peer reviews are currently used at Google to supplement manager reviews and so-called ongoing reviews have gained favor elsewhere.

In general, though, employee performance reviews are not only disliked by both employees and employers, they are not having the desired impact of improving performance. According to our high performance research, the vast majority of leaders do not believe their process for performance management drives business value or higher performance. 

 Here is what we do know from our twenty-plus years of performance management training…if you want your performance management process to create higher performance, you need to make sure you follow these three critical factors for success:

  1. Don’t adhere to an artificial schedule for reviewing performance…do it on the spot. Employees benefit far more from feedback that is given when and where the behavior occurs. It is far more valuable to learn right away how you did something “right” or how you could do it better. Give your employees a chance to make small course corrections in the moment. Give feedback regularly to open up lines of communication around continuous learning. The emphasis should always be on betterment and offered in an encouraging way. Accentuate the positive; feedback should be more about the do’s than the don’ts.
  2. Look forward more than backward.One of the major problems with annual reviews is that when the feedback comes, it is too late to do anything about it. No wonder employees hate the process so much! I think it’s safe to assume that most people want to get better at what they do. Ongoing feedback will help. But a piece of that desire to improve should be a look at what the future holds. Ask your employees about their future goals and where they would like to be in the next three years. Help them identify and take advantage of growth opportunities. Be their career counselor and engage them in the process.
  3. Find out what they really think.Employees won’t be truly committed to a performance management program unless they are truly engaged in their work. Ask them what you as their manager and the company as a whole can do to support their success. What is standing in the way of their performing to their maximum potential?

Take these three steps and your performance management program will be far more effective and far more satisfying to employees and employers alike.

Learn more at:

What is the Purpose of Performance Reviews?

A cartoon boss addresses his employee: "Your evaluation is based on the next 30 seconds. Go!"

In which direction should the employee in the cartoon run? On what will his evaluation depend in the next half minute? The goal is unclear and the employee looks rightfully paralyzed by the lack of clarity from his boss. Do you see any parallels here to the way performance reviews are handled at your firm?

Our employee engagement research tells us that less than 1-in-5 companies are satisfied with the way performance management is handled at their company. It has been a long time since we worked with an organization that felt that their performance management process was worth the effort or was a major component in creating a high performance culture.

We think organizations need to get back to performance basics instead of wasting time and money on complicated performance management systems and processes. What, indeed, is the purpose of performance management?

At LSA Global, we believe that the fundamental purpose of performance management is to:

Create clear and agreed-to performance expectations
Align individual contributors with the overall strategy of the organization 
Fairly and consistently expose individual, team and organizational performance so everyone knows where they stand
Enable targeted coaching and professional development opportunities

Ideally, performance management should be an ongoing component of your high performance culture. Employees should expect timely, constructive, relevant and helpful feedback on a regular basis. The once-a-year review does little to change behavior on the job. And it does a lot to discourage efforts to improve. Few are happy at their conclusion. The manager has struggled to put the report together and the employee only hears the negatives. What is to be gained by such a painful encounter? Not much.

Take a good long look at how performance management works at your company. Make sure that your managers know how to give feedback that is well received and acted upon. Do they set clear expectations for performance? And do they hold their team members accountable for meeting the standards for performance? If ever you aspire to build high performing teams, setting up a proven performance management program (and getting your managers prepared to drive it) has to be your first priority.

Hack Performance Management by Hiring Right

a cartoon figure climbing up a ladder is passed up by a business woman with a jet pack

Can you manage performance before an employee is actually on the job? We say that you can.

Performance management training typically addresses important manager effectiveness skills around setting clear standards and expectations, measuring performance against those standards, regularly holding employees accountable, and coaching effectively using constructive feedback to improve on-the-job behavior. Managers who consistently do these things well have teams with higher levels of engagement, performance, and retention.  They also report lower levels of employee relation issues. 

How can you get a head start on managing performance and giving your employees a boost up that career ladder? By hiring well in the first place. 

When you can put the right person with the right skills and attitude in the right job in an organizational culture that suits them, you are well on your way to engaging, developing and retaining a high performer. There are pre-hire assessment tools of course. But they often don’t tell you all you need to know to make a good hire. They may tell you something about a candidate’s personality and aptitudes but, unless you can match those to a specific job with a specific team and manager and corporate culture, those hiring tests cannot guarantee a successful placement. In order to hire “right,” you need to know not only the behavior-based competencies and attitudes and motivations of your candidate, but also exactly what is needed for success on the particular job in your unique environment. The match is critical.

There is a lot of hiring buzz these days about cultural fit. We define corporate culture as how things truly get done in an organization. It is represented by the way people think, behave and work.  And, we agree, that fitting into the corporate culture matters enormously. But there are two other factors that should be considered as well – Talent and Strategy.

Find an employee who has the talent for the current and potential future job profile, who operates on a day-to-day basis in a way that fits with the team culture and who is motivated by what drives the corporate strategy and you have a winner. Managing their performance on the job will be a breeze. Your greatest challenge will be to stay ahead of them and provide enough learning opportunities and stretch goals to keep them on a satisfying growth curve.