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Performance Review 2.0: Eight Ways to Overhaul Your System

Author: Quint Studer
January, 2011 Issue

Changing your approach to performance reviews will not only make them more effective, it also can have a positive impact on company culture.

Performance reviews are necessary. And when they’re done properly, people actually like them. Employees want to know how they’re doing. They want to connect with their managers. And reviews give leaders an opportunity to measure performance results and make rewards or changes accordingly.

That being said, many companies could stand to overhaul their performance review system. Changing your approach will not only make them more effective, it also can have a positive impact on company culture. Here are a few guidelines:

Think of them as a process, not an event

Let’s put the traditional performance review in context. That annual encounter is expected to yield a productive meeting of the minds, followed by growth and progress on the employee’s part. It rarely works that way.

Instead, if you lay the groundwork for performance reviews all year long by practicing regular rounding for outcomes, you can make personal connections, recognize success, find out what’s going well and determine where improvements are needed.

Rounding means asking specific questions in the right sequence: Do you have the tools and equipment you need to do the job? What’s going well? What isn’t? Always listen and write down the answers and then follow up—if you don’t do this last part, it negates all your hard work.

When you build your reviews on a foundation of rounding, they become meaningful. They’re the culmination of lots of mini-meetings. Neither party is surprised by what the other party says.

Hold them four times a year

That’s right, a quarterly performance review. If this sounds like a lot of work, it is. But it’s also far more effective than the annual review, which too often reflects an employee’s performance during the previous month leading up to the meeting. What if that month turns out to be an employee’s one bad month in an otherwise good year? Quarterly reviews are a far more accurate reflection of the employee’s overall performance.

Link reviews to organizational goals

Surprisingly few leaders structure employee evaluations around concrete, companywide goals. When employees know they’re going to be graded on the progress they made toward goals the entire company shares, they will alter their behavior. But don’t just impose these goals. Get employee input up front. This helps employees “connect the dots” regarding the impact they have and makes them feel like an important part of the whole.

Make the criteria as objective as possible

What do words like communication, organization and professionalism really mean? Perceptions vary wildly. What you can’t argue with is hard numbers. The medical field is notorious for this—Which department has the highest patient satisfaction scores? Which one has the lowest employee turnover?—and there’s no reason other industries can’t take the same approach.

Strive to make reviews conversations, not confrontations

I endorse the 90-day plan, a coaching tool designed to manage dialog between a leader and a supervisor on progress toward goals and to put specific actions in place. While 90-day plans tend to involve the management team, the “coaching” aspect should hold true for all employees. The best leaders draw employees out, solicit their ideas for improvement and offer concrete suggestions on how to better pursue the goals you’ve set together.

Avoid falling back on we/theyism

Let’s be honest. Most employees come into performance reviews with the hope of walking away with a pay increase. Leaders often have to disappoint them. And many of them fall prey to the “we/they” phenomenon—as in, “Well, Rick, I fought for your pay raise but you know those tightwads over in corporate.” Problem is, we/theyism has a divisive effect on company culture.

Instead, make an effort to position the company as a united entity. It’s fine to say something like “Sales are down 11 percent and no one is getting raises. But we have a great team, we’re all working hard, and I’m confident we can turn things around.”

Make sure all leaders are singing from the same choir book

Train your managers in how to do these new performance reviews before you roll out the initiative companywide. Otherwise, you’ll see inconsistent results in companywide goals.

Use reviews as a springboard to move low performers up or out

What do you do when certain low-performing employees refuse to budge? What you don’t do is let them hang around year after year. When they’re tolerated in a company, they tend to pull middle performers down to their level. Worse, your high performers will get disgusted and leave. Get rid of your “bad apples,” and your middle performers will naturally start to emulate the behavior of your star employees. The reviews I’ve described let you quickly build a case against them.

Admit it: Not having to endure the annual “performance review” charade of old would be a huge relief for all concerned. But the benefits reach far beyond the meetings themselves. It’s no exaggeration to say transforming your performance review system can transform your entire company.

The way you motivate and reward employees is everything. When employees believe they’re treated fairly and are engaged in the company’s mission, when they’re coached toward meeting clearly stated goals, they’re going to put their hearts into their work. We’re talking about nothing less than changing the culture of your company. That’s a huge, major step toward long-term success. I’ve always said it and I still believe it: A great culture outperforms strategy every time.

Quint Studer is founder of Studer Group, an outcomes firm that implements evidence-based leadership systems that help clients attain and sustain outstanding results. He was named one of the “Top 100 Most Powerful People in Healthcare” by Modern Healthcare magazine for his work on institutional healthcare improvement and was named “Master of Business” by Inc. magazine. He’s the author of Hardwiring Excellence: Purpose, Worthwhile Work, Making a Difference; 101 Answers to Questions Leaders Ask; and Results That Last: Hardwiring Behaviors That Will Take Your Company to the Top. For more information, visit


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