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Performance Objectives and the Annual Review January 29, 2012

Posted by Tim Rodgers in Management & leadership.
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It’s the beginning of the year and for many companies it’s the season for performance reviews. It’s time again for managers to reflect on the past twelve months and evaluate whether or not their subordinates successfully completed their assigned objectives. Today I’ve got several complaints that will surely sound familiar to anyone who’s been on the giving or receiving end of this process.

Generally I like the idea of a contract-style performance review (See In Defense of the Performance Review.) In theory it ensures that if employees meet their objectives, and those objectives are aligned with higher-level business strategies, then the company benefits (through the additive and aligned contributions of all employees) and employees benefit (through some kind of performance-based base pay increase or bonus).

Unfortunately the execution typically falls short, maybe because everyone is just trying to get through the process as quickly as possible. I joined my current team in mid-year, so I didn’t participate in the strategic planning exercise that supposedly trickled down to individual objectives last January. Looking at them now, it seems that all of the objectives are basically tasks that were either completed in the first few months of the year or became irrelevant as business priorities changed and were therefore ignored. Shouldn’t it be possible to come up with objectives that don’t become meaningless by mid-year? If it’s not possible, then there needs to be a mechanism to re-write and update the performance contract to keep up with the new priorities.

Back in the mid-90s managers were taught that objectives are supposed to be SMART (Specific, Measurable, Attainable, Relevant and Timely, from one popular interpretation), but instead they tend to be descriptions of tasks to be completed and checked off a list. These are “binary objectives,” they’re either done or they’re not done. Just as attribute data provides much less information than variable data, there isn’t much value in simply reporting that a person successfully completed an assigned task. Objectives should state the measurable results that are desired, leaving it to the individual to figure out the best way to achieve those results. The ability to do so without detailed instructions is one of the things that differentiates performance.

Another problem comes when managers are asked to rate the performance of their team members as “meeting” or “exceeding expectations.” I remember a review meeting with one of my direct reports some years ago where they wanted to know what specifically they had to do in order to “exceed expectations.” I realized that as soon as I started giving examples of things they could have done, those suggestions became new expectations. Doesn’t “exceeding expectations” require doing something unexpected, and therefore impossible to describe in advance? People who exceed expectations are not just over-achievers, they’re the ones with the ability to generalize and extrapolate.

What are we really trying to accomplish when we provide performance objectives? Certainly we need to communicate the responsibilities of each person’s position, and help them understand what successful execution looks like, but I think we should also inspire people at all levels to look beyond their near-term assignments and contribute more. We need to help them understand how the business works, who its customers are, and how it competes; and then we need to listen to their ideas and encourage critical thinking. We need people who can execute, but we also need people to lead, and the performance objectives we assign should make it clear that both are valued.

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Comments»

1. David Kanigan - January 30, 2012

Good post…thanks for sharing. Dave


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