Performance

CEOs, you need to change your thinking on performance reviews

Okay, here is my belief. The annual performance review is dead. Can you name a sports coach who gives feedback and coaching at the end of the season? Of course, there aren’t any. The whole idea is flawed.

Written by Matt Roberts | Co-Founder of ZOKRI

Let’s start with the goal of performance reviews. They are not to award pay raises and give promotions. They are to optimize performance in a way that works for the employee and the company.

To borrow a Simon Sinek quote; Leadership is not a journey to rise in the ranks. It is a journey to help those around us rise.

This can’t happen over a few hours once a year.

So here’s what you can do.

Create an easy-to-understand strategic narrative and make it accessible to all. It should describe which customers you serve and what is special and unique about you that will give you an advantage.
Ensure each team knows the KPIs / metrics they need to know, manage and when required, improve.
Co-create team OKRs that make progress on your strategy/company OKR and improve specific metrics and KPIs.
80% of every employee’s time should be spent supporting either KPIs or OKRs—they do not have the same job, so that you know.
Every employee should create ONE personal developmental goal (learning and performance-focused) that supports the team OKRs or KPIs.
Create daily alignment with 3 and 4 by implementing scheduled processes that form habits.
Weekly: Weekly team meeting that follows a specific agenda, i.e. KPIs, OKRs, Priorities for the week ahead.
Fortnightly: Fortnightly 30 – 60-minute 1-on-1 to go through what has been worked on during the fortnight. Praise the stuff that’s gone well and encourage honesty and reflection around the things that can be improved. Then, support that improvement and help with any issues holding them back or blocking progress.
Quarterly: Quarterly career-focused 90-minute meetings to deep dive into OKRs, KPIs, personal goals, work done, value and guiding principle-based reflection, feedback and ideas. Share knowledge and/or recommend sources of expertise, e.g. podcasts, books, and courses.
Link annual bonuses to company, team and individual goal performance (33% / 33% / 33%). You can add other calculation variables like tenure as well.
Salary raises, and promotions have different cycles and approaches. A salary review looks to correlate performance, market salaries and remuneration. Agenda’s cover points like:
Summary of company, team and personal performance.
A review of current roles and responsibilities.
Salary review – are they earning the average salary for their industry and location?
Discussion around roles that employees could potentially develop into.

The symbiotic relationship between all stakeholders should become more evident at every interaction. The better the alignment, communications, and support, the more the company will grow. The more the company grows, the more progression opportunities arise, the higher the bonuses that get paid, and the more competitive salaries are.

Would you like to work this way? Our consulting team and software can help you implement this approach inside your organisation.