It's that time of year again: the dreaded performance review. While this practice is key to getting teams to set priorities and clarify actions, managers (and employees) often treat it as a make-work task instead of a productive conversation. Perhaps it's no wonder then that companies worldwide deliver just 50 to 60 percent of the financial performance their strategies promise due to a noticeable gap between their goals and employee behaviors. To mend this gap and create real impact for 2015, it's time for both parties to make this process an actionable dialogue. And they can start by avoiding these seven mistakes:
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Before the review
1. Avoiding the review. "Yes, these conversations are important, but I'm too busy right now." Sound familiar? If managers are saying this, it means performance reviews are not a priority — and that's a mistake. Research shows that anywhere from 60 to 70 percent of adult learning is related to feedback about work experience versus about 15 percent each from formal training and life experience (hobbies, interests, family — the other things you do and love outside work). People become high performers by identifying specific areas where they need to improve and then practicing those skills with ongoing feedback on performance. Hence, to grow capabilities and get promoted, it's important for employees to have and demand these conversations. The worst bosses are managers who will avoid meaningful reviews because they don't delegate real responsibilities to their people. It's the surest way for employees — and businesses — to stall.
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2. Not preparing for the review. Performance reviews encompass what people do for a living, their relationships with others in the organization, and often their pay and job assignments. Yet many managers "prepare" for reviews by observing a subordinate a few days before the scheduled meeting. Managers must pay attention to individuals' behaviors far in advance of a formal review date if they're going to be helpful and specific about the impact of those behaviors on job performance and colleagues. Conversely, employees need to approach the review as a two-way dialogue about behaviors — not simply a report card.
During the review
3. Confusing a review with a paycheck. A review should be about feedback aimed at augmenting an individual's strengths and increasing his or her effectiveness. Yet many managers simply use reviews to convey bonus or salary information. Feedback and rewards should of course be aligned, but managers need to recognize these as two different conversations. And employees need to speak up about the developmental implications of the feedback they do receive: "You're right: I do need to get better at that. Is there a training program you can suggest? Are there assignments that can increase my learning and experience with the relevant activity?"
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4. Not being specific. Overly general feedback increases defensiveness. For example, saying to a sales person, "Your pitch was terrible" is little more than a perception and invites counter-punching rather than discussion and learning. Saying instead that the pitch "didn't include information on demographics, total life-cycle costs and payment terms" makes it easier for employees to hear negative comments and take corrective action. At the same time, if employees are just receiving broad, vague feedback from managers, it's important for them to ask for specifics so they have a better understanding of where their managers are coming from and how they can make improvements in the future.
5. Not focusing on behavior. Few people want to underachieve, but many are often unaware of the impact of their actions on outcomes. Business is a performance art, and improving performance ultimately means some change in behavior, not just knowledge and intentions. For example, it's one thing for an employee to hear he or she didn't connect with the buyer. It's quite another to specify that behaviors such as not interrupting clients or being a better listener can help improve customer relations in the future.
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6. Delivering a monologue. Two-way dialogue is important in reviews, not just because it's polite, but because that dialogue tests assumptions and reveals the manager's impact on performance, defining what should stay the same — and what can be improved — for both parties involved. It also allows employees to take responsibility. Career development is ultimately the employee's task. Despite much glib advice about coaching, no manager can do that job for the individual; however, an effective performance review can help guide this development.
After the review
7. No follow-up. Reviews are about today and tomorrow in the marketplace, not yesterday in the office. The biggest impact from performance conversations is what happens after the review. Too often, nothing happens: The review is an isolated annual event with little real impact beyond the compensation discussion. Behavioral change requires setting goals and then ongoing feedback about progress toward these goals. Technology is lowering the costs of doing this. For example, studies indicate that in a range of industries, text-message reminders have almost the same impact on behavior as face-to-face follow-up. The key is making follow-up an iterative process about actionable items. Employees notice when this does and does not occur. And when it doesn't, all the good advice and counsel and attention in the review elicits a longer term "this, too, shall pass" response from employees.
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The upside from better performance reviews is huge. Employees inherit valuable perspective so they can make improvements and reap the rewards of success and workplace satisfaction. And leaders receive the security of effective support. After all, the higher you go in any organization, the more you depend on subordinates' performance. As one CEO puts it, "I'm betting my job on everyone who works here."
Commentary by Frank Cespedes, author of "Aligning Strategy and Sales: The Choices, Systems, and Behaviors that Drive Effective Selling." Cespedes is a senior lecturer in the Entrepreneurial Management Unit at Harvard Business School. He helps business leaders close the sales/strategy gap and create long-term value. Follow him at @fvcespedes.