Unfair. Dysfunctional. Biased.
The past 10 years have not been kind to one of the business world’s most polarizing tools. We have all experienced poor performance management at some point in our professional lives. The reputation is arguably deserved. Just the sheer amount of required time and associated costs to some organizations that implement very robust performance management systems should give any leader pause. Deloitte, for example, recently revealed their previous performance review process took almost 2 million hours a year to complete!
So why, then, should we implement performance management in startup environments that want to remain nimble, creative and focused on future growth instead of results in the past? The short answer is because it works. Research has shown that even dysfunctional performance processes result in a net positive gain in employee performance. Further, these processes create higher levels of satisfaction, engagement and self-awareness around potential derailers that might remain hidden without a process to reflect these items back to the employee. And if that wasn’t enough, do not discount the role that goal planning plays in aligning and cascading goals throughout your organization.
To help you and your team on your journey to performance nirvana, here are three simple tips to consider when jumping into performance process design.
Pick the Right Frequency
The most common frequency is the annual performance reviews (or, similarly, 6 month reviews). Straight out of TV land, the annual performance review became popular in the 1960s in large organizations as a way to quickly assess thousands of employees in a time where you could still plan 20-year strategies. Annual processes can still be the right choice for organizations that feel they have a long-term view of their market and a workforce who is patient in their own career growth. Be wary, however, of managers and employees delaying hard conversations and using the performance review as a mechanism to try to resolve a lack of communication and leadership in a 60-minute meeting.
Most startups are more likely to choose a more frequent cadence to their performance conversations. Weekly or even daily quick performance talks between supervisor and direct report can provide more real-time feedback and allow startups to maintain their nimbleness while also providing feedback and support to employees. The Millennial workforce also prefers consistent feedback in smaller, bite-sized chunks so they know where they stand. (For an example of how that might look, you can read about SalesLoft’s experience with a daily performance management tool.)
Choose the Right Tool
Regardless of the frequency you choose, the right tools can make all the difference in your employees’ experience. You do not have to invest great sums of your precious startup runway on an elaborate performance system. In fact, paper-based (or digital paper like Google Docs) processes still have a place in many organizations. Check out a great system described in Marc Effron’s book One Page Talent Management for tips on how to set up your own form.
If you do have the capital to invest, you have a variety of software-as-a-service solutions available to you. Already have existing systems in place for other HR functions like payroll or information management? You may want to explore integrated solutions like Halogen or Namely. These systems are often very robust, and include modules that link performance management to other talent management modules like career development and succession management.
Alternatively, the rise of cloud-based software has opened up several standalone performance management tools at a much lower cost than their integrated peers. Online tools like TinyPulse or 15five provide extremely affordable, low-touch options for leaders and managers to gather and provide performance-related feedback to their teams.
Include What Counts
Once you choose the right tool, you still have to know what to include in the actual review. One key to successful reviews are to educate your team on goal writing. Goal setting ensures that employees can identify goals that fit with the organization’s need while also providing a check and balance so the employee does not set themselves up for failure.
Like the tools discussed above, there are many viable ways to write goals. Two of the more popular models are identified by their acronyms: SMART and SIMple. SMART stands for Specific, Measureable, Attainable, Relevant and Timebound. In short, this guidance ensures the employee’s goals are realistic and achievable based on the resources available to the employee. SIMple goals take the concept of SMART goals and make them more simple. Goals written using this model should be Specific, Important and Measurable. If you are trying to reduce complexity of your performance management process at all levels, using the SIMple goal writing methodology could be the best choice.
In additional to goals, performance reviews often contain a handful of other elements. You should consider including an overall performance rating, development planning opportunities and even an option for integrating performance specific assessments.
Despite its polarizing history, performance management can create significant value in startup organizations. The earlier you implement the process, the better chance you have of tweaking the process to find what works best for your culture.