As the year winds down, we turn our attention to year-end financials, holiday plans, next year’s goals, and employee reviews. Ugh. Employee reviews. Why do we hate them so much?

For one, they are time-consuming. We spend hours preparing them while squinting our eyes, furrowing our brows, and scratching our heads. We strain to grade our people on a Likert scale or cobble together a few sentences about strengths and weaknesses.

Second, they’re awkward and cause anxiety for managers and employees. The communication is often directional, overly formal, and may be laden with surprises.

Third, there’s an unwritten expectation that annual reviews come with a pay increase as a rite of passage as opposed to being performance-based.

And fourth, you may already know this, but research indicates that annual reviews rarely produce results. That’s right, they are basically a waste of time.

Why? Because feedback is generally best received when it’s immediate. Not days later. Not weeks later. And certainly not months later. Yet, there we are, saving up a year’s worth of feedback for the annual review when it is unlikely to have much impact. To compound the ineffectiveness, most don’t generate an action plan or a follow-up plan. 

We meet. We talk. We go through the motions. We file the report. Then it’s back to business as usual. See you next year!

What if we took a whole new approach and turned this exercise from a mundane waste of time to a vibrant and meaningful meeting that resulted in a common understanding, personal enlightenment, an action plan, and a follow-up mechanism? Even better, what if these meetings were so enjoyable, effective, and impactful that you and your direct reports looked forward to them? Perhaps you would schedule them twice a year, quarterly or even monthly.

This year, consider a new approach. Follow these eight steps to maximize the impact of your employee performance reviews. 

Step One: Free up the dialogue. Remove the formality and top-down communication of the meeting and focus instead on a casual two-way discussion. Be prepared to ask questions and then LISTEN to your employee. As a rule, airtime should at least be split evenly. The best practice would be to talk only 20% of the time and actively listen 80%.

Step Two: Review the position description together to determine if the description and expectations match the work. If not, agree to make the necessary adjustments in the description or the actual work.

Step Three: Have the employee describe their contributions to the business. Give them a chance to tell you about the value they bring to the business. Let them brag a little. Listen to determine if those efforts align with the company’s mission, vision, and values. You may need to nudge them a little if they are not. Many employees are overly humble, so you might need to boost them with honest and positive feedback. Let them know you’re noticing their good work.

Step Four: Have the employee identify professional “weaknesses” – what we now refer to as “opportunities” for improvement. This might include time management, delegation, listening skills, and confidence. Mutually determine which two opportunities will have the biggest impact on performance over the next 90 days and make them a priority. Brainstorm some action items to help the employee address the concern and assign deadlines for each. Only after the employee has shared their opportunities should you add your observations to the list. After all, there may be a glaring blind spot that you need to address. Be sure to support your feedback with two or more examples.

Step Five: Discuss long- and short-term business goals. These are measurable, high-impact goals that will move the needle significantly. Check that they align with the company's vision, mission, values, and strategic initiatives. Again, choose the top two for each and develop action plans for all four. Don’t forget to include deadlines.

Step Six: Lead a discussion around the employee’s career aspirations. This is a great opportunity to provide some skills training or encourage attendance at a workshop or conference. Look at the upcoming calendar, find the training and development opportunities, and get registered. This might turn into a homework assignment. A good staffing plan provides budget dollars for these types of activities.

Step Seven: Open the floor for any thoughts or observations about the company. This might include the direction of the company, your vision for the department, employee rumblings, comments on company culture, suggestions for how you can better manage the team, ways to improve communication. This is basically an open forum. You may have to massage this conversation by asking questions in these areas and showing genuine interest and openness to the feedback. By demonstrating good listening skills, you invite employees to have a voice, encourage participation, and, in turn, make them feel valued. This goes a long way toward getting company buy-in and increasing retention.

Step Eight: Tie everything together, document the conversation with a one-page professional development plan, and schedule a follow-up meeting. Key items include:

•    Two professional development goals focused on professional opportunities for improvement.
•    Two measurable short-term business goals focused on immediate impact in the near term.
•    Two measurable long-term business goals focused on meaningful impact over several months or a year.
•    One career development goal with an eye toward long-term career advancement.

Each goal should include measurables, supporting action items, scheduled checkpoints, and calendar deadlines. Go ahead and schedule the follow-up meetings before you conclude the Employee Review. Write up the plan together and make a copy for each of you.

With these eight steps, you are sure to get better participation and a more meaningful outcome from your annual employee review. Here are a few best practices and variations you should consider.

•    Keep the meeting between 60 and 90 minutes.
•    Make the best use of meeting time by having the employee prepare answers or comments to the review questions or discussion items ahead of the meeting. You should do the same. Not everyone thinks well on the moment, and you want both parties to spend quality time ahead of the meeting on these subjects.
•    A 360-degree feedback report will yield additional valuable feedback. But be sure to screen the responses for inappropriate or hurtful comments.
•    In all subsequent meetings, make sure you revisit documents from previous meetings. This is a good follow-up practice and a chance to measure progress and reinforce gains and wins.
•    Discussions around pay increases are much easier when you have timely and frequent performance reviews with measured results.
•    If you are conducting quarterly or monthly meetings, you can consider breaking up the eight steps and focusing on two or three at each meeting. •    A quarterly meeting cadence is recommended. A monthly cadence is even better. A semi-annual cadence is acceptable but not ideal. Reviewing performance only once a year is better than no review but is ineffective at delivering timely feedback.
•    Feedback should be ongoing, two-way, and developmental to maximize its effectiveness.
•    Management Action Program’s (MAP) golden rule of feedback: Focus on the Problem, not the Person.

I hope this begins a much improved and meaningful employee review process. While the discovery and discussion portions are highly beneficial, the accountability piece drives action, feeds personal and professional growth, and delivers high-impact business results. If you’re struggling in this area, let’s talk about it. I’d love to get your feedback or hear about your success with this new format. By the way, MAP has a great Professional Development Plan template. You can download it from HVACR Business magazine’s Download Center. 

Rick Gutenmann is a senior consultant with the Management Action Programs. Contact him at rkgutenmann@mapconsulting.com.