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Reimagining Performance Reviews: Moving to Performance Coaching

Decades of concern about negative impacts of annual performance reviews has crystallized into a growing consensus among academics, HR executives and many business leaders: when they are done badly or the wrong methodology is used, they can do more harm than good.
MAR 05, 2024
performance coaching
Can coaching save the annual performance review?

It’s a question that more and more of my colleagues, and our clients, are asking these days as we acknowledge that traditional performance reviews have been irrevocably diminished in importance by remote work and the seismic transformation of business models. Massive disruption has revealed and exacerbated the disconnect that existed before COVID-19 between leaders and the people they lead. 

It is in this context – attention has shifted to growing concerns about annual performance reviews. There is a growing consensus that the traditional performance review needs to be updated, although nobody is quite sure how.

Without putting a label on the fix, let’s start by imagining our ideal performance review. 

In the conversations I’m having with clients and colleagues, the most common words that come up are “regular,” “one-on-one,” “development,” “goals,” and “skills.” The only way to cover off all these important topics is if the manager and employee make a commitment to knowing each other better. If that happens, a review is not only about the work done in the past but also what both manager and employee want to achieve in the future. A meaningful review is interactive, and is focused on creating more engagement, productivity, and job satisfaction. It should not be a process that is solely focused on criticism without any positive re-enforcement.

Put those words together, and you’re starting to describe a coaching mindset. In fact, the more you think about how best practices in coaching could be used to re-imagine the performance review, you must wonder: why didn’t we do this years ago? 

Concerns about badly executed performance reviews have existed for many years 

It’s no secret that the human capital world is concerned about traditional performance reviews. 

Decades of concern about negative impacts has crystallized into a growing consensus among academics, HR executives and many business leaders: when they are done badly or the wrong methodology is used, they can do more harm than good.

That was a recent conclusion in the Society for Human Resource Management online magazine: “Annual Performance Review Bows Out.” In the article, Robert Sutton, a professor of science and management at Stanford University said that a “bizarre, constrained conversation” held once a year can be severely damaging to both the psyche of the person receiving the review, and the manager offering it.

"The way human beings make progress is through small steps, not through a bizarre conversation once a year," Sutton told SHRM.

Sutton’s analysis is hardly new.

In 2013, for example, a Washington Post article described the performance review as an “annual rite of corporate kabuki” that, research has shown, actually dulls brain performance, produces no measurable improvement in performance and ratchets up stress for both manager and employee. The article asks why, when we know all that, are annual performance reviews still being used?

“Why must we continue to have these awkward conversations, in which both sides try to recall what employees accomplished nearly 12 months ago and to make excuses for broaching uncomfortable subjects?” wrote Washington Post reporter Jena McGregor. “Why must we pigeonhole people’s performance into numerical ratings and fill out reams of paperwork or irritating software programs for a process that just leaves everyone deflated?

“One answer is, ‘We always have.’”

Where does coaching come in?

As noted earlier, if we start the process of re-imagining the ideal performance review, we are immediately drawn into the best practices of coaching.

Whether it’s through a coaching engagement – an employee working with an external or internal coach or an employee working with a trained manager who can coach – the best coaching conversations are all about finding the triggers to produce greater engagement and, consequently, better performance outcomes.

Coaches, and managers who have received training in coaching skills, know that a productive conversation is bi-directional, which means it is more about listening and asking questions and less about imparting advice. It’s also an opportunity to find out why someone is struggling. Are there problems with co-workers, or outside the job, that are impairing performance? Is this person talented, but currently in the wrong job? Am I, as a manager, doing anything to hold this person back or am I helping this person chart a fulfilling career path within the organization?

The best part is that a coaching conversation is focused just as much on the future as it is on the present. Career pathing and development, which can move someone into a job that really motivates them, is an effective way of improving performance.

Not all managers are going to be comfortable in this kind of conversation. As much as they can be stressful, traditional performance reviews also provide cover for managers who find it difficult to have a real conversation with their employees. In this scenario, the performance review becomes a shallow proxy for real, productive interaction.

It should be noted that bringing coaching skills and mindsets into the performance review process has other benefits as well. In this environment of talent scarcity, the best people want to work for companies that show they are invested in their future by engaging in regular, meaningful conversations. They want to be able to discuss their career goals with someone who can support them and help them map a career path. They want to talk to someone who has a coaching mindset. If you can show people that you’re that kind of organization, people will be knocking your door down to join up.

So, we should replace performance reviews with coaching?

No. Properly done, a performance review can be very effective.

We need to separate the practice of measuring performance with our current approach to performance reviews. As noted, a once-a-year check-in at which someone is harshly judged simply does not improve performance. But if you build an organizational culture around a coaching mindset and coaching conversations, then the annual review takes on new purpose.

First off, if managers are having regular conversations with their employees and utilizing coaching best practices, then there should be no shock and awe when it comes time to do a more formal, annual review. If the ongoing conversations have been focused and frank, then employees walking into their manager’s offices will have a good sense of whether they are doing a good job, or whether they need to improve in some area. 

Employers still need tangible KPIs on how their people are doing. However, if there is regular and ongoing contact between manager and employee, those KPIs are more meaningful. And perhaps more importantly, ongoing coaching conversations are aimed at improving overall performance, so it’s possible to course correct in real time, making it more likely those KPIs will stay headed in the right direction.

We don’t need to abandon performance reviews. But we do need to re-invent them. And the first step forward in that process is acknowledging that simple, regular conversations – at which manager and employee work together to identify strengths and weaknesses and develop a plan geared toward development and growth – will not only relieve the stress of the annual review but ensure that, not only are employees contributing at high levels, but that you’re building a pool of talent prepared for the future. 

Performance reviews can be a good thing. But not if it’s the only conversation you’re having with your employees.