Chapters:
- Take Annual Performance Reviews seriously.
- Look above Key Performance Indicators while running annual performance reviews.
- Give yourself an honest review too.
Military origin of the Annual Performance Review
Sources point to the military origin of various evaluation tools and performance management rituals we’ve carried on with until now. We still call it an Annual Performance Review, although it should be about far more than looking at KPIs and renegotiating salaries.
Because of its origin and initial goal to filter out non-performers from the army, there are debates about dropping it or at least renaming it. In this article, we will share a few key aspects we keep in mind to make it a time to reflect and reevaluate. Annual Performance Reviews at Livit are a base for goal-setting, a moment of appreciation, and being honest about failures. Although we still call these bigger reviews Annual Performance Reviews, their purpose is very different. Here are the core pillars of a good Annual Performance Review.
Take Annual Performance Reviews seriously
All rituals in an organization only make sense if they are taken seriously from the very top level. Many entrepreneurs, while growing their organization and having core team members working together for a long time, find reviews a waste of time. They are well-aligned with each other, they do not prepare written feedback, and are at ease with giving each other negative feedback on the spot. This was possibly very effective for a smaller group, plus core founders and C-level tend to have very similar personalities and ways of communication.
Often people hire look-alike talent at the beginning, which brings the same preferences in communication and feedback. As the organization grows, diversity will grow, and people who prefer structured reviews and be mentally prepared will join the team. So starting to run reviews and getting ready with thorough notes, pointers, and examples are crucial for leaders of growing organizations.
Look above Key Performance Indicators while running annual performance reviews
The chart below highlights the ways modern organizations put ‘culture’ above pure performance. Before sliding through, answer this question for yourself. Would you fire someone who is a lovely team-mate and is a nice person to be around but does not hit the goals or someone who is laser-focused on archiving targets but is not the most pleasant person to have as part of the team?
Before evaluating based on ‘cultural fit’, it’s good to remind yourself which ‘culture’ you are nurturing in your company.
“Almost 90 percent of organizations worldwide can be categorized as having one or more of these culture types dominate in their organization.”
— Kim Cameron, Professor at the University of Michigan Ross School of Business
Clan culture
Also known as ‘collaborate culture’, clans focus on teamwork and togetherness. It is usually a very friendly working environment where relationships, participation, and consensus are prioritized. The leaders’ scope of duties is closer to a mentor.
Adhocracy culture
The name comes from Latin ad hoc and embraces speed above anything else. Common for early-stage startups, ‘create culture’ fosters an entrepreneurial work environment where taking risks and aggressively pursuing innovation is the focus.
Market culture
AKA ‘compete culture’, is focused on results, winning, and accomplishing what was set out to do. Leaders are harsh and demanding to achieve success metrics. It is a high-pressure environment but comes with lucrative rewards for hard and smart work.
Hierarchy culture
A hierarchy or ‘control culture’ are extremely structured and process-oriented. Innovation and rethinking are not valued, following existing procedures are. Leaders are mostly there to ensure that SOPs are followed ruthlessly and stable results are achieved.
Each one will have pros and cons and multiple examples of successful organizations and satisfied employees. What is important is to have clarity and transparency about which culture you are growing and reviewing employees accordingly.
Give yourself an honest review
This one is not common and not easy. Founders, business owners, and entrepreneurs are often the most experienced people on the team and there is nobody to get a review from. There are a few ways around this. Mastermind and accountability groups for entrepreneurs can be honest mirrors. Obtaining a mentor usually brings similar benefits for personal growth. Having an experienced consultant or business coach could similarly serve you. Although to make any of these options work, it has to be an honest and long-term relationship. Anonymised 360 reviews may also be of help. The key thing is to create an opportunity to reflect on your development and continuous growth as a leader.
