What to do if your company needs a Performance Cycle

Whatever the reason might be, every company reaches a stage of needing to review people’s performance. Some call it a performance cycle, others call it a performance review and others have a more catchy name. Whatever you call it, this tool is powerful and can make or break an employee's experience.

Performance Cycles created most of the problems I had to solve throughout my career. Those experiences taught me 5 very important lessons.

Before I start, let us all be on the same page that Performance is a combination of WHAT you do with HOW you do it.

Know what problems you are solving and make it simple.

I have over complicated processes that ended up being bad experiences. I am a firm believer that a performance cycle should be used for group decisions about people’s career progression. Less is more. The more steps and frameworks you add, the more complex it becomes and the less engagement you have. More steps correlate with more control and less autonomy for leadership and teams which ultimately means a busier HR team. Making it simple allows space for more autonomy and for leaders to mature regarding performance assessment. You should then spend more time training and giving tools to leadership.

I can’t stress this enough: don’t use ratings.

There is extensive research from neuroscience on how ratings impact engagement, performance, and ultimately mental health. Ratings are also a control measure to categorize people in groups to facilitate decision making which is very appealing to leadership and HR but can correlate with a bad experience.

Adding compensation as a result of a performance cycle can be detrimental.

It can result in a not-so-positive feedback culture. Adding compensation means that your performance cycle directly impacts bonuses, stocks, and % of raises. I don’t think we will ever reach the ‘ideal world’ where we can measure every aspect of performance as there are so many variables and subjectivity. Then adding a financial aspect as a result of a human developmental process will increase the stress levels and stakes for people which can decrease transparency and quality of feedback. There are exceptions to the rule if you use a clear performance KPI (like in customer support or sales) and ONLY that KPI to connect with some sort of compensation.

Leadership has to be fully committed from beginning to end or else it will not work.

There is extensive research that says that people follow the example of the behaviors their leadership shows. If you have a process in place that a leader does not follow, it is more likely that the team will not take it seriously. In my experience, the best experiences people had with a performance cycle process were the ones where leadership was heavily involved and were outspoken champions.

Make an active effort to guarantee that career feedback and conversations are also happening outside of the performance cycle.

If your performance cycle includes a phase where feedback is collected, make sure that you are also taking measures for effective feedback to happen outside of this timeline. The majority of people will wait for the performance cycle to give feedback. This cycle should be a culmination of a certain period (6 months ideally) and not for day-to-day feedback.

There is much more that I learned on this topic but these are my top 5 learnings. I would love to hear how you approached having a #performancecycle and how that is working out.

I hope this was useful, let’s keep the conversation going! Please share your thoughts below.