I was just forwarded a study by Mark Murphy, Founder & CEO of Leadership IQ. As I read it, I was fascinated by the results. In a survey of 48,000 CEO’s managers and employees, only 13% of managers and employees and 6% of CEOs thought their year-end reviews were effective. For my entire career, I have not been part of the 13% or the 6%. Why?

As the study points out, there are three primary reasons:

1. The first was a lack of differentiation: reviews aren’t synced to performance so there’s no real recognition for being a high performer
2. The second reason why people really dislike performance reviews is because the boss’ feedback isn’t relevant. Employees are walking away from performance reviews shaking their heads and wondering if the boss even knows what they did this year.
3. This is the third big reason why employees don’t like performance reviews. Most managers conduct performance reviews from a boss/employee perspective rather than using it is a coaching and mentoring tool. They sit across the desk from employees and say “this is your ‘grade’ and this is your pay” and they hope employees don’t have too many questions, because there are another dozen more reviews to conduct.

Ever feel this way as either a manager or an employee? Yearly performance appraisals are typically a “check the box activity”, that is done because it is policy, rather than using reviews as a tool to engage employees in open and transparent dialogue on the needs of the company and the employee. Yearly reviews cannot accurately reflect what an employee is being held accountable for, because the objectives of the business change real time, not yearly. Many leaders approach their business on a cyclical basis, but they are fooling themselves, because their business is dynamic and real time. They need to communicate these changes as they occur, and if that impacts the performance objective of an employee, that employee should know about it and begin supporting it.

I am in favor of scrapping paper based yearly evaluations as part of an effective organizational development strategy, because I have never seen one work well, and the aforementioned study bears this out. It is truly a shame for a business to expend this much effort on yearly appraisals to achieve these kind of results. If the finance team were to do an ROI on the yearly cost and the obvious lack of benefit, they would recommend scrapping a paper based system all together.

I am not against evaluations though. I am in favor of a real time system that allows for employees and managers to have two way discussions about what the business is going to hold them accountable for: clear and concise performance objectives.

That is why Group50 has spent so much resource and time supporting our newest product offering Cascade: a low cost, cloud based system that gives employees, managers and senior leaders that ability to all be on the same page, to communicate with each other on how objectives are being met on a real time basis and to instantly change objectives throughout the organization when business conditions require it.

You can see a short video on Cascade here. After viewing this, please post a comment, give me a call at (909) 949-9083 or drop me a note at jgitney@group50.com to let me know what you think about ETW, or the study.

About Group50 and the author:
Group50’s focus is on strategic execution^TM. Jim Gitney, the CEO of Group50 has worked with organizations of every size in support of their movement to a culture of effective strategic execution, and realize their potential in the marketplace. You can request more information here, email info@group50.com, or call (909) 949-9083 for more information. To see the services that Group50 provides, go to our home page

I was speaking with a client the other day who was expressing frustration with being able to align his organization with the company’s strategies, vision, mission, values and tactics. He felt as if the yearly off site meetings and quarterly communications to employees weren’t causing the company to build a culture and performance mindset around those. He mused that there must be a better way to accelerate behaviors in the organization and create a culture of strategic execution.

As we spoke further, we talked about the need for:

• Clear and concise strategies, mission, values and tactics
• Constant communications to all levels of the organization
• Measures that are cascaded down to each level that support the strategic initiatives
• Accountability for all managers and employees
• Full transparency in the company
• The ability to have communications both up and down about what is working and what isn’t
• An understanding of the company’s strategic and operating gaps

We agreed that a significant shift in culture and performance was a difficult objective. We also agreed during our conversation that cultural change isn’t achieved by yearly reviews and occasional communications. The tactics to implement such a change need to be well thought through and executed with rigor. It is one of the single most important set of activities for the company’s leaders and needed to be a daily activity. He would have benefitted from a change management framework such as Group50’s Business Hierarchy of Needs® to guide his organization’s strategic planning, change management and implementation efforts. As we talked further, we agreed to keep a dialogue going and focus on strategic alignment and performance management as part of our on-going work with his organization.

Several articles with further information on this topic include:

• Performance Management as a Business Strategy
• Organizational Alignment: The Good and Bad News
• Cascade
• Morphing Evaluations Into Strategic Execution

About the author:
Jim Gitney is the CEO of Group50^® and specializes in the development and implementation of manufacturing and supply chain strategies. Jim and the Group50 team are all former executives with well-known manufacturing and distribution companies who understand what it takes to put together and manage the implementation of a successful strategic plan. Group50 has designed a series of strategic assessments, workshops and strategic execution tools that eliminate the existence of Anti-Strategy. You can reach us at (909) 949-9083 or send a note to info@group50.com.

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