a successful journey to dropping annual reviews and ratings

The catalyst for dropping annual performance reviews at A.I.M. Mutual Insurance started with Mike Standing, President, and C.E.O., asking Mark Millett, HR Manager, to fix the system. Announcing the end of annual appraisals earned Mark a rousing round of applause at the all-colleague meeting.

In Mark Millett’s words, “As the H.R. guy, I know it’s a cliché, but our employees are everything. The company can’t do well if our employees aren’t performing well.” A well-functioning performance process should drive and align employee contributions.

Problems with the old system (annual performance appraisals)

1. Managers cut and pasted the previous year’s comments, so the content wasn’t meaningful.

2. “Feedback often and early,” the conversations that should have taken place throughout the year didn’t happen.  Then, at performance review time, critical information was withheld, because what H.R. person doesn’t tell managers, “no surprises in the annual review?”

3. The motivation to give a 4% increase instead of 3% inflated ratings.

4. “Everyone was rated on eight competencies, including “leadership.”The opportunity to demonstrate leadership skills in non-leadership roles was nonexistent, so most people were given the neutral “Meets Expectations” rating.

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1. Measuring, tracking, and improving employee performance.

2. Regularly scheduled performance development conversations.

3. Focusing on current and near-term performance (versus reviewing the past 12 months)

 Mark explains how he implemented continuous performance management:

 Step 1: Defined and measured performance using the four-square Employee Performance Continuum model to assess work results and behaviors. Manager workshops on Conversations to Accelerate Employee Performance and Potential were facilitated via train-the-trainer to develop in-house expertise and allow scheduling flexibility.

Step 2: Launched the 10-Minute Question Conversations (10MQ), the continuous performance development conversations initiative.  Employees shape their conversations by choosing from a menu of topics and questions. Dialogue focuses on current and planned performance (versus reviewing and judging past performance). Managers have the choice of scheduling conversations monthly or every other month. The time commitment is 5 or 10 minutes to prepare and 10 minutes or less for the discussion. Internal communications included a video demonstration of the 10MQ between a supervisor and her direct report.

Step 3: Team Plotting/Measuring Performance Without Ratings: The four-square is used to measure current and planned performance. We’re using a “Team Plotting” process where peer input supplements the manager’s employee assessment. Observations, examples, and pertinent information about individual employee performance are shared.

 Scheduling the plotting sessions was a challenge. Getting the right people together was the goal, so buy-in from the senior leaders and an online scheduling tool was essential. In just over a week, 190 employees were assessed and plotted. Each employee assessment lasted between 7 – 10 minutes. While this might sound like a significant time commitment, considering the time to write, deliver, and submit 190 performance review forms, it was time well spent. 

The transition from the manager as the sole-assessor of their employee’s performance to the Team Plotting process was an adjustment. Receiving feedback from peer managers and candidly sharing observations about non-direct reports created some apprehension. But once the sessions were underway, and we followed the process, the response and results were overwhelmingly positive. H.R., Director, and V.P. level leaders have more precise performance measurements, a plan for improving performance, and identifying employees ready for greater responsibilities.

 So, now that you’re 6-months into the program, what has the feedback been?
The connection between measuring Work Results and Observed Behaviors combined with the 10-Minute Question Conversations was evident. Managers, supervisors, and senior leaders are thrilled that performance appraisals are “retired.” Employees say the conversations feel more constructive, promote two-way dialogue, and allow for more participation versus the managers writing and delivering a review.

What’s Next?

We’re rolling out the 10MQ, a new cloud platform tool to keep managers accountable for scheduling and holding the conversations (we’re already using the tool to record the 4-square Employee Performance Continuum work to measure and track performance across the organization). We’ve been using paper, so this will eliminate collecting forms. To reinforce and support the program, we’ll hold mini-reminder workshops for Managers and Supervisors on redirecting patterns of off-target performance.

While there are numerous steps to transitioning to the system, the program requires two steps: Measuring/tracking performance plus a bit of training to faciliate the right conversations between managers and employees. The ultimate measure of success is the steady improvement in employee performance.