Performance Reviews Suck – The Case for Eliminating Annual Reviews

The annual performance review has become something employees and, as it turns out, managers dread. Stories abound on the Internet of people complaining about the dreaded annual performance review

A recent study found that only 8% of companies believe their performance management drives business value. More so, 58% report it is not an effective use of time.

In “Mean People Suck,” I make recommendations on how companies can change the way they review employee performance with Champion Leadership.

What is Champion Leadership?

Champion Leadership is comprised of executives and managers who champion their employees’ ideas. They are able to recognize when an employee offers constructive feedback or a new idea and make adjustments accordingly.

In the book, I tell the story of LEGO’s Jorgen Vig Knudstorp’s example. Knudstorp was hired as a junior consultant in 2001. For the next two years, he observed how the company operated and how it was performing. In 2003, he asked for a meeting with the senior leaders. He told them the end was near: the company was hemorrhaging money to the tune of $1 million a day.

“We are on a  burning platform, losing money, with negative cash flow and a real risk of debt default,” Knudstorp said. “Which could lead to the breakup of the company.”

He left that day, convinced he would be fired. Instead, the CEO at the time named Knudstorp as his replacement. After his promotion, he began his journey to save the company. He based everything he did on empathy – having empathy for both customers and employees and listening how each felt about the use of LEGO’s products.

Knudstorp listened to his employees and allowed them to take risks.

Don’t be a manager who sucks

The traits of a Champion Leader combine the counterintuitive traits of humility and competence I remember reading about in James Collin’s book, “Good to Great: Why Some Companies Make the Leap … and Others Don’t.” In his book, Collins examines the leadership style of the 20-year Kimberly Clark’s CEO Darwin Smith.

Motivated by the feeling Smith needed to earn the right to be called CEO each day, his main priorities were to serve his customers and employees.

Smith had the right approach. Research indicates that job satisfaction is directly correlated to the role an employee has with their immediate manager. In a world where an estimated 66% of employees are disengaged or actively disengaged, it is clear the manager-employee relationship is the key to success for businesses.

With over 50% of companies reporting that performance reviews are a waste of time, it is time to shift the approach.

How to become a Champion Leader

In each of my management roles, I tried to embody humility and competence to help champion my employees’ ideas. Happy employees work harder and while I feel like I understood the correlation between employee happiness and innovation because I remember being my most innovative when I had a great boss!

Life’s too short to be miserable at work, to deal with a manager who sucks, to have prescheduled one-on-ones, and to sit through annual performance reviews. Happy people are more productive – that’s really the bottom line.

To mitigate unproductive meetings, I believe in asking my team 3 simple questions about once a week:

  • How are you doing?
  • How am I doing?
  • How can I help?

The employees’ answers help you to get a better understanding of what they need and how you can improve your performance as a manager. More importantly, it can gauge how to best help champion your employees’ ideas.

By asking these questions, I have found that employees enjoy their work because they recognize their work and ideas are valued. This acknowledgment fosters an environment of creativity and innovation. Happy employees also translate to more satisfied customers, creating a win-win-win for all!

So what do you think? Please consider picking up your copy of Mean People Suck today, and get the bonus visual companion guide as well. Or check out our services to help evolve your culture. And I would be thrilled to come present to your team on the power of empathy. Get in touch with me today!

Michael Brenner  is a Top CMO, Content Marketing and Digital Marketing Influencer, an international keynote speaker, author of "Mean People Suck" and "The Content Formula" and he is the CEO and Founder of Marketing Insider Group, a leading Content Marketing Agency . He has worked in leadership positions in sales and marketing for global brands like SAP and Nielsen, as well as for thriving startups. Today, Michael helps build successful content marketing programs for leading brands and startups alike. Subscribe here for regular updates.