“So, what do you think?” asked Lenny. “How are we doing?”

“How do you measure how you are doing?” I replied.

“That’s the thing. We aren’t sure what to measure against. We got some studies of companies that are sort of like us, but the benchmarks they use seem so different. They just don’t make sense.”

“Two things,” I said. “Pick what you think is important and start measuring now.”

“What do we measure against? How do we know if we are doing okay or not?”

“Measure against yourself. So many companies chase each other’s tail around and end up back where they started. Figure out what is important to your customer and measure that. That’s all your customer cares about. What else matters?

“You, getting better, is all that matters. Measure the second day against the first day. Measure the third day against the second day. Pretty soon, you will see a trend. Before you know it, you will have one year’s worth of data. Start measuring now.” -TF

Morgan was early. I had invited another friend of mine to join us. “Shannon, the reason I invited you to lunch was to talk about performance reviews. Morgan, here, doesn’t know whether to scream or eat a banana. You have had success with your process. I wonder if might give us some insight.”

Shannon revved up. “Some success” was a bit of an understatement. First she just smiled, because she knew exactly what Morgan had been struggling with. Then she got serious.

“Look, I am not going to tell you to chuck your old system, but once you’ve tasted the Kool-Aid, you might never go back.” Morgan was listening. “We use a 360 process. I got tired of being the bad guy. So I just stopped. I enlisted the help of all the people surrounding the person. If a person’s performance stunk, everybody knew it anyway, let them tell him. Why should I have all the fun?”

Morgan was skeptical. “Yeah, but how do get people to tell the truth?”

“Well, it takes some time, doesn’t happen all at once. First, we do it writing and it’s anonymous. We talk about confidentiality and we structure it so it contains both positive and negative feedback. We let the person pick four people, then I pick four people. The group includes peers, subordinates and bosses, it is really 360 degrees.” Shannon continued to explain all the logistics, the questions and how it was put together. At the end, Morgan was willing to try.

Based on our conversations with Morgan and Shannon, we have developed a web based application that helps the manager run this system. It is called 360Tool and is currently in beta testing. If you have an interest, you can follow this link to our beta test site. www.360tool.com . The help file has a decent explanation on Shannon’s process. If you would like to be notified when the application is available, there is place where you can sign up. -TF

Morgan looked relaxed today. He started the conversation, “So, if the feedback in my current performance reviews isn’t meaningful to the team member, what should I change?”

“Morgan, as a manager speaking with a team member, have you ever delivered negative feedback?”

“Sure, except I don’t think anyone ever listens.”

“Exactly! So how do you get meaningful feedback communicated? Morgan, do you have any teenagers living in your house?”

“I know what you are driving at,” he replied. “My fifteen year-old never listens.”

“Oh, your fifteen year-old listens. She just doesn’t listen to you. Who do you think she listens to?”

It didn’t take long for Morgan to figure this one out. “She listens to her friends and one or two of her teachers, but definitely not her parents.”

“So, Morgan, if you could structure a formal feedback system to a person, who might you want to include?”

“Well, the people around the person, but how would you do that?”

“Tell you what, meet me for lunch tomorrow at this restaurant. I have a friend I want you to meet.” -TF

Morgan was perplexed, “Okay, so if I set the form aside. And if I buy into the conversation-is-the-relationship. Where do I start?”

“Morgan, let’s go back to purpose. What is the purpose of the performance review in the first place?” I asked.

Morgan held his head in both hands, thinking. So many misconceptions abound on the purpose of a performance review that he was temporarily paralyzed. Finally, he spoke. “The performance review should provide feedback to the team member on their performance.” He stopped, still confused. “But isn’t that what we have been doing all along?”

“Let me change a couple of words in your definition,” I replied. “The performance review should provide meaningful feedback to the team member for the purpose of improving their performance. The feedback has to be meaningful and for the purpose of changing their current behavior to more effective behavior.”

Most current performance appraisal systems provide feedback that is not meaningful and do very little to change behavior. I promised Morgan more tomorrow. -TF

Morgan was hanging with me. He had never considered the conversation-as-relationship in the dynamics between the team member and the manager. We had been working on his performance review process.

“Morgan, it’s not the form from the office supply store. It is the conversation. In fact, think about the form. The form actually works against the conversation. It summarizes the complexities of human behavior into numbers.”

Morgan mounted a defense. “That’s why we have the person rate themselves first and then the manager. That way, if they disagree, the two have something to talk about.”

“Morgan, it is a game of tit for tat. A game. What happens when the manager wins the game?”

“Well, the lower the score, the easier it is to justify a lower adjustment to compensation.”

“And if the team member wins the game?”

Morgan stoppped. At first he wasn’t sure. Finally, he replied, “The team member never wins the game. It’s not how it’s played.”

So, in the long run, what impact does this process have on performance. Is there a better conversation that should be happening between the team member and the manager? -TF

Morgan was finally thinking about purpose. What was the purpose of the performance review in the first place? What was the performance review supposed to accomplish?

“Morgan, what is the most critical factor for both team member performance and team member retention?”

At this point, Morgan was gunshy, he hesitated to respond.

“Let me ask this differently,” I continued. “What is the most critical relationship for both team member performance and team member retention?”

Morgan’s face relaxed. “That’s easy. It’s the relationship between the team member and the manager.”

“Good, now let’s build on that. How important is the conversation between the team member and the manager?”

“Pretty important, I guess,” said Morgan, going tentative on me again.

“Here is why it’s important. The relationship between the team member and the manager is the critical factor for both performance and retention. And the conversation is the relationship.”

What kinds of conversations are happening between your team members and your managers? -TF

Conversation is the relationship described in The Heart Aroused by David Whyte.

Morgan handed me a stack of the files which contained copies of previous performance reviews.

“I see here that you are using a 1-5 scale with 1 = poor and 5 = exceeds expectations.” Morgan nodded. I continued, “Scanning down the list, I see that you have tons of 3s and only an occasional 2 or a 4, never a 1 or a 5.”

“That’s easy to understand,” said Morgan. “We don’t have to explain a score of 3. If we rate a 2 or a 4, we have to provide a written explanation. And even if someone deserves a 5, we never give it, because then they might ask for a raise.”

“And, tell me again, what is the purpose of this review?”

“Well, our HR person says that if we have to fire someone, we need to have a bunch of 1s and 2s in the file. Something about avoiding wrongful termination.”

“Morgan, have you ever been up against a labor attorney in court?”

“Not really,” Morgan replied.

“Morgan, have you ever had to explain to an attorney exactly what a 2 means?”

“Not really.”

“Morgan, with all due respect, this little form is not going to get you very far in a wrongful termination suit. There has to be a better purpose for this performance review process.” -TF

I let Morgan puzzle for a while. I had just questioned the Holy Grail of management processes, the annual performance review.

Finally, I broke the silence. “Tell, me, do you really look forward to this annual tennis match all based around this form you bought at the office supply store?”

Morgan had begrudgingly conducted performance reviews for 15 years. He had never considered that this process might be counter-productive to performance.

“Not really,” he replied. “I just thought it came with the territory of being a manager.”

“You are right, it does come with the territory, but I want you to think about a whole new way of conducting this conversation.” -TF

“I can’t believe this list. Look at this. I have 14 performance reviews I have to conduct in the next three weeks. And I just used the last form off of the pad this morning, so I have to send someone out to the office supply store to pick up some more. I wonder if all this is worth it?” lamented Morgan.

“What would Dr. Deming say?” I continued, answering my own question, “I believe Dr. Deming would say, NO. In his research related to TQM, he found no real correlation between performance reviews and productivity. Sometimes, I wonder if performance reviews don’t work against the intentions of a performance feedback loop.”

Morgan was puzzled. The last thing he thought he would hear from me was that I might question the entire performance review process. -TF