Whether we realize it or not, the performance review as we have come to know it is dead. Yes, dead.
And what’s more, we’re mostly to blame. Why you might ask? It’s simple, we’ve been doing it wrong. For years companies and organizations across the globe have been using them to measure performance. The truth is, we need to stop thinking about performance and start thinking about value. Contrary to what many may believe, performance is no longer a relevant measure in today’s competitive work environment as it is not directly correlated to results. Sure, your team might be putting forth a good effort and following their job description, but how have their efforts or contributions truly impacted your organization’s bottom line? The truth is that most of us can’t answer that question, which is unfortunate because the very thing we are not measuring is ultimately what counts the most!
It’s time for a new kind of measurement. If we are expected to deliver results and the value we’ve promised to our customers, then we must adopt a new system for evaluating our employees – one that fully aligns with how their work will be assessed and measured in the marketplace. The good news is there is a way to more accurately determine which employees are moving the needle within your company and which are not. I call it the New Value Equation and it includes three very important variables that I challenge today’s leaders to consider. The equation looks like this:
Current Performance + Future Potential – 3 x Emotional Expensiveness = Employee Value
So how does management leverage this equation to track employee results and measure their value to the organization? The answer lies in each variable.
Once upon a time we handed out job descriptions, added a few stretch goals and used them as a checklist to see if the employee was performing. Did they complete their assigned work and meet other minimal standards such as being consistent in their attendance? If only that were still enough…but that is exactly how performance gets disconnected from actual results delivered.
Performance is not about delivering the bare minimum or checking boxes. It isn’t about delivering what you think is reasonable given current conditions or what is outlined in a job description or even what you are good at. It’s about delivering what the organization requires in this moment. It is no longer about your job; it’s about your role in the company. Did we deliver the results required in the reality we found ourselves in? And before you give bonus points for effort or extenuating circumstances, compare your employees to those outside your organization – those employed by the competition, not their peers. Make comparisons based on what your company is aspiring to be, not what you currently have – to what is possible, not what is probable.
Future potential is something that almost no one is measuring, and that needs to change. If it’s not part of a job description today, odds are it will be in the future. So instead of enabling your team to hide from their changing circumstances, encourage them to grow into them. Valuable employees are those who do all they can to stay competent and relevant at work, both now and in the future. Ask yourself how sustainable their performance will be several years from now. Do they have what it takes to deliver results far into the future? Do they spend their time preparing instead of resisting? Encourage this and take note in challenging times. Employees who use their energy to adapt, stay relevant and fuel growth instead of fighting off the inevitable are those you want in your court for the long haul. The organization will always have to deliver more to stay competitive and your employees need to as well.
Drama. Who has time for it? I don’t and I doubt you do, either. And yet, most leaders and management teams don’t often consider this factor in annual performance reviews. They look at what the employee brings to the table, but not the total cost of delivery – is it even worth it? What is an employee’s hassle factor, drama quotient, true emotional expense – the cost of them in addition to their salary and benefits? Think this factor isn’t that critical or doesn’t impact the true value added by your team? Think again. Emotional expensiveness outweighs good performance and fast growth three to one.
What would your job be like if you could eliminate the drama and work with willing employees who didn’t come to work with all kinds of conditions or drama? These are the employees you should be seeking out to fulfill positions and reward with raises. Good employees are those who give a lot in terms of performance and potential. The key is ensuring they don’t require a lot of emotional maintenance in return. They may bring a lot to the table, but if an employee is also a big taker they may be negating their contribution before it hits the bottom line. Employee value goes far beyond performance to measure results – it’s about the sustainability and total cost of those results in addition to their salary and benefits.
After reviewing the true value of each employee on your team, you may be shocked at what you find. Your hard working team may not measure up after all, at least in the new reality. An integral part of great leadership today is to regularly review where you are investing your assets to ensure that you are getting the most return on each dollar. I am convinced that the clearest way to improve the results of your organization is to get clear about the overall value proposition of your current talent. Once you have identified and reward according to this new Reality-Based metric, the rest will fall into place.
Cy Wakeman is a national keynote speaker, business consultant, New York Times bestselling author, and trainer who has spent over 20 years cultivating a revolutionary approach to leadership. For more on Cy, check out http://www.realitybasedleadership.com/.
This article was written by Cy Wakeman from Forbes and was legally licensed through the NewsCred publisher network.