Anyone like annual performance reviews? Me neither.
When Gallup asked employees if performance reviews were helpful, less than 15% strongly agreed that they inspire them to improve. No wonder some companies are going a different route.
Take Lexmark, the veteran maker of laser printers and imaging products. Back in 2009, it changed its performance management system by ditching employee ratings that included an annual performance review.
That move comes back to trust, says senior VP and chief people officer Tonya Jackson, who’s been with the privately held company since it launched in 1991. Lexmark decided that its ratings-based system wasn’t effective at driving real conversations about what employees, managers, and teams could do together to move forward, Jackson explains.
The old performance system was backward-looking, she tells me from Lexington, Ky.: “‘This is what worked, what didn’t work,’ and those kinds of things.”
So HR put together a team to figure out how to drive and measure performance, says Jackson, who’s held several other management roles at Lexmark, most recently chief product delivery officer. “The biggest thing that they landed on was: Open, honest discussions build trust.”
Today, Lexmark’s performance management for its 7,200 team members is based on constant and informal feedback.
This approach is decidedly forward-looking. At the start of each year, each employee and their manager settle on two or three performance management goals tied to the company’s strategy, Jackson says.
“We focus on the things that are going to move the business forward,” she adds. “And then that’s what those conversations are about throughout the year.”
Informal feedback includes regularly scheduled one-on-one meetings between employee and manager, Jackson says, plus any other conversations that arise. Staff can also formally request feedback from their peers or from someone outside the company. And midway through the performance cycle, the manager and employee check in to chat about progress.
There’s also a strong talent development angle. “We really are trying, in that feedback process, to talk about what can you do better and how can we all get better,” Jackson says. Part of that is identifying experiences that will help the employee grow.
“So it’s a little bit of a blend of performance and career development,” Jackson says. “If it’s done well, your performance will lead to where you’re going in your career.”
Trust between employee and manager flows from their frequent exchanges, Jackson maintains. “It’s not this once-a-year thing where you meet somebody and everybody dreads it,” she says. “The manager is coming from a place of care because he or she is saying, ‘I’m caring enough about your career, your development, to have these conversations.’”
One criticism of dispensing with employee ratings is that without a number, it’s tough to decide if someone deserves a raise or a promotion. But as Jackson points out, besides performance, the factors that determine compensation include benchmarking, the company’s current needs, and employee behavior.
“Performance is one thing, and then the behavior in achieving that performance is another thing,” she says. “That’s where I think our system is strong.”
At Lexmark, feedback is also a two-way street. Every year, through an outside firm, it does a global employee engagement survey that lets people weigh in on their manager. The company also has an open-door policy at all levels, Jackson says.
No matter how it measures employee performance, a company should clearly state its values and link performance to them as well as to strategy, she suggests. “If you break a lot of glass along the way, and at the end of the day, you achieve something but nobody’s following you, nobody wants to work with you, that’s not a great performance.”
It’s about “making sure that you are rewarding people for the right behavior,” Jackson says. “Other people will notice who gets rewarded, and they’re looking at both what they actually delivered and how they delivered it.”
Someone should print that.
Nick Rockel
nick.rockel@consultant.fortune.com
IN OTHER NEWS
Striking out
Maybe George Kurtz shouldn’t crack open the champagne just yet. On a call with investors, the CrowdStrike CEO praised his cybersecurity firm’s financial “resilience,” but that victory lap feels premature. It was only in mid-July that CrowdStrike blew the world’s trust by releasing a faulty software update that crashed some 8 million Windows computer systems. The estimated tab for Fortune 500 companies: $5 billion and change. Care to chip in, George?
Self-sabotage
Some managers have too much trust in themselves, a new study reveals. When researchers looked at about 550 people who gained a managerial post through self- or external promotion, the former group did worse in a leadership exercise. The culprit: overconfidence, which can blind managers to their own shortcomings. The self-promoted also thought more highly of their performance than lottery managers, who showed better social skills—and crushed it for real.
Taken for a ride?
Across the pond, Uber faces a lack of trust in its handling of employee data. The Dutch Data Protection Authority just fined the ride-hailing company $324 million—for allegedly moving European drivers’ personal details to the U.S. without adequate safeguards. Uber plans to appeal the penalty, claiming it did nothing wrong and that it complied with the EU’s General Data Protection Regulation (GDPR). Good luck.
High absenteeism
Looking for employees you can count on? Marijuana fiends might not be your best bet. In a study of 46,500 U.S. workers, researchers found an association between cannabis use and abuse and increased absenteeism. Respondents who said they’d never touched the drug missed an average of 0.95 days of work in the past 30 due to illness or injury. For those who had used it in the past month, the average was 1.47 days. Cannabis users were also more likely to simply skip work. Hmm, no stereotypes confirmed here.
TRUST EXERCISE
“‘Trust is like the air we breathe—when it’s present, nobody really notices; when it’s absent, everybody notices,’ Warren Buffett once famously said. Today, much like air being sucked out of the room, trust in America’s institutions continues to erode at an alarming rate.
In 1972, a survey found that CBS TV Network news anchor Walter Cronkite was the ‘most trusted man in America.’ Today, such trusted voices are rare. A pervasive sense of agita has taken over. This widespread collapse in trust feeds a vicious cycle of disillusionment, leaving many citizens feeling rattled, powerless, and disheartened.
The crisis of trust may be more pervasive than previously understood, particularly as many surveys today are skewed. This widespread erosion of confidence impacts a broad range of institutions, revealing deep-seated vulnerabilities and systemic issues that require urgent attention.”
None of that surprises me, and I doubt it’s news to you either. Both government and business are to blame for the trust crisis, argue Richard Torrenzano, CEO of reputation management firm the Torrenzano Group, and attorney Ronald J. Levine.
After 9/11, which revealed a vulnerable nation, people expected political leaders to build trust, Torrenzano and Levine explain. But by misleading the public, many politicians have done the opposite. At home, the resulting distrust has undermined democracy. Abroad, it’s hurt America’s credibility with global allies.
Then there’s business, whose recent contributions to distrust include data breaches, alleged fraud, and poor risk management. Torrenzano and Levine highlight skepticism and cynicism about the media, which has lost public confidence in the age of alternative facts.
To restore trust, they call on leaders to put integrity, honesty, and responsibility first. That almost sounds old-fashioned, but it just might work.
