Performance Reviews Not Tied to Merit Increases

We are considering doing away with (or drastically changing) our Annual performance review process so that performance reviews and wage adjustments are separate processes rather than being interrelated.

 I have read several articles and white papers that show a trend where companies are not doing written annual reviews at all.  We are thinking of doing annual wage adjustments that are driven by our budgets and wage ranges but not by scores on an annual review. 

Instead of a formal performance evaluation on a yearly basis, we are envisioning periodic feedback reports that would be presented to the employee and included in their personnel files.  Do any of you have systems that incorporate these concepts?

Joan Ivory, M.S., SHRM-SCP

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  • Good morning Joan -- my name is Jim Bokar . . . a colleague of mine and I have just such an approach that we're working to implement here, and at another friend's company.   I can send you a short overview if you'd like: jbokar@vhtcx.com or 440-591-8369 / this afternoon frees up a bit.  Jim

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  • James Bokar James Bokar 

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  • James Bokar Jim- Do you mind sharing with me as well?  I'm trying to get some ideas for changing our current system as well.  Thanks!

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  • Hello Jaime!  Please give me a call (see contact info above) on Friday - I’m generally available until 2pm EST.

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  • Hey Joan / Jaime . . . would love to chat and get your feedback next week?  Just not on Monday.  Jim (jbokar@vhtcx.com)

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  • Hi Joan. A lot of organizations are struggling with this issue and are considering similar  changes. I'm sure your research spoke to several current and fluid approaches to performance management and development to avoid that tense sit-down manager-employee discussion.  I just wanted to comment on the pay change side. We speak too often of a pay increases as a reward for past performance when we should really consider them a re-investment in future performance.  The new pay level should be reflective of the contribution you expect for next year rather than how an employee did the previous year. We've found this thinking helps align newer, scoreless performance management approaches with pay adjustments.

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  • Thank you, Dan.  That's exactly how we were thinking but the verbiage you used to express it is very helpful to me. 

    Joan

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  • Last year my company opted to go this route as well.  We have "reviews" 3 times a year in January, May and September.  It is focused on being more of a discussion with employee/manager and without the critical aspect.  We have three areas of discussion, Challenges, Accomplishments, and Next steps (goals).  It isn't tied to merits, which are given in July.  It is more of an opportunity to work on overcoming challenges, acknowledging accomplishment and setting future goals.  It is a two-way conversation and employees are encouraged to give feedback and complete with their managers, but aren't required to do the somewhat cumbersome "self assessment" that is often required.  So far it is working very well, and is a communication tool to get managers talking with their employees on a regular basis to find solutions to problems and manage goals.

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