I just read an article in
Inc. magazine (December 2008 issue, yes I’m behind in my reading) that ties into a conversation I had yesterday. The article is titled How to: Conduct Annual Employee Reviews. My conversation included why annual reviews are mostly useless and how a proper Performance Measurement system should work.
I’m doing some work with a small non-profit arts organization. The art is great. The business side needs a little work. Part of my discussion revolved around measuring the performance of the administration; Executive Director, Artistic Director, and the Board. Many non-profit arts organizations struggle financially and administratively. It almost goes with the territory. In that kind of environment, an annual review is irrelevant. Performance needs to be monitored constantly, as part of everyone’s daily work. To do that, it has to relate to something. Performance has to relate to progress towards defined goals.
The Goal Attainment System includes the Goal Attainment Plan, where the goals of the organization as a whole are defined, the Action Plan, where the map of how the goals will be achieved is developed, and the Performance Measurement System, where the performance and actions of everyone are tied to the defined goals and work towards achieving them.
With this arts organization, everyone should know where they stand at all times. The Executive and Artistic Directors will know almost daily how they’re progressing and how they’re moving the organization towards its goals. The Board meets monthly and should know prior to each meeting how the organization is progressing, and how both the Executive and Artistic Directors are doing in progressing the organization towards the goals. Any other paid staff and volunteers must be included in the system too.
When looking at performance and performance measurements for your organization, look at one industry where measuring performance is critical to success – the sports industry. I was thinking of an example while reading some of Wendy’s blogs at
Your Scrumhalf Connection. Wendy is a top athlete, but she’s had a couple of injuries lately that have temporarily hindered her progress. Think about what kind of impact an annual performance review would have on her and her rugby club, rather than a dynamic and ongoing measurement system. A year ago Wendy might have been in peak condition and at the top of her game. A performance review then would be very high. But if you relied on that review to assign her work and give her rewards for the entire next year, that would be a mistake.
In rugby, whether at the local club level or at the international level, players are selected each week or just prior to each game. You can’t wait for an annual performance review or rely on last year’s to select players for the next game. You have to rate their performance right now, how they’ve been performing the past few weeks or months and how their fitness is right now. The club or team has defined goals for where they want to be. Each individual, whether player, coach, or administrator, must help to get them there. They must know at all time how they are performing and how they are helping the organization to progress towards the goals.
So chuck the annual reviews and start developing your Goal Attainment System and Performance Measurement System. And Go Wendy!
I've been interviewing people/organizations to include in my upcoming book (to be released this Fall). I'm speaking with organizations that are doing things well in terms of their Business Operations (since that's the topic of the book). One of the questions I get regarding these interviews is what is the theme or common thread I see among the organizations I speak with. 
