Goal Setting for Performance Appraisals is Outdated, Now Might be the Best Time to Change It
Let’s roll the clock back to January 1st, 2020. Yes, wouldn’t we all like a ‘do-over’ for this year so far? We were all looking forward to a new year, the positive changes we could make, and the potential of a fresh start. From a business perspective, most people entered goals into a performance management system (because they had to), so they could ‘see what they had to accomplish this year.’ In a lot of cases, for many retail workers and leaders, those goals are provided to us in the form of metrics to achieve over the course of the next fifty-two weeks. Blah.
A vision of better
I have a vision of a retail world where that is not the case. Where our success is not solely predicated on the numeric values that we measure in our businesses. Rather, one where we can have meaningful and ongoing conversations about the actions and behaviors of associates and leaders alike that lead to the metric outcomes. A system that encourages learning, taking on new challenges, personal development, and leadership that allows for success to be realized in more ways than just financial or other numeric values.
When we are given goals or metrics, even if we are asked to then set goals for our behaviors, it feels hollow and one dimensional. We know that we have to put certain words in to try and achieve numbers that we may not fully believe in or even understand. Writing generic goals at the beginning of the year won’t help anyone achieve at a higher level.
It might be an interesting experiment for businesses to let people set their own goals for themselves and in conjunction with their team. Would they stretch even further? Would they, in time, have a better understanding of what they want to accomplish and why? Could those even exceed what we are asking for in the systemic approach? These are questions that need to be further explored.
The annual performance appraisal
Beyond the goal-setting process, performance appraisals tend to focus only on results from last year. And typically that is a narrow line to discuss. Rarely do performance appraisals cover leadership development and the behaviors that are present throughout the entire year for themselves or their teams.
More about development than money
We use performance appraisals to determine annual merit increases and in some cases bonus payouts. I believe in pay for performance, but I am not sure the typical systems really foster the environment we are hoping for. If the goals and/or metrics are flawed, they tend to spoil the entire process in the ‘pay for play’ world. I fully support bonus payouts tied to sales and profit results. In fact, I believe that bonuses should entirely be paid out on those two metrics alone. Other incentives can be used for other key performance indicators. But I believe there must be a process that allows for discussions to occur about people’s development. We need time and effort spent on really dissecting and discussing the actions that lead to results and turning those into developmental conversations that lead to growth goals.
So what are some options to begin to turn the tide in how we view the goal-setting process as well as the dreaded performance appraisal process?
Setting shorter term goals
First, we should begin by setting shorter-term goals that are defined by those within the business. Instead of defining goals for everyone, allow individuals to discuss with their supervisors what is most important.
For example, today we might say achieve sales plan or increase customer satisfaction by 10%. Those don’t really help from an overall performance standpoint and even if they are relevant they certainly don’t help people achieve at a higher level. We would be much better off looking at shorter-term goals that can be communicated quickly and followed up as part of visits, phone calls, and regular interactions that allow continual feedback and the view of progress on the part of the individual who has a goal set.
I would recommend that we start with quarterly goals, with weekly milestones clearly defined. Much as I would push for setting personal goals, having a shorter time frame with some specific targets will allow there to be clarity and urgency in creating action. This will also allow for more agility in the goals as things change. Priorities can change in the retail environment pretty quickly. Goals may have to shift as well.
Discussions not measurements
Equally as important is the need to change the review process. Today, most experience a fairly formal appraisal process where there are weeks of writing reviews, posting into a system, justifying the ratings to someone else, and ultimately delivering the documents to team members. Everyone hates that process. It is no fun writing the reviews, it can be frustrating to justify what you wrote to others, and then the discussions sometimes end up being awkward because it is the first time in a year that anyone has talked about performance this way. There must be something better.
With shorter goals and weekly milestones, there is a natural discussion point for regular subordinate and supervisor conversations. You have a starting point built-in. Whether this is a phone conversation or in-person discussion while visiting the store, it allows for actions to validated against the stated desired outcomes of the goals. This is where real development and meaningful dialogue can occur. Simple notes from these sessions can be captured and recorded so that there is a history of progress and growth. This could replace the annual process of trying to remember everything that happened over the past year. There will always be work to do in helping people perform better, but if that effort is done in a more meaningful way, I believe more people will adopt this approach and see the value.
Whether this process leads to maintaining an annualized summary of that or not, the result is more conversation that is developmental in nature throughout the year and not just a process tied to numbers, for the purpose of justifying a merit increase.
With so many things already in flux and the need for change so apparent, now might just be the time to challenge a thought process that has been in place for decades. We have come to realize just how volatile the retail world really is and trying to plan and measure a full year in advance seems silly in light of current events. If we begin looking at shorter periods of time and define clear expectations, we might just find that not only can we accomplish more, goals stay relevant, and everyone feels better about being a part of a process where they can succeed.
What are your thoughts on how we could change the idea of business goal setting and performance appraisals?
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