According to Mark Dickinson of DONE! Hospitality Solutions, annual performance reviews are a thing of the past. Here, he reveals how to recognize and reward employees the right way.

We live in a real-time world where news is instant and feedback arrives in seconds. When we dine at a restaurant and stay at a hotel, our response to the experience is immediate. With this is mind, employees expect to receive regular updates regarding their performance.

If we want to attract and retain the best and brightest workforce, we need to understand the world they live in, which is often quite different from the world the company and its managers grew up in. Time changes rapidly, whereas companies don’t; they frequently hold onto old practices and systems that worked for many years, and they are slow to adapt and adopt new ways of doing things.

Management must understand the needs of the new workforce; it is more fluid than ever, often with many employees completing part of their jobs remotely.

Annual reviews: a flawed system
The performance evaluation process is riddled with complex forms that are meaningless, asking the evaluator to decide if an employee’s work is excellent, good, fair or poor. This is a fundamentally flawed system, and I’ll tell you why.

If a staff member’s performance is falling below standard, you immediately begin a process that begins with a one-tone discussion with the team member concerned. Assuming that there is no change or improvement then a more serious, recorded conversation takes place. Finally, if there is no change, the suitability of the individual is stringently reviewed and remedial action is taken, which can vary from reassignment, intensive training or termination. In short, a company cannot afford to wait until the year end.

Annual reviews were first created to reward performance that exceeded the expectations of a person in their role or to recognize an employee’s contribution to. Annual reviews were first created to reward performance that exceeded the expectations of a person in their role or to recognize an employee’s contribution to the business. It was a tool for monetizing the value of the person’s contribution. This brings us to the ever-difficult challenge of money and what further rewards an employee should benefit from after their years of service. In my mind, there are four types of “money.”

1. Inflation balancing
2. Loyalty rewards
3. Increased responsibility compensation
4. Exceptional contribution rewards
(I do not consider commission within the scope of performance evaluation, as commission is contractual and follows its own set of rules.)

Inflation balancing should be standard practice in every company. Annually, all salaries are increased to align with inflation. This is compensated for by the increase in the selling price of products and services in line with the market conditions. Employees should automatically and unequivocally receive the amount identified.

Loyalty rewards refer to the work anniversary of an employee. If the employee has committed a year of their life to the organization, this should carry a reward, such as an invitation to select an item of their choice within a value bracket. Created by the company, these gifts could include cash, paid time off and similar benefits.

Increased responsibility compensation is straightforward. If the employee has been given a higher level of authority and responsibility, they deserve to be compensated accordingly.

Exceptional contribution awards are presented to employees who have made outstanding contributions to the organization.

With all of the real money off the table, what is the value of performance evaluations? Not so much. Simply, assign tasks, track progress and results, and you have performance management. It will save your business massive amounts of anxiety and stress, and removes a heavy cloud from looming over the company.

Stop wasting precious resources on mindless evaluations and focus on the work that needs to be done on a daily basis, making customers happy all of the time.

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