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Last week, I wrote an article for Fast Company magazine’s on Bottom Line blog, which is based on my next book, People Tools for Business (out this September). It’s about my approach to the annual review that many employers and employees face each year, and how I’ve learned how to make this usually dreaded process a positive experience. I’ve re-published it here on my blog. Enjoy!

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5 Ways to Make the Annual Review Process Less Painful

I’ve supervised hundreds of employees, and I can say without a doubt that one of the most difficult parts of being a manager is the dreaded annual review process.

To take the fear out of this necessary process, I’ve developed a unique approach over the years that has helped me transform this annual event from one that I loathe to one that I look forward to.

Here are five actions that can help you take the “dreaded” out of annual review:

1. MAKE IT A TWO-WAY REVIEW

Why should we think of the review as being only about the employee? Your employees are your coworkers. Every one is a crewmember on the same ship, headed toward the same destination, and seeking the best possible performance for the company.

The most important shift I’ve made with my annual review has been making it a review of my own performance as well as my employees. I always ask them how I, or the other managers, can assist them to perform better.

If my employees aren’t performing as well as they can, perhaps they lack the proper tools or training. Maybe they don’t feel appreciated and, as a result, are not as involved as they might be.

Tools, training, and the expression of appreciation are the responsibility of the employer, not the employee, and the annual review is a great way to find out how you can do a better job of supporting your team.

2. DON’T WAIT UNTIL THE END OF THE YEAR

Keep your employees up to date on how they are doing during the year, rather than saving up your feedback for the annual review.

Offer approval to encourage them and suggest course corrections to help them focus on what needs to be changed. If you have properly helped your coworkers throughout the year there will be no unpleasant surprises for either of you during the annual review.

3. DON’T PROCRASTINATE

When it’s time for the annual review, make sure to conduct it within a week or two of your employees’ anniversary date. It’s not fair to your team to delay information which is important to them and to keep them walking on eggshells, waiting for the knife to drop. And you don’t want to skulk about the office hiding from someone.

4. ENCOURAGE SELF-REVIEW

Ask each person being reviewed to evaluate him or herself, encouraging them to write down their accomplishments of the past year and goals for the coming year. Not only does this help your employees learn the valuable skill of self-assessment, it also shows how much you respect and appreciate their opinions.

Before or during the review you can also ask the reviewees what salary they think they deserve, and use their recommendations as a guide.

5. ADD A BONUS

If a member of your team has made an outstanding contribution to the company that saves time and money, increases profits and productivity, or improves the working conditions in the office, consider awarding them a one-time bonus. This way, the annual review can be just as much about rewarding performance as it is about offering constructive suggestions on how to improve.

Why shouldn’t you want to encourage the best performance possible, and pay fairly for that performance? If all of your employees felt unfairly compensated and failed to show up Monday morning, your business would instantly disappear. Each of them is there because they are good at what they do, and they could always find a position somewhere else.

Alan

I used to be a partial perfectionist.

I say “partial” because certain aspects of my life, such as my clothing, weren’t especially important to me and I didn’t need them to be perfect.

I say “perfectionist” because often I would settle for nothing less than that ideal. In high school I wanted the highest grade in every class. When I began practicing law I wanted each letter or agreement to be perfectly composed and perfectly typed, and that was in the days before word processing equipment made at least the typing relatively easy.

After a few years running my own law office I learned the hard way that I was a hopeless prisoner of perfection. Some of the troubles I encountered in that particular trap were:

1. Perfection was costly. I was paying my secretary a lot of money to retype letters so they had absolutely no visible erasures.

2. My output was less than perfect because perfection took a lot of time.

3. I was always dissatisfied with my own work and the work of everyone else in my office. This meant work wasn’t much fun either for them or for me.

4. I procrastinated. When I faced a new project, such as handling my first probate, I was afraid I wouldn’t do it perfectly. So I put it off for so long that my client finally took the file to another attorney.

5. I often fell short of my goal. I found that I couldn’t be perfect— at least, not very often. I was disappointed in myself. I was a failed perfectionist.

A year or two later I realized even more fully that the quest for perfection carries a high price. When I bought my first office computer, an IBM 5110, I needed software so I hired Peter, a young computer programmer.  He was a robust perfectionist.

Peter began work in March. For months we worked together into the night. Peter was marvelous. Every week he invented a new shortcut or proposed an even more elegant algorithm. Peter was a genius, and I was certain that eventually he would create a program that would be the envy of the industry.

 “Eventually.” Spring passed into summer. Soon it was Thanksgiving and we seemed no closer to using the wonderful product of Peter’s inspiration than we had been in March.

“Peter, when do you think you’ll be finished? We’re going to have to start using the computer in our business.”

“Just a few more months. I’m working on some entirely new functions which will really speed up the processing time.”

“Okay, but we really need to finish.”

Peter programmed on. And on. Nights and weekends he haunted our office. I found him hunched over the miniature video screen at 7:00 a.m. Monday morning and at 11:00 p.m. Saturday night. Takeout bags from McDonald’s littered his desk. Peter was a workaholic.

Perfectionists often are. They have to be.

On December 15th I faced a decision. Either we would begin using our computer, which had now been sitting in our office for almost a year, on January 1st, or our accounting department would have to spend the next three weeks preparing manual records and forms for the new year. I talked to our extraordinary programmer.

“Peter, the computer goes live on January 1st.”

“No way.”

“We’re going to do it.”

“Alan, I don’t see how.”

“Peter, we have to start using what you’re working on. If we don’t, I’m going to immediately have to start three people preparing manual records for next year. And if we don’t start using the computer in January we’re going to have a horrible mess trying to combine the first few months of manual records with computer accountings for the rest of the year.”

“I understand, but I want to make the program as good as it can possibly be. I need more time. Maybe by March 1st,” he offered.

“January 1st. Not negotiable. If it’s less than perfect, so be it.”

Peter sighed. “I’ll see what I can do.”

The following January 7th we went live on our new computer. The programming gods must have been smiling because the transition was surprisingly smooth. Our new program was certainly less than perfect, but it worked just fine.  Happily, we had moved past perfect.

When my daughter Heather was six she came into my den to visit, and showed me two of her drawings. “This is the fast drawing, and this is the slow drawing,” she said.

“Is that because you drew one fast and one slow?” I asked.

“Yes.”

I liked both drawings. Heather liked to have fun, and was not concerned with perfection. As a result, I think she came closer to perfection than I did.

I have nothing against perfection, especially when I’m flying at 37,000 feet in an airplane. But I know that my life is more fun, and more productive, when I am able to Get Past Perfect.

Alan