It’s no secret that the vast majority of managers, staff, and HR leaders find limited value in the annual performance evaluation process. Staff want more frequent feedback—and they would benefit from it. Industries outside of health care have led the way in shifting away from the annual performance appraisal in favor of ongoing, continuous feedback, but there are early-movers making similar shifts in health care. We recently spoke with leaders from University of Chicago Medicine to learn how they created a flexible performance management process that’s doable for both health care leaders and staff. We spoke with:

• Mark Schlosser, Executive Director of Talent and Organization Capability, University of Chicago Medicine
• Patricia Nebrida, Senior Learning and Organization Development Consultant, University of Chicago Medicine

Read on to get answers to the most frequently asked questions about how University of Chicago Medicine scrapped a formal annual appraisal and implemented an ongoing feedback process.

Continue scrolling to read the complete Q&A or use the links below to jump to the relevant section.

• What Continuous Feedback Looks Like at University of Chicago Medicine
• Making the Business Case
• Keeping Track of Talent
• Rolling Out a New Performance Management Process
• Results

What Continuous Feedback Looks Like at University of Chicago Medicine

You shared with us that you’ve shifted away from traditional performance management centering on an annual review. Can you break down the key components of what the new, continuous feedback process looks like now?

Patricia: We got rid of an annual, organization-wide performance appraisal in mid-2017. Instead, we designed our new process to enable leaders and their direct reports to have flexible and ongoing performance-related conversations throughout the year. We call these MAX (Meeting to Achieve eXcellence) Conversations. Leaders and their direct reports determine the timing and the types of conversations they have throughout the year based on individual and business unit needs.

There are four performance-related topics that a leader and their direct report might focus a MAX Conversation on:

1. Goals
2. Basic accountabilities (job responsibilities)
3. Values and competencies
4. Professional development

What aspects of the new process are required—and what isn’t required?

Mark: Leaders and staff can fill out a simple MAX form (all housed on our SharePoint site) to recap each conversation they have and document any next steps—but they aren’t required to do so. The only requirement is that leaders document one conversation with staff per fiscal year, but it’s up to the leader and the business unit to decide both the timing and the type of conversation they want to document. This isn’t about meeting a minimum requirement; rather, it’s about making it easy to have ongoing conversations throughout the year.

Have you rolled out the new process across the entire organization?

Patricia: We piloted MAX Conversations with leaders first, in July of 2017. Starting January 2018, we also rolled out the process to our non-union, non-leader population, which makes up about 3500 employees. Piloting with leaders was a deliberate choice because we wanted them to be comfortable with the process so they could coach others. The process is exactly the same for both groups, which speaks to the fact that we wanted the process to be simplified and easy for all.

A goal-focused conversation is one of the four types of MAX conversations leaders and their direct reports can have. Is goal-setting required?

Mark: Documented goals are required for all leader-designated employees. For other non-union employees, their leader determines if they need to have goals. Some of these employees don’t have goals—but some do.

Individuals with goals:

• Typically focus on 2-4 goals at a time. Our VPs’ goals are driven by the organization’s operating plan. From there, directors (and so on down for individuals lower in the organization) will have a conversation with their leader to determine if there is an appropriate goal they can develop to support their leader’s goal(s). If not, they’ll determine alternative goals that are appropriate.
• Determine the appropriate timing. Goals don’t need to be time-bound on an annual basis; they are continuous and ongoing, so the timing surrounding each individual’s goal is up to that individual and their leader to decide.
• Update the status of each goal within our SharePoint system. Within our system on SharePoint, each goal for an individual is its own discrete task. The individual and their supervisor can see the status of each goal (present or past). Once a goal is completed, leaders or staff mark it as complete and set a new one. There’s also the ability to mark a goal as not applicable if the environment or circumstances change.

Help your leaders have meaningful performance development-related check-ins with each of their direct reports using our Tiered Coaching Guide.

Making the Business Case

Shifting away from the traditional annual review and ratings can feel daunting to many organizations. How did you make the business case?

Mark: Our business case was built on four key components:

1. Out-of-industry examples: We were inspired by what we’ve been seeing out-of-industry with the movement away from the annual performance appraisal and ratings. Much like the business case those organizations made, we focused on the amount of time we hoped our new approach would save leaders. We compared, on average, how much time leaders spend managing the annual performance review for each one of their direct reports (including preparation and delivery) against the amount of time that they’d spend if conversations were happening on an ongoing basis. Additionally, we looked at employee time for self-evaluations and other activities associated with an annual appraisal. We found there would be a time savings—though not hugely substantial, still certainly sizeable.
2. Simplification: We wanted not only to simplify the forms, but to simplify the process in general. Historically, the forms and the interaction required with our performance management software were extremely complex. All that complexity made the process very cumbersome and undermined the meaningfulness of performance focused discussions.
3. Future Focused: We wanted to move the conversation to the actions and behaviors that can help employees be successful. The annual appraisal process’s retrospective approach didn’t focus enough on what an employee can do to meet the needs of the organization and those they serve. This shift changes the tone and meaning of the conversation and becomes a more positive experience for both the employee and the leader.
4. Flexibility: Beyond time savings, what was really key to our business case is the degree of flexibility the new process lends itself to. It gives functional leaders a greater ability to align performance management to business need. The example we give is that when we’re in the budgeting cycle for the year, finance might not have as many MAX Conversations as other parts of the organization, but they will at other times in the year. Or, if specific areas of the organization have high volumes of patients, they might not have as many MAX Conversations then, but they would have them as volumes level off.

Check out our best practice research publication, Shift from Annual Performance Management to Continuous Feedback, for four practical strategies that will help HR leaders reduce time managers spend on the annual review—so managers can spend more time coaching staff throughout the year.

How do you ensure that the process is compliant with regulatory requirements and other designations you are pursuing (e.g., Joint Commission, MAGNET)?

Mark: We worked with our Regulatory Compliance Director and MAGNET Director to fully understand what was required to meet those standards. We also had a conference call with the ANCC to ensure we were taking all requirements into consideration.

Patricia: While we don’t have specific requirements around the timing and type of conversation, we do require all (non-nursing and nursing) leaders to document one conversation per fiscal year in order to meet Joint Commission’s standards. We require nursing employees to obtain feedback, and have a professional development- and performance-related MAX Conversation (one of which is self-initiated), per fiscal year to meet MAGNET standards. All of the documentation required by both organizations is captured within SharePoint.

Keeping Track of Talent

Since you no longer have a focal annual review, how do you keep track of the talent in your organizations to make key decisions (e.g., promotions, pay)?

Patricia: Even though we no longer have an annual appraisal period, we still have two milestone events during the year to help us keep track of exactly that—our talent.

Contribution Calibration: This occurs between January and March, and takes place for both leaders and frontline staff. As a group, leaders discuss their direct reports and what can be done to make the team members even more successful. To anchor the conversation, we have leaders sort their direct reports’ accomplishments into three categories (Exceeds Expectations, Meets Expectations, and Below Expectations). They can determine the category using the accumulation of MAX conversations and forms, achievement of goals, and any additional feedback they might have. It’s important to note that the actual categories are not a part of the employee conversation. They are to only be used to provide comparisons during the group discussion.

• Promotion or advanced development decisions might take place for those who are Exceeding Expectations.
• Those who are categorized as Below Expectations might move to a progressive disciplinary plan or are provided closer supervision.
• The group also discusses if there’s anyone in the Meets Expectations category who should be either in the category above or below.

Regardless of the category, the outcome is to determine the development opportunities for each employee. The focus is to be forward thinking and to find ways to make the employees even more successful.

Compensation Calibration: This occurs between May and June. This conversation focuses around individuals’ salary planning and is overseen by our compensation and benefits team. The categories we use in the Contribution Calibration are also used to help guide this discussion. The goal is to establish internal equity with salary.

Design the right calibration session for your organization using Tool #5 in our toolkit, HR's Guide to Accurate Evaluations.

Rolling Out a New Performance Management Process

Rolling out a new performance management process is no easy task. What support (e.g., tools, training, etc.) did you provide to leaders and staff during the change?

Mark: We provided support resources for both the MAX Conversations (for staff and leaders) and calibration sessions (for leaders). These included a customized SharePoint site, job aids on forms and processes, live and recorded webinars, and computer-based training courses developed in-house. We even used short commercial-like videos to generate excitement as we introduced the concept.

• MAX Conversations: We have a very detailed and interactive guide for leaders and staff to use, complete with discussion guides for each type of MAX Conversation. A staff member interested in having a professional development discussion can click into that section of the guide and it will give them questions to think about and ask (e.g., “What do I want networking to do for me? Is there a specific area I’m interested in?” “What can I do to address any development needs?”). The leader would also have a respective set of questions to use in the conversation (e.g., “What do you need from me [to remove any roadblocks]?”).
• Calibration sessions: We rolled out the concept of calibration sessions one year before we shifted away from the annual review. During the first year, our team helped facilitate the sessions which included both contribution and compensation discussions. Since then, we’ve developed training through webinars, job aids, and an outline of the process in detail. We also equip senior leaders (and anyone they designate to facilitate) with tools to run the contribution calibration with their leadership teams.

One of the benefits of your new process is flexibility. How do you help leaders use that flexibility to their advantage?

Patricia: We’ve had to do a lot of education around how different parts of the organization can use the flexible process to fit their business needs. It becomes the functional leader’s responsibility to make the decisions and set parameters around the process. We’ve educated these leaders to identify what parameters they can put in place to help their areas use MAX Conversations successfully. The answer will be different for each area depending on area-specific circumstances, like business goals and typical leader’s span of control.

Mark: Leaders can set timing and topic requirements for the entire team or based on individual needs. For example, they may want their team to do a self-initiated form on goals every quarter and values and competencies every six months. They may have a new employee and do a leader-initiated form on basic accountabilities each month for the employee’s first 6 months. There are so many options it is hard to list everything. That, along with the freedom to set those expectations, can be daunting and we need to help them see the potential.

One of the biggest challenges health care organizations face when trying to make a shift to continuous feedback is manager time and capacity to manage ongoing conversations throughout the year. How did you overcome this?

Mark: Conversations can either be initiated by the leader or the staff member. Leaders have found that putting the onus on staff to initiate these conversations frees up time they’d usually spend simply ‘managing’ the performance management process itself. It also creates shared accountability with the leader and employee to ensure the conversations take place.

How are you managing leaders who don’t document a conversation within a fiscal year?

Mark: That has been a challenge. We can track and identify who has completed the forms and conversations. We are working on a way to identify when the forms and conversations haven’t taken place. By doing so, we can intervene through communications, training, and other means to ensure the leader and employee initiate the conversation as required. Until that time, we ask leaders to monitor their own teams. They have visibility to what is happening at all levels and can best assess if someone hasn’t documented a conversation

What advice would you have for an organization who wants to roll out something similar?

Mark: The biggest obstacle we face is keeping the MAX Conversations top of mind for people throughout the year. Keeping track of data around how often and what conversations are happening has helped us figure out our communication needs. For example, in areas where there aren’t many staff members initiating MAX Conversations, we can set up education to make sure they know how they can fully take advantage of what’s available to them through this new process.

See Practice 4: Picklist of Guardrails to Reinforce Ongoing Performance Conversation in Shift from Annual Performance Management to Continuous Feedback to evaluate and revise incentives to encourage managers to coach staff throughout the year.

Results

How did you track the impact of the change you made so far?

Patricia: Within SharePoint, we are able to pull data to keep track of how many conversations are happening and what type of conversations they are. Since we’ve started, we’ve seen an upsurge in the usage of the forms. We had 1781 MAX conversations take place in the fourth quarter of our fiscal year, up from 644 from the third quarter.

Anecdotally, our leaders’ ability to have meaningful performance conversations has improved, because they aren’t held back or time-bound by a cumbersome process. We will eventually start tracking outcome measures (e.g., engagement scores) once the process has been in place long enough for us to a meaningful comparison.

Another benefit we’ve seen is a new level of empowerment for frontline staff members to take ownership over their own development. There’s a high rate of self-initiated forms (38%). The majority (~60%) of self-initiated MAX conversations center on professional development. Alternatively, only around 10% of leader-initiated MAX conversations focus on professional development. The process has enabled employees to emphasize what’s important to them (i.e., professional development)—and this really is what performance management should be all about.