Are performance reviews obsolete?
Are performance reviews obsolete?
It’s tempting to declare performance reviews dead. But we see it differently — and here’s why.
Before I explain why performance reviews aren’t dead, a quick story to introduce myself a bit:
When I was a kid, I was the perfect middle child. For the most part. But as soon as something started to frustrate me, well, let’s just say I spent a lot of time on the floor with a wet face.
I often misplaced little things — clothes, shoes, toys, homework. I’d wander around the house, asking my family if they’d seen my stuff. I’d look in places I knew it’d never be.
Eventually, I’d find it and swear to never lose it again — whatever it was.
A few years ago, I realized that the problem wasn’t that I was bad at finding things. The problem was that I was losing them in the first place. So I learned techniques to help me remember where I put things.
I do something unusual after I set something down if I’m afraid I’ll lose it. I try to set things like my phone, water glass, and headphones in the same place. Then, I know where to look first.
I’m happy to report that it’s been quite a few years since I cried because I couldn’t find something. ;)
We all have something that frustrates us.
Unfortunately, that thing is performance reviews for many employees and managers.
When you’re frustrated with a process, it’s tempting to give up. And since over 90% of managers dislike how their company does performance reviews, you’re probably ready to throw your hands in the air and stop caring.
If you haven’t already.
Many people say that’s exactly what you should do when it comes to performance reviews. People at Forbes, CEB, and TalentCulture say, “Ditch formal annual reviews and appraisals! They’re outdated and lower employee morale!”
Around 30 Fortune 500 companies have already kissed performance reviews goodbye.
Because giants like Adobe and Amazon are publicly abandoning performance reviews, it seems like the right choice. Yet 97 percent of companies haven’t jumped on board yet.
Adobe stopped doing annual performance reviews. They instead have check-in cycles determined by the timelines of each department. If projects in IT operate on a 6-week cycle, managers in IT check in with their employees every 6 weeks. If it’s 8 weeks in HR, managers in HR are free to check in with their employees every 8 weeks. The review cycle is no longer determined company-wide. Honest, open conversations that center around developing the strengths of employees are encouraged.
Cargill has switched their focus from annual reviews to daily performance management centered around candid conversations between managers and employees. This encourages managers to become more invested in the success, growth, and engagement of their employees.
Amazon dropped their stacked-ranking system in favor of a simplified system that focuses on employee strengths. They plan to continue annual performance reviews, but the reviews will no longer place employees on a bell curve that influences raises and lay-offs.
Accenture is transitioning away from annual, stacked-ranking performance reviews to continual feedback. This change is in response to the millennial desire for consistent feedback rather than a one-off once per year. They’ll focus on employees’ strengths and how they perform in their own roles, rather than on comparing employees’ performance to each other.
How people ditch performance reviews looks different in each company. But the big idea is the same: out with the old and in with the new!
Determined to revitalize their employee review process, companies latch onto new ideas.
But it isn’t working in the long run.
Most of the time, the first review cycle goes extraordinarily well. Managers are enthusiastic, employees appreciate the informal feedback, and everyone is optimistic.
Yet things start to break down as early as the second review cycle:
- Managers get busy and can’t continue to devote extra time to the new performance management format.
- Engagement drops 6 percent as employees have less concrete accountability with their managers.
- Productivity and motivation decline as uncertainty mounts.
- Under 5 percent of managers manage their employees well sans ratings.
With these deteriorating results, it’s no surprise that many of the Fortune 500 companies that abandoned rating systems are considering returning to them or some form of them. Not to mention how there’s often still a ranking system running behind the scenes.
Abandoning quantifiable metrics isn’t sustainable in the long run.
You can’t manage what you can’t measure.
When you think about it, performance reviews should do a few things:
- Measure the value employees are adding to a company
- Track employee achievements and progress
- Discover areas where productivity and quality can improve
Translating all these goals into quantifiable values makes it easy to measure and track progress.
- Competitive mindset: Naturally high performing employees want to remain in the top 25 or 10 percent. Dipping below that for a year motivates them to do better. Reaching that benchmark after a year of hard work encourages them to continue to have a strong work ethic.
- Recognition of mastery orientation: High performers also get motivation from recognition of their near-perfect performance. Rather than a comparison to their peers’ performance, this is a comparison to the ideal performance. They want to be identified as best-in-class.
- Low-performer confrontation: If there’s one thing high performers hate, it’s having to work with people who are apathetic about their job productivity and quality. They’d rather not get recognition for being a top performer than have to work day in and day out with low performers.
The problem with declaring performance reviews dead is that it removes quantifiable measurements of progress.
The problem isn’t performance reviews. The problem is how companies carry out performance reviews.
You might have rolled your eyes at some of the points in the previous section. They seemed idealistic and maybe even naive to you. After all, there are plenty of times when high performers hate performance reviews.
But before you ditch performance ratings, think about why people hate them.
- Is it because they’re genuinely not a good fit for your company and workflows?
- Is it because your review process is tainted by office politics, under-committed managers, mismatched employees, and flawed workflows?
For most companies, it’s the second option.
Rankings cannot simply be a formality where inconsequential bonuses or raises are distributed to the employees managers like most.
Too often, stacked rankings seem to be determined by employees’ ability to schmooze the right people rather than their work quality and productivity.
Discouraged by office politics, managers become less engaged in making the most out of reviews. In offices with quotas — where 10 percent get an excellent rating, 20 percent get the above average rating, and so on — managers with mostly high performing employees end up giving poor ratings to great employees.
Plus, managers are famous for being stretched thin. They don’t have time to complete thorough reviews for every employee. So they give semi-thorough reviews and risk missing major accomplishments from the beginning of the year.
When you have too many low performers, remember why you hired them.
You didn’t hire them because you liked their shoes at their interview or because they were obsessed with the same TV show. You hired them because you saw competency, potential for growth, and real contributions they could make to your company.
Employees not performing to their full potential is a good sign that they’re mismatched to their job. Low performers aren’t necessarily bad employees. They have real talents that simply aren’t being utilised in their current role.
How much time do you spend preparing for, carrying out, and following up on performance reviews?
I’m guessing your answer is too much.
Whether it’s bouncing between applications, juggling shared documents, or getting approval for certain paperwork, the whole performance review process can easily get jumbled. The main reason employees and managers dislike performance reviews is tied to how long they take and how outdated they feel. This is a workflow problem.
Let’s wrap it up.
There are a lot of moving parts in performance reviews. Getting them all lined up and in sync takes more time, patience, and experimentation than you probably thought it would.
If you dislike performance reviews in your company, consider adapting them to align better with your company culture and employees. Done well, performance reviews reinforce employee morale and motivation. You’ll see more employees adding measurable value to your company.
Do you agree that performance reviews aren’t dead? How would you like to see them change where you work? Any other comments, questions, or criticisms? I’d love to hear from you.
Originally published at uptickhr.com on May 16, 2017.