Why Killing Performance Reviews Was a Mistake
The Performance Review Revolution of 2016
2016 was the year of many themes in business, probably most notably people freaking out about artificial intelligence and what that means for everyone. But it was also the year that a lot of people started discussing -- maybe not yet acting on -- how ridiculous the once-a-year performance review is. Apparently 70% of enterprise companies, including some legacy ones like GE, are considering changing their approach to performance reviews. Headlines scream from the rafters: “Is it time to kill performance reviews?” and “Five reasons to abandon the performance review.”
This isn’t surprising: studies have shown for years that people hate performance reviews, and that includes both employees (receiving) and managers (giving). I’m not going to belabor the reasons people hate them here; I think you’re all smart enough to see those. They’re usually low-context, rushed, and more about process/checking boxes than actually trying to develop the employee in question.
The Unintended Fallout
Well, as noted above, some companies are outright removing them. But … there’s a bit of an issue:
At firms where reviews had been eliminated, measures of employee engagement and performance dropped by 10%, according to CEB’s survey of nearly 10,000 employees in 18 countries. Managers actually spent less time on conversations, and the quality of those conversations declined. Without a scoring system to motivate and give structure, performance management withered. As one manager told CEB: “When I gave someone a low score in the past, I felt responsible for helping them out, now I just don’t feel that I have to spend time doing that anymore.”
So basically: companies are eliminating performance reviews because they see the flaws (or think they’re too time-consuming), and they’re replacing them with … nothing? And by doing that, managers are actually having less conversations? And those conversations are decreasing in quality? Egad.
The Problem Still Remains...
Unfortunately, most managers think of themselves as “Mr. (or Mrs.) Productivity”. They view their direct reports as numbers -- x-amount of KPIs achieved. This is unfortunately because a lot of our “management theory” comes from a 1911 book by Frederick Winslow Taylor. Henry Ford was competing with horses then, and now we have self-driving cars -- but we still design management best practices the same way. Insane.
The once-a-year review is great for lazy managers. You can essentially ignore your employees all year (except for when they screw up), have one elongated conversation with them, and pat yourself on the back about how great a leader you were. Organic feedback is much harder. It requires time, effort, eye contact, communication, genuine interest, emotional intelligence, conversational skills, and more. This is hard for a lot of managers. Do they know that it’s important? And if they do, who’s making sure that they have the training necessary to execute the feedback appropriately?
If you’re going to replace an annual performance review (which you should, because the rest of our economy is on-demand), you need to replace it with legitimate, consistent feedback. Issue: feedback is very rare in most offices, which is largely because it’s a very direct form of communication that we nonetheless root in many assumptions.
So What are We to Do?
This is the bottom line: work is most functional when clear priorities exist, those priorities are aligned with task work, and the people doing the task work get consistent feedback on how it’s going and if priorities are shifting. When we impede any of those three steps, work becomes confusing and challenging for all.
Aside from training managers better and contextualizing for them that their job is about developing talent and not just hitting KPIs, one easy solution is the 90-day review. 90 days is about a quarter -- which is how most companies tend to think -- and it provides a good time to take stock of how an employee is doing. It also feels less overwhelming to super-busy middle managers. We’ve still got a long way to go on how best to give feedback and evaluate employees, but every quarter is better than a once-a-year process choked in HR jargon.
What are your thoughts on the value of performance reviews and adopting my proposed 90-day review process?
Choose a Client Portal as Wisely as Choosing Your Dog
People tell me that dogs are a sign of how the dog owner feels about him or herself and what they value. I agree.
The 6'9" man with the tiny dog tells me that he values love, being cuddled and protected. The scruffy 5'9" man with the two greyhounds tells me he values the feeling of being stately and proper. And the woman with the fancy white poodle values feeling sharp and noticed.
A consumer portal is no different.
The portal and contents send a clear message on what the business values the most and wants its clients to value. If the portal showcases investment performance, the advisory firm is telling the client that investment performance matters the most.
If the portal accentuates a person's net worth or probability of reaching their financial goals (2nd home, college, retirement), the advisor is telling the client to care most about achieving their goals and watching their bottom line.
So before your business chooses a consumer portal, think about the message you want to send to the public and clients. It is no different than the message that your dog is publicly sharing about you. What you choose tells others what you value. And just like a dog, you can't return the portal so easily. So choose wisely.
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