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?
Most Read IRIS Articles of the Week (March 20 - 24)
Here’s a look at the Top 11 Most Viewed Articles of the Week on IRIS.xyz, March 20 - 24, 2017
Click the headline to read the full article. Enjoy!
In the world of ETFs, advisors face a similar challenge. Simply put, the menu of ETFs is massive. And while advisors used to debate only about the merits of active versus passive investing ... — Jillian DelSignore
Here are five reasons why we believe simply shifting your strategy, but not running from REITs, may provide desired yield—even in the face of yet another rate hike ... — Salvatore Bruno
There are different types of narcissists but handling them is always the same: be humble, don’t engage. — Tanya Beaudry
Use these simple tips to establish and grow valuable relationships with Centers of Influence to have them recommend you to their best clients. — Paul Kingsman
Are you getting enough qualified referrals from people within your network? Or are you relationship rich but referral poor? — James Pollard
ETFs offer attractive features—access to a broad range of asset classes, sectors and styles in a liquid, transparent and cost-effective vehicle. But before using that vehicle, it’s helpful to understand how it works ... — ProShares
While I personally won’t forsake my Starbucks ritual for McDonalds’ curbside delivery, I have to concede the prospect of having my breakfast provided to me as I pull up to a restaurant does sound appealing. — Joseph Michelli
So many leads, so little time. Your marketing strategy is generating so many qualified prospects and you can’t keep pace. It is an enviable position. — Elizabeth Harr
The stock market continues to soar. The natural question is: How long can this go on? — Mark Germain
New presidents typically arrive in office with an economic agenda. In the case of Trump, the nature of his proposals has invited comparison with a variety of changes made under the first term of President Ronald Reagan in the 1980s. — Matthew F. Beaudry
The hope for economic growth much beyond 2.0% looks to be deferred, as legislation appears to be bogging down and the Fed is reducing monetary support, clearly taking the path to interest rate normalization. — SNW Asset Management
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