If you’re working in any large organisation, stopping performance reviews probably sounds like crazy talk. We need to know how our employees are performing, right? And the employees need yearly feedback so they know what was great and what to improve upon for the coming year, right? Right?!
This is the traditional wisdom. But maybe, just maybe, this isn’t the case any more. In fact, many companies are choosing to ditch the traditional performance review and go with something all-together more human and humane, to all involved. Why is that then?
Well, to find out why performance reviews might not be the best thing ever, we ought to look at what they actually involve.
What does the traditional performance review look like?
The manager fills in a form provided by HR about the employee’s performance throughout the past year. Then the manager and the employee have a meeting, wherein the manager gives “feedback” – both praise and criticism – to the employee.
Sounds simple enough. What’s the problem?
First of all, the feedback that the manager is able to give is rarely going to be a balanced overview of performance throughout the year. Thorough and objective evaluation spread out over the year is difficult and time-consuming to maintain. Also, the forms used in many organisations ask the manager to rate the employee on concepts and buzz words, for example “excellent performance”, “exhibits enthusiasm” and “achievement-oriented”. What do these words mean in practice? How can the rating of them be anything other than subjective? So the review ends up being based on the manager’s opinion and what she remembers of recent events, not necessarily what actually happened.
Second, managers are often not trained or skilled in giving constructive feedback and may feel uncomfortable or unable to give specific examples, so the employee can end up feeling attacked and, understandably, get defensive. This can lead to managers not giving honest feedback – so then why bother with the performance review at all? If the manager and the employee disagree about performance and contribution to the workplace, this can create a rift that may not heal for months, if at all. Is it really worth it?
In fact, research is starting to show the uselessness of the performance review. Conventional wisdom says that if an employee is genuinely motivated to improve their performance, they will respond well to critical comments during a performance review. However, research disputes this idea. In studies, the best employees who were the most motivated to improve were the most bothered by negative comments, and became discouraged upon receiving them. If that’s happening even to those who want to do better, what about the less motivated employees? It seems that those who receive negative reviews find themselves in a vicious circle, performing worse in the next rating period.
Further research suggests that at least 30% of performance reviews resulted in lower employee performance. Why are we doing this to ourselves and our employees? Not only is it useless, it’s worse than useless. It’s actually damaging performance in a significant number of cases.
Employees hate it. Managers hate it. The way it is usually done is paternalistic, top-down and authoritarian, which is not the atmosphere and culture that most companies want to nurture. It treats employees as property of the organisation, and puts the manager in the position of judge.
But wait, don’t we need performance reviews to give fair raises?
Okay, it’s true that annual raises are usually based on performance reviews. However, they aren’t a guarantee of just increases. In fact, more often, they are a useless bureaucratic motion that is followed because, well… it’s always been that way. A manager is sometimes told (maybe in not so many words) by bosses that she knows who the best employees are and who is deserving of a raise, so she should “give those people the best reviews so that the review justifies the raise you want to give those employees.” They are unnecessary for setting annual salary raises – all they do is legitimise them.
Managers who aren’t given this advice from the powers that be often feel (or indeed, know) that they will be limiting the employee’s raise potential if they give them an evaluation of anything less than “outstanding”. In some organisations, over 90% of employees end up with “outstanding” reviews, because the manager doesn’t want to harm their employee, who they may work alongside daily and mentor.
Clearly, the performance review is not quite doing the job we intend it to do.
What can we do instead?
Simple: give regular feedback. This feedback must be a discussion, a dialogue – not a judgement from on high. Individual performance targets should be measurable and achievable. They should also be meaningful within the organisation – by which I mean the individual’s goals should support the overall organisational goals. Development plans and opportunities should be supported for each member of the team. With trust and paths to success, performance will come naturally.
Staff should be in a position to feel comfortable asking for feedback when they need it, and should be able to work in an environment where feedback comes from a place of nurturing potential, not finger-pointing that leaves them feeling inadequate. What we need is collaboration, coaching and truly working together in an open environment that allows feedback to come naturally, without judgement attached. This continuous approach to giving constructive criticism also allows us to catch small issues before they become big problems, especially when they are only addressed at that one yearly meeting.
As Ray Williams at business.com puts it “the annual performance review was designed for a work environment where control of individual employee performance was a key function”. I think most of us would agree that collaboration, rather than control, is a feature we want from our workplaces. This is why the performance review is outdated, redundant and in fact counterproductive. Let’s get rid!