How relationships can trump rankings
This year sees some of the largest organisations in the world abolish their traditional annual performance review systems. Accenture, Deloitte Microsoft and Adobe are amongst the growing list of companies to do so. We explore why traditional annual performance reviews may no longer be fit for purpose and look at the alternatives organisations can consider.
Are performance reviews still fit for purpose?
Traditional performance reviews are meant to provide a stage in which employees can discuss their performance, talk about their future development goals and offer a safe environment in which employees and managers can effectively plan and track development journeys. Despite these clear objectives, there is growing evidence to suggest that traditional performance reviews simply aren’t working1.
In reality, this style of review can be counter-productive, often provoking feelings of fear which triggers the same flight or fight response which we encounter when faced with a physical threat. Traditional performance reviews create situations in which employees think they must look good instead of reflecting on what they could have done better. Forced rankings encourage employees to compete against each other and the process creates a pressurised environment which employees feel they simply need to ‘get through’ rather than learn from. On top of this, evidence states that this system doesn’t help managers to identify high performance and is ineffective2. It is likely that once bonuses and rewards are mentioned, energy is directed at salary conversations, as a result development and goal setting discussions often fall by the wayside. When you think back to your own performance review experiences, have you recognised these things happening and if so, how did it make you feel? With this in mind it isn’t surprising that Corporate Executive Board (CEB) research found that 95% of managers are unhappy with traditional performance review systems2.
What is the alternative?
It is clear that traditional performance reviews need improvement, whilst some organisations are keen to abolish the process, performance management and feedback is essential to ensure employees reach their potential. A shift in the approach to performance management systems is required, which is able to keep up with our complex work force. The rate of change which we are currently experiencing has never been so rapid, we therefore need to update what currently exists to meet the expectations and the requirements of the workforce.
Feedback that works
Today’s workforce is exposed to real time feedback in their personal lives, for example, consider the last time you posted a picture on Facebook, the chances are after a few seconds or minutes you would have experienced ‘likes’ and comments. Imagine posting that same picture and receiving comments a year later, the chances are you would have forgotten posting the picture in the first place. The comment is likely to seem irrelevant, dated and frankly you may not even read it. This emphasises real time feedback is not only welcomed, but is increasingly becoming the norm. If organisations want to keep up with the growing expectations of millennials who are increasingly entering the working world, real time feedback and continuous performance conversations should be welcomed in the workplace.
In order to achieve this, future performance management systems should:
Encourage less formal and more frequent feedback conversations
Concentrate on ways to enhance relationships between managers and direct reports to build trust
Focus on unlocking employee potential, current and future performance, rather than getting hung up on the past
Abolishing performance reviews completely is not the way forward. Instead, creating an environment which encourages informal conversations has the potential to facilitate a more effective way to increase employee performance. To do this we need to be clear on what good looks like and identify ways to tap into intrinsic motivation which facilitates individual development journeys. Making the links between individual and organisations goals will create not only success but individual satisfaction. Abolishing performance reviews is only an option if the environment is set up to consist of leaders being able to develop potential, creating a coaching culture is essential for the success of this approach.
Patel, M. (2015). Tough Love Performance Reviews, in 10 Minutes. Harvard Business Review.
Veenman, D and Hart, G. (2015). The Rise of the Naked Manager: From Annual Appraisal to On Going Conversation.