Why Performance Reviews Don’t Work

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“If performance evaluations were a drug, they would not receive F.D.A. approval,” because “they have so many side effects, and so often they fail.” - Robert Sutton, Stanford Professor and co-author of just published, Scaling Up Excellence. (Source)

It’s no secret that most employees, and even most managers, dislike the annual performance review. I remember doing a performance assessment in a previous job and being stumped on almost every question. Without encouragement to track any of my successes or challenges, with an incomplete view of all I had worked on and scant input from the people I had worked with, the task felt hopeless and intimidating. I worried about getting negative feedback from my manager and how it would impact my overall evaluation and future opportunities. Performance reviews didn’t inspire me to achieve more or get better. They only caused anxiety. The Washington Post very recently reported on how people respond to critical feedback stating that, “The research is a reminder not only of how much people dislike criticism, but of how dangerous performance review tools like rankings and ratings can be.”

“The best kind of performance review is no performance review” - Aubrey Daniels

In a post last July on Adobe’s blog, HR Executive, Donna Morris (SVP, People and Places at Adobe), looked back on the company’s first year after they made the bold decision of abolishing the annual performance review. Fittingly pleased she reported, “we’re saving 80,000 hours of our managers’ time by removing an archaic process; and our attrition is down year over year.” The company’s new focus on motivating and inspiring each individual was working.

There is a paradigm shift occurring in the HR world on how companies view talent and their needs in terms of attraction, retention, and employee engagement.  Josh Bersin, Founder and Principal at Bersin by Deloitte, aptly states, “The old-fashioned performance review is slowly going out the window. In 2014, companies will  aggressively redesign their appraisal and evaluation programs to focus on coaching, development, continuous goal alignment, and recognition.”

Thought leaders on this topic are finding performance reviews no longer deliver what people want and are dreaded by almost everyone.  Here are reasons why they just don’t work.

Performance Reviews Are….

Infrequent – It’s easy to forget all of your accomplishments, successes, even failures to learn from, when you’re only being reviewed once a year. Patty McCord (previously, Chief Talent Officer, Netflix) states that performance reviews “didn’t make sense—they were too ritualistic and too infrequent.” (Source).  When feedback is not given often or on the spot, the opportunity to recognize is lost. Aubrey Daniels, clinical psychologist turned management consultant, made a great analogy. “Think of a sports team: A coach doesn’t wait until the end of a season to give his players feedback.” And neither should managers.

Weakness Based – Once a year performance reviews tend to focus on calibration and employees’ shortcomings rather than on coaching and reinforcing strengths. This can lead to negative year-end surprises, a decline in morale and higher attrition rates.  Donna Morris (Adobe), expressed her concerns on the matter: “When you’re a company of 11,500 people [and you experience] an increase [in attrition] of a few percentage points, you’re talking 100 to 200 individuals leaving who were likely great contributors. That has implications around your productivity and your performance as a company.” (Source)

Antiquated & Vague – If performance reviews can be traced back to the 1930s, it’s safe to say that most companies don’t work the same way anymore. This is especially so with the Millennial generation entering the workforce in large numbers. Gen Y workers, who will be greater than a third of the US workforce in 2014, crave specific and meaningful feedback. Taproot Foundation confirms this belief: “Millennials, who in ten years will make up the majority of the workforce, require mentorship, growth opportunities, and useful feedback from their managers.”  We can’t continue sticking to old, mundane traditions if we expect to progress.

Don’t Promote Growth – Most performance reviews are focused on ratings and rankings to determine compensation therefore managers mostly spend time justifying pre-determined ratings during these discussions. This adversarial dynamic ensures there is not much productive discussion about growth, development and career progression. Culbert explains this further saying, ”performance reviews demoralize the workforce because they focus too heavily on flaws in employees’ performance, rather than on building their strengths. The result is stagnant performance and a team of demoralized employees who are not getting the support they need to grow and develop.”

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-Lolly Fitzpatrick

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