In Defence of Performance Review

Organisations have been questioning the validity and usefulness of the so-called traditional performance review in recent years. Reports indicate that the number of Fortune 500 companies ditching performance reviews reached 12 percent in 2015. There is also evidence to suggest that getting rid of performance reviews can have a negative impact on overall performance.

Clearly, tossing out performance reviews is not the answer to the challenges associated with traditional annual feedback. While we certainly advocate evolving the review process, it is important for organisations — businesses, schools and nonprofits alike — to take a systematic approach to evaluating employee performance and providing meaningful feedback.

Best practice insight and technology company CEB polled nearly 10,000 employees in 18 countries and discovered that ditching the rating system had some unintended consequences, including:

A decline in quality conversation between managers and staff
Managers had more time but spent less of it on informal conversations
Top performers were less satisfied at work
Lower staff engagement

So what went wrong? My guess is that the organisations represented in these results got rid of their annual performance reviews, without implementing a new formal system for evaluating performance. Instead they likely relied on managers to be proactive about providing feedback to people on a regular basis.

Even in organisations with a culture of learning such as in schools, feedback must be systematic and formalised in some way. In fact, this is part of what makes such a culture work. Informal daily conversations are certainly important. However, informal probably means there is no record, and ultimately that progress is not being tracked. Without tracking, how do managers and staff know what progress is being made? This is no way to facilitate the long-term growth and development of your people.

Here are some recommendations for evolving the performance review instead of throwing it out altogether:

Check in regularly and often. ‘Regularly’ means, on a specified schedule, and ‘often’ means, more than once a year, term or quarter. Checking in involves sitting down with individuals to discuss what they’re doing well and what needs improvement. It’s also an opportunity for managers to find out what obstacles the person might be facing and discuss solutions.

Make a formal process for informal conversations. Sometimes informal conversations yield big insights. But if there’s no process for recording those insights, they’ll probably get lost. Something as simple as a form managers can complete summarising the conversation along with next steps could turn an informal conversation into an opportunity for genuine growth.

Focus on the future, not the past. One of the biggest problems with traditional performance reviews is that they tend to look backward. While it’s useful to look at historical data, make sure to look at strengths too, then move on quickly to discussing the areas of improvement and the steps needed to get there.