Thursday, July 30, 2015

Time to Blow up the Performance Review?

What will you do instead?

A fairly recent HR "flavor of the day" idea coming from thought leaders (many of whom have probably never actually practiced HR, I’m sure) is the call to dump the annual performance review. It’s no secret that many managers/supervisors and HR folk really hate dislike the whole process. The annual struggle to get management to complete the reviews with some semblance of objectivity, provide meaningful feedback in them, and actually present them to employees in a timely manner is a task many of us dread. As a result, some companies are dumping the annual review.

In a recent Washington Post article, Accenture’s CEO Pierre Nanterme explained why he’s revamping their process. He states "…we’re going to get rid of it. Not 100 percent, but we’re going to get rid of probably 90 percent of what we did in the past. It’s not what we need. We are not sure that spending all that time on performance management has been yielding a great outcome." Accenture has over 300,000 employees, so any endeavor like this is going to be a major effort.

Nanterme goes on to say "Performance is an ongoing activity. It’s every day, after any client interaction or business interaction or corporate interaction. It’s much more fluid. People want to know on an ongoing basis, am I doing right? Am I moving in the right direction? Do you think I’m progressing? Nobody’s going to wait for an annual cycle to get that feedback. Now it’s all about instant performance management."

Microsoft, Gap and Adobe are among several other companies that have reformed their evaluation processes in recent years. In 2012, Adobe replaced its evaluations. Under the old system, managers focused on the most recent developments instead of looking at the entire year; they fixated on the past instead of considering what employees should do going forward; and in many cases, they came across as antagonistic. So instead, Adobe implemented a more informal "check-in" process that takes place throughout the year, with employees receiving feedback on what they’re working on at any given moment.

The theme here is that these leaders are not giving up on performance management. They’re simply changing the tools they use to achieve it. This is the true take-away message of these efforts. Performance management is as important as it’s ever been. How we go about it, however, may need to evolve.

The problems with annual performance reviews are well known. Recency effect (inaccuracy or flaw in a performance appraisal caused by the evaluator's reliance on the most recent occurrences of the employee's behavior) is a prime example. Whether the effect is positive or negative, it does not result in a complete picture of the employee’s overall performance. The propensity of many managers and supervisors to avoid conflict and confrontation also results in scores that are more positive, and therefore less accurate and truthful, than constructive. Furthermore, the lack of any substance in the conversation with the employee when presenting the review renders it almost useless. It becomes a chore that must be completed rather than an opportunity to assist the employee in developing his/her performance and potential.

So, go ahead and dump the annual review. But what will you do instead? You still need a way to have constructive conversations, a way to record what it is you’ve talked about – few of us have perfect memory! We need a way to follow up on behavior (both good and bad) as it happens. We need a way to communicate and monitor and measure performance goals.

The goal is to manage performance. This should be done on an on-going basis. Create the expectation and culture that your supervisors and managers will have regular, frequent conversations with employees. Teach them how to have honest, constructive conversations. Focus on hiring the best, so you build a team which strives for the best possible performance – don’t just get butts in the seats. You do have to prepare for this ahead of time, though. Expect supervisors and managers to define performance goals with measurable outcomes; define the priority of each job responsibility and goal; define performance standards for key components of the job. Keeping these criteria in mind when having those regular, frequent conversations with employees will be key to the success of any performance management process.

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