As we near the year end, a number of HR functions will be initiating the performance review process. With roots back to 1954 and based on the principle ‘that what gets measured gets done’, performance reviews are a mainstay in most organisations.
The aim of these performance reviews is supposedly about raising employee performance, but more often than not they negatively affect the individual and the organisation. The flaws with performance reviews are many: they're subjective, time-consuming, costly to administrate and not actually conducive to work. HR professionals welcomed 360 appraisals as an approach to reduce subjectivity but this came at even greater cost. Perhaps the greatest criticism levied against performance reviews is that typically a disproportionate amount of time is spent looking backwards, managing the ‘what’ and, in some cases, the ‘how’ rather than the actual person.
Performance reviews are often reduced to an exercise of going through the motions without connecting at an emotional level. Many managers are technical specialists promoted into management roles but managing people is a separate skillset. To be effective, managers need support from their organisations and to be self-aware. In the absence of this support and development some managers are ill-equipped to have ‘honest’ conversations about work and some simply replicate their own experiences of being managed.
In these reviews, ratings are used to identify high potential, high performance at one end of the spectrum (the good), low potential, low performance at the other end of the spectrum (the bad) and everyone else in between (the indifferent). This talent rating of the ‘good, the bad and the indifferent’ is then used to dovetail into the annual rewards and recognition programme.
Can one approach really be considered best practice when work has evolved and changed so much? Is it realistic to expect these ‘command and control’ approaches to work today?
In recent years there has been a trend for more frequent reviews with shorter and adjustable goals in an attempt to reflect the pressures of being in a VUCA world. Annual and mid-year appraisals have been supplemented with more regular reviews. Some big names (Deloitte, General Electric, Accenture, Adobe and Microsoft) have decided to ‘ditch’ performance reviews and forced distributions in favour of ongoing or continuous performance conversations. The approach varies but can include removing forced distributions, delinking performance from reward, and having regular real-time conversations around performance and development. Importantly these tend to be more future-focused rather than backward-looking.
In terms of time and cost it could be argued continuous performance conversations actually take more time and are therefore more costly. But team working, collaboration and innovation are more likely to be enhanced because employees are not in competition with each other over a rating score.
However, if managers are not supported by their organisations with their soft skills then it is not sensible to assume a manager who would not be adept at having an honest conversation once a year will suddenly be able to have ongoing performance conversations throughout the year.
The underlying assumption of continuous performance conversations is that everyone would like to be managed the same way but people are not one homogenous group. Some staff may well prefer less contact and interaction with their line manager while others would prefer more.
So are continuous performance conversations actually better than performance reviews? Comparing performance under the two approaches is not a like-for-like exercise due to the fact there are many variables affecting performance in any given organisation. There is simply a lack of empirical robust evidence to argue continuous performance conversations really are better for managing performance.
To really raise performance, organisations need to invest the time to treat their people as people. The ratings of ‘good, bad and indifferent’ tend to result in disproportionate time dealing with conflict with the ‘bad’ employees, disproportionate time focused on the ‘good’ employees, and missing the great opportunity to focus on the ‘indifferent’ who typically will make up the majority of the organisation. Ultimately, managers need a shift in mindset towards becoming enablers of all their staff being the best version of themselves.
Shakil Butt is founder of HR Hero for Hire and former HR and OD director at Islamic Relief Worldwide