Performance review pitfalls

Does the process effectively drive employee engagement and development?

The annual performance review is probably the most dreaded activity in the workplace, one that has long been satirized in television sitcoms, in our favorite Dilbert cartoons and in YouTube videos. 

The U.S. government got the performance review ball rolling with the Performance Rating Act of 1950, requiring annual reviews for federal employees and establishing three performance rating levels: Outstanding, Satisfactory and Unsatisfactory.

In the 1960s-1980s Peter Drucker’s Management by Objectives became popularized as a best practice and performance against objectives became a key element in performance evaluation. 

Eventually, though, surveys began to surface showing dissatisfaction among employees and managers with the review process. In 1997, the Society for Human Resource Management found a mere 5 percent of companies rated themselves “very satisfied” with the review process. A 2009 Reuters survey determined that four out of five U.S. employees were dissatisfied with performance reviews.

Since then, arguments to eliminate the performance review have gained momentum, pushing the subject to the forefront of many of our discussions. 

UCLA Professor and management guru Sam Culbert was an early champion of change, with other experts, such as Dr. Tim Baker, more recently entering the fray, with books and articles outlining the pitfalls of performance reviews.

Experience and research have shown us that some of the foundational components of the performance review processes we use today are flawed. The following are the top four deficiencies in today’s practices:

• Most managers obtain feedback on their employees from other managers and colleagues. These can include peers who work with an employee and managers who observe or receive an employee's services. But people all have different goals, perspectives, agendas and political alliances, as well as personal needs and biases, that make our feedback subjective, incomplete and, therefore, inaccurate.

• Often, managers collecting the feedback have their own opinions about the employee and feedback that agrees with their own is given more weight. Studies have shown that this bias in our perception of data and information even affects the way scientists interpret information when doing experiments and trials. This is human nature. 

• Employees need to receive feedback promptly and given time to make associated changes. In order for that to be possible, managers need to take the time to communicate often enough to be aware of performance problems as well as to provide the feedback and information the employee needs to correct such problems. Timely communication and feedback are areas needing improvement in most organizations, and this impacts trust as well as performance.

• Gallup and other organizations have hard data showing only 30 percent of employees are engaged at work. To build performance results, we need new tools. Performance reviews are known to demotivate people. This could be a high impact target for change.

A number of companies have stepped in to transform their review processes, including Zappos, which has moved away from the traditional results-based structure to one that assesses cultural contributions based on the company’s 10 core values. 

At Adobe, the performance review process has been abolished and replaced with check-ins, including expectation setting, feedback and a written quarterly recap of employee strengths and opportunities for development.

Deloitte is eliminating cascading goals, 360s and annual reviews. It will now focus on three objectives: see, recognize and fuel performance. The new, future-facing process will have three interlocking rituals to support them: the quarterly or per-project performance snapshot; the weekly check-in; and the annual compensation decision.

And Accenture is reinventing its process, seeking relevance in an environment where people seek development and growth, and building a culture where performance and feedback are recognized as, and supported with a process that is, fluid, ongoing and individual.

We are at a tipping point in performance management. Now is the time to ask yourself: 

• Is your company’s performance review process effectively driving employee engagement and performance?

• Is it designed to avoid pitfalls in objectivity that are inherent in traditional performance review processes? 

• Does it yield valid performance information and data that can be relied on for succession planning, workforce planning, employee development and retention initiatives? 

Each of these companies has leaders who dare to make a disruption, to reap the benefits of not only updating, but moving to a new way of managing performance. Your performance review process needs to be tailored to fit your company’s unique business strategy, desired culture and organizational needs. 

Are you ready to lead the way for your organization?  

Rosanna Nadeau, principal/consultant, at Prism Perspectives Group LLC, Mason, can be reached at 603-878-1546 or Rosanna@PrismPerspectivesGroup.com.