The annual performance review is something that remains memorable to managers and their teams – sometimes for all the wrong reasons! Managers often question the workload involved in rating the performance of their direct reports, while the recipients of the review sometimes question the fairness and accuracy of the process. And yet, we continue to do these reviews.
Over the last year, the HR press has reported that a number of high profile organisations are moving away from this kind of performance management, often replacing the annual review with coaching-style ‘check-ins’. At the Future Work Centre, we wanted to examine the narrative of ‘everyone is abandoning the performance review’ from an evidence-based perspective.
We shared our findings at a recent breakfast seminar and in our report, ‘The death of the performance review: fashion, fad or forward-thinking?’.
What did we find?
Organisations conduct annual performance reviews for many reasons – from clarifying goals and expectations, delivering feedback through to helping managers get to know their teams. A key problem with the review is its lack of clear and consistent purpose, even within organisations.
The case for abandoning the performance review is quite compelling. The performance review combines the worst of both worlds: it’s unpopular with those involved and can be deeply time-consuming, particularly for managers with numerous direct reports. From an evidence-based perspective, there’s little data supporting the hypothesis that performance reviews lead to improvements in employee performance.
Research has also consistently highlighted the lack of fairness and accuracy in manager ratings of performance – simply because managers are human too, falling prey to the thinking errors and cognitive biases we all experience. They may simply reply on the most recent examples of performance, rather than the most representative – something referred to as the ‘recency effect’.
Further, a lack of rigorous training for managers means that feedback can be delivered poorly and the goals set may be inappropriate for the individual and/or the organisation.
That said, we don’t advocate wholesale abandonment of the performance review, without a suitable replacement. So what can we do to ensure the reviews are as useful as possible?
- Establish clarity of purpose, ensuring that all stakeholders know what the performance review is for and what is expected of them.
- Goal-setting is effective in many conditions, but must be done properly. Providing a combination of flexibility (should conditions change) and autonomy seem to be helpful here.
- Training for managers in how to give effective and actionable feedback is key. This training could also highlight how our biases reduce the objectivity of reviews along with strategies for dealing with this.
- Ensure that rating frameworks and scales are extremely clear and usable.
- Ensure that your organisation is clear about how people can develop once they’ve received their feedback. Feedback without the support and resources to improve is deeply unhelpful.
We never advocate a one-size-fits-all approach, so the above recommendations, while anchored in evidence, should be viewed in the light of your own organisational context. It might also be useful to consider the following questions if you’re thinking about changing the performance review:
- How would you rate the success of your performance review as it stands? Have you any evidence that it’s working well or not working?
- Have you clearly communicated both the purpose of the reviews and the standards you’d like participants to adhere to?
- Are you clear on how employees view the performance review? Is it helpful, or a time-consuming distraction?
- Do you know how you would effectively evaluate how well your process is working?
How we can help
Understanding where you are now
We can help you evaluate the process and identify its strengths and areas for improvement.
Improving your current process
If you’d like to improve the quality of your performance review, we can design and run appropriate training for your managers.
Designing and evaluating a new performance review process
If you’re considering abandoning the performance review completely, we can evaluate your plans with you, and help you design and implement an alternative process which meets the needs and culture of your organisation.
So if your organisation is looking to optimise the performance review process, and you want to take an evidence-based route, get in touch: firstname.lastname@example.org