With all the emphasis these days on the power and purpose of employee engagement for business success, it’s hard to imagine how organizations have persisted so long with the soul-sucking, anxiety-provoking, bias-ridden, team-spoiling practices of the traditional performance appraisal process. Any guess how I really feel about the subject?
Companies Finally Hearing the Cries for Change?
Sound-minded authors of countless books and articles over the past 20 years or more have decried the old methods as essentially useless and even damaging to both people and business. One of the best is Abolishing Performance Appraisals written by Tom Coens and Mary Jenkins 15 years ago. Yet somehow, the tried and not-so-true annual review with its characteristic rating game has continued to dominate the performance management landscape.
But maybe – hopefully – its day are numbered. We actually may be reaching a true tipping point on the dreaded performance review universally disliked by employees and supervisors alike. This past month, two highly regarded magazines published articles on why the old appraisal process is not working and, more importantly, what some organizations are doing to replace it.
Deloitte Ditches Ratings to Focus on Strengths
The Harvard Business Review ran a piece entitled, “Reinventing Performance Management” written by Marcus Buckingham and Ashley Goodall. Buckingham has numerous books to his credit, including Find Your Edge and Win at Work. Goodall is the director of development at Deloitte Services, whose new performance management system is the centerpiece of the article.
Here are a few highlights:
- Despite years of recognizing the severe shortcomings of Deloitte’s old review system, the need for change didn’t crystallize until they found that completing the forms, holding the meetings and creating the ratings consumed close to 2 million hour a year.
- A study with 4,492 managers revealed that 62% of the variance in ratings was due to peculiarities of perception in the individual raters. Actual performance accounted for only 21% of the variance. How’s that for rater bias and inequity?
- Deloitte ultimately decided the main focus should be not on rating people, but helping them use and build on their strengths. Toward that end, they have ditched the annual review, and replaced it with quarterly or per-project performance “snapshots” and weekly check-ins between employees and their supervisors.
Reviews the Wrong Way Chase Talent Away
In the same month, HR Magazine published “Reinventing Reviews” written by Dori Meinert. The article features numerous people from academia and corporate America, denouncing the traditional appraisal and spotlighting new processes that focus on positive growth and development for all employees.
Here are some notable insights from the article:
- At Adobe Systems, right after review time each year when they used the old rating system, they saw a “disturbing spike in voluntary turnover as disheartened employees – many of them good workers – left the company.” People were told they were “exceptional” when they were hired, but now a year later, relative to their peers, they were only “average.” As one manager put it, “That doesn’t feel good.” No kidding.
- The company concluded that instead of giving everyone a chance to make an impact, the old process was pitting person against person, undermining their efforts to be more team-oriented.
- Part of the problem goes back to the “rank-and-yank” policy popularized by General Electric’s Jack Welch in the 1980s to constantly weed out the bottom 10 percent of employees. Recognizing the anxiety it produced and the cost of replacing good people they were losing, the practice was phased out about a decade ago.
None of this shift in thinking about how to get the best from employees and how to help them grow and develop should come as a surprise to anyone with a lick of sense about human nature. Still, sometimes even a blinding flash of the obvious takes a while to get people’s attention. Now it’s time to put the final nail in the coffin of the old appraisal process, and seize the opportunity to turn this burgeoning awareness into a full-fledged revolution that’s a win-win for employees and employers alike.
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