June 2016

Death of the Performance Review? Throwing the Baby out with the Bath Water

Some high profile companies have decided that performance reviews are passé. For example, Accenture, with over 300,000 employees, announced last year that they would end performance reviews and rankings as of this September.1

General Electric made a similar announcement2. So did Microsoft … and Dell3.

Riding the wave, it quickly became fashionable to deride performance appraisals as writers took up the burning torches and pitchforks on behalf of both managers and staff who hate the process4,5,6.

Get Rid of the Performance Review - Samuel A. CulbertThe things is, these companies and commentators are not alone. A short search will reveal many more vocal opponents of the performance review in their camp … There’s even a book on the subject! A quick perusal of Samuel Culbert’s “Get Rid of the Performance Review!” 7 would inspire many of us to join their ranks.

To be frank, in many ways I agree.

Those traditional twice-a-year performance reviews (the inaptly-named “performance management” process we’ve all come to loathe) can be tedious. Especially when your manager expects you to define your own development – which is iced as soon as it’s filed.

Even more disheartening for the overachievers among us is when a 5-point scale is reduced to 3 points because no-one scores either a 1 or 5. Even then, most people score 3. There’s just a sprinkling of 2s and 4s to legitimise the farce.

The challenge is taken to the next twist on the spiral to purgatory when you’re saddled with a manager who has the communication skills of a rhino – or (worse) – a fish. Either he’s in your face all the time, charging you into a corner, Or the mouth is moving, but no sense is reaching you.

prevailing management communication styles aren't always effective

And finally, that sickly cherry on this putrid dessert: when there’s no objective scoring mechanism for the appraisal process, and no link to the outputs of the department, division, branch, or organisation.

What is the point of it all? We ask in despair.

Some companies and authors talk about more frequent feedback and conversations.

Herein lies the rub.

If managers struggle to appraise performance effectively once or twice a year, how will this improve if they try to do it more often? Practice makes perfect? Well – maybe.

In most cases, though, the problem goes deeper than simply not talking often enough. In order for the performance management process to become more effective, there are two fundamental problems to fix:

1. Performance Measurement

The performance being measured needs to be relevant to the outcomes required of the team. In my experience, many performance scorecards are too complex, too subjective, too vague – and not linked in any tangible way to the outcomes of the department, division, or organisation.To fix this problem, the leadership of the organisation needs to define the objectives of the organisation and how those objectives will be measured (KPIs). This gives everybody has a clear view of what must be achieved. Once defined, those objectives are cascaded to the appropriate jobs in the organisation.

In other words, everyone knows what the business is trying to achieve, and what role they play in achieving those goals.

Secondly, the organisation achieves its strategic objectives through the execution of processes. Most of the staff of an organisation work in processes. It must be clear to each individual how their process work is to be measured (again: KPIs).

Finally, once each staff member is clear about how their work will contribute to the achievement of the organisation’s objectives, we have two last tasks:

    1. to set targets for each KPI on 4 or 5 levels so that it is clear what must be achieved to score a 1, 2, 3, 4 or 5. This deals with one of the biggest problems of performance appraisals: subjectivity.
    2. to weight each KPI so that we appreciate the priorities that should occupy most of our day

2. Management Skill

Once we have a clear picture of the work to be done, the second (and tougher) job becomes important: the capability of the manager to execute effective performance management.The celebration of the demise of performance reviews will be short-lived. The people in an organisation still need to be assessed for their contribution to the organisation. There are no better examples than in the worlds of sport, commerce, and education. Imagine for a second if we scrapped scoring teams that compete against each other because scoring is too mechanistic and doesn’t take account of the contribution of each player. Imagine scrapping share prices on the stock exchange because the share price is too mechanistic… Imagine scrapping school marks because school marks are too mechanistic… It would be ridiculous.

Scrapping performance reviews is solving the wrong problems. The problems don’t lie with the review process per se, but with the objectivity of the process, and the competence of those managing it. It’s certainly easier to scrap performance reviews than to upgrade the skills of managers – but it’s not a long-term solution.

If organisations define and communicate their objectives and KPIs to the people of an organisation – and if these are cascaded to jobs clearly so that employees are able to see the links between their work and the organisation’s output – we are halfway home.

With that foundation in place, the coaching community has a fundamental role to play in assisting managers to improve the following fundamental skills:

    1. communication
    2. providing negative and positive feedback
    3. coaching
    4. problem-solving
    5. reducing personal bias
    6. managing the emotions related to performance, especially when the manager has the tough task of communicating negative feedback
    7. building a constructive relationship with staff that doesn’t depend on rank, popularity or nepotism

Twenty years ago, the topic of coaching barely existed. Today it has become a thriving international industry as organisations and people recognise that no matter what technical skills they people bring to the table, it is their behavioural skills that remain the largest challenge.

It is incumbent on consultants and coaches to demonstrate the importance of the problem … and the value of the solution.

Sick of painful performance appraisals that just don’t deliver? Call me. Let’s talk.

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