High Growth Insights

How to get rid of annual performance reviews

Performance reviews were first developed by the US military in World War I and were adopted in later decades by such companies as General Electric to shed poor performers. They’ve now become universal and universally loathed. Often seen as a time consuming, backward looking, box ticking exercise, probably revealing more about the rater than the person being rated.

I an now increasingly coming across companies that have jettisoned formal annual reviews in recent years. The pandemic helped accelerate the move: Fifteen percent of organisations suspended performance ratings as the number of Covid-19 cases rose, according to WorldatWork.

Companies that do so earn kudos at first, but the good feeling can fade. Workers who hear from their bosses less frequently end up feeling left in the dark about their pay rationale and prospects. This highlights the importance of replacing them with other strategies to better support employees. Here are some I have come across:

1.????Regular and timely discussions

Chats between a manager and worker should happen right after a project is completed, or at least every quarter. The ideal frequency for check-ins is, according to ADP Research, every 11 days.

2.????Focus on the how, not the what

According to Gartner just 4% of HR leaders say performance reviews accurately assess employee performance. Discussions should centre more on how people work, their skills, behaviours, and competencies, rather than what they worked on, which inevitably turns into a recital of tasks and goals.

3.????Consult co-workers

Involving an individual’s colleagues in a performance assessment can be particularly helpful in today’s hybrid offices, where managers have less visibility into employee work patterns. Interestingly only 25% of organisations include a worker’s teammates in appraisals, according to a 2021 Gartner survey of HR leaders. Note this approach isn’t advisable unless a company has an open and honest culture.

4.????Let the employee reflect

Some businesses have replaced formal chats with quarterly self-reflections by employees on their performance, which managers can then comment on. This reduces the amount of time spent writing up traditional evaluations.?

5.????Look forward

Some of my clients now use the idea of “feed-forward,” which links the performance discussion directly to the employee’s own development. That way, reviews become more effective at identifying and cultivating your best people, rather than just determining who gets how much of the annual bonus pot.

Think Time

One activity I advocate to my clients is to build think time into your weekly diary. This is time for you to work 'on' the business by thinking through the answer to questions you typically would not ask on a day to day basis.

This week's question to reflect on:

What are you practising? Are you improving?

Quote of the week

“The road to success is always under construction.” Lily Tomlin