Why Performance Reviews need to be replaced with conversations.

Is it that time again in your organisation? The dreaded annual Performance Review charade. Time-poor managers and team leaders despair at the prospect of completing reams of paperwork and trying to fit in one-on-one meetings into their already crammed schedules. And these conversations too often feel like a complete waste of time. Because they usually are. The traditional annual Performance Review model entered corporate life over 50 years ago. It was used to establish remuneration against role requirements. Over time the review process incorporated qualitative feedback about performance, as employees looked for more than financial incentive. People wanted skills development, challenge and education.

Regular quality feedback has been proven to improve productivity and performance, by as much as 40% according to the Corporate Leadership Council. But only when conversations are handled well and not once a year. The ability to give regular informal feedback that is meaningful and useful is arguably the most important skill of the new millennium leader. In our work with organisations and leaders, we find time and time again that giving feedback is avoided and / or executed poorly. If employees are telling us they value quality feedback highly, even over financial incentive, and we know it hits the bottom line positively, why are we avoiding it?

The top 4 reasons Leaders avoid giving regular informal feedback:

1. It is difficult

Many managers have been promoted to leadership positions on the basis of their technical skills, doing the job well. They are now responsible for the people doing the job. This requires “people skills” that the new manager may not possess. They rarely receive training in how to be a manager and resort to micro-managing, struggle to delegate and focus on the task not the team. Corporate mission statements may state “people are our greatest asset”, which is universally true, but it is easier to focus on process and tasks. Managing people is hard.

2. It is scary

Conversations about performance and workplace behaviour can be confronting. We do not know how someone is going to react. It can be a difficult conversation which throws up emotion and potential conflict. What if they get angry and defensive? What if they cry? What if I say the wrong thing and it makes the situation worse and they go to the union and accuse me of bullying? Fear leads to avoidance, which compounds workplace issues.

3. It is time-consuming

Making the time to plan and execute regular informal performance conversations can feel impossible in our frantic work weeks. Aligning schedules can feel like planning a NASA space mission and it is all too easy to claim we are just too busy and focus on the next crisis. Our diaries reflect our priorities and if we value giving feedback, we will make time for it. 

4. It is “not my job”

It is the job of a manager / leader to have regular informal conversations with their team about how they are doing, both as a group and individually. It is not HR’s job to deal with difficult behaviour, poor performance or conflict. Because it is difficult, scary and time-consuming, it can be seriously tempting to label feedback conversations as “not my job”.

Regular informal feedback is a strategic weapon. Executed well, it will build morale, engagement, productivity and performance. Instilling a culture of holding regular, honest and respectful conversations relies on transparency, accountability and courage. Deloitte has scrapped bi-annual Performance Reviews and view this move as a way of fuelling future performance rather than assessing its history. Their research convinced them that all the time, money and effort spent on the old fashioned performance ratings did not ultimately accomplish their main goal: to drive better performance among employees. Deloitte discovered it was consuming 2 million hours a year filling out paperwork, in meetings, and creating rankings. More frequent discussions mapped to a dramatic increase in employee engagement.

Maybe it is time we ditched the formal Performance Review process and start the real conversations?

Sam Young is the Managing Director of Human Psychology, one of Adelaide's largest psychological services companies and is committed to helping people and companies think, feel & perform better.

Would you like to develop your skills and confidence in having crucial Manager Conversations around employee performance, mental health and engagement? Click on the image link below for more information about our upcoming "Manager Conversations" workshop August 24th Adelaide: