Should you really get rid of Performance Reviews?
There are more and more articles out there about companies that are getting rid of the traditional annual performance review. The reasons are generally the same:
- They take a lot of time on the part of the manager and nagging, begging and pleading on the part of HR.
- They are notoriously inconsistent, with some mediocre performers getting high marks when they really shouldn't.
- If wage increases are tied to the review, there are inevitable debates over who deserves what, draining even more time and resources.
- Employees become jaded to the process because their responses are often asked for after the review is already finalized, if ever.
Given this, it's no wonder that an increasing number of firms have stopped reviews altogether, and several clients every year ask me if that's what they should do as well. After all, I've never met an HR Manager who looks forward to performance review season.
The real issue here is, what is the best way for your company to provide feedback to its people on their performance? For some, it's through a formal performance review process; for others, it's through more informal regular periodic coaching. Here are some things to consider when determining which way to go:
- Don't make this decision about money or resources. If it were just about the cost we wouldn't bother to do any coaching at all (or for that matter, even have meetings).
- Eliminating performance reviews requires trained managers that are committed to providing regular coaching to their people - and documenting it. This includes all of their direct reports, not just the "problem children". If they haven't been trained on how to give regular feedback, getting rid of the performance review will only create a communication vacuum.
- Performance reviews aren't a bad thing. I've been part of organizations that have formal reviews twice a year where employees actively take part. The key is training managers to conduct reviews right.
- Even if you keep annual reviews, it is never a substitute for regular coaching. Reviews should be a non-event; If an employee sits for their review and they are surprised by their manager's feedback, shame on us for not providing regular feedback throughout the review period.
So is eliminating the hassle of the annual review right for your organization? For most companies I've worked for or with, I'd say the answer is no. Managers simply aren't equipped to provide the effective regular feedback to fill the gap. If or when your people are ready, however, no performance reviews can be something HR, employees, and management alike can appreciate.