Written By: Matthew Hemmings, Columnist, International Director
Employees dread performance reviews, but managers feel they are an essential tool in helping them to gauge how well each part of the organization is performing and to devise corrective measures if needed. Based on those reviews, managers discuss job performance with employees and set goals for professional development for them as well as objectives for meeting the company’s mission. Performance reviews can be a learning opportunity for both employees and employers alike. However, the effectiveness of this method is now being questioned, given that it is a legacy from the industrial age. Today, in the information age, we need something more suitable and which works better at putting an organization’s performance back on track.
Performance reviews no longer have an effect on performance.
There are plenty of reasons why performance reviews need to be reconsidered. A survey by the Society for Human Resource Management concluded that 95 percent of employees are dissatisfied with this process, and a study by Adobe Systems found that these reviews lead to no change in performance whatsoever. It is becoming clear that this tool is no longer meeting its intended purpose.
History of performance reviews
Performance reviews emerged as a result of the work of Elton Mayo, who is considered to be the founder of human-relations management theory. Therefore, they are deeply rooted in the way employees are managed. Mayo’s approach toengaging employees was an improvement on Frederick Taylor’s method, which approached humans as machines, more or less. The United States government then reinforced Mayo’s approach by designing a rating system through the Performance Rating Act, which placed an employee’s performance inone of three categories: outstanding, satisfactory or unsatisfactory. This performance rating system was further buoyed by the Incentive Awards Act. Both of those acts placed emphasis on employee performance, and by necessity needed periodic performance reviews. However, the conditions today are different.
Technology today enables far better means of performance management.
In our agile organizations, which are powered by a plethora of technologies, and in a business environment characterized by rapid change, waiting for six months to discuss performance with employees renders the entire endeavor useless. Today’s organizations are flatter, and vertical as well as horizontal communication flows more easily than ever before. This enables much more effective and efficient modes of deliberating performance than the outdated performance reviews.
Harsh truths: the 360 review
The modern approach to performance management is different. The 360 review gives the employee—and the manager—a perspective from all angles, as the name accurately implies. Such perspective can be an invaluable and powerful tool for change. The feedback that employees and managers receive is hardly ever what they want to hear, but harsh truths are always better to hear than comforting illusions. Such approaches can lead to breakthroughs in performance. One manager, for example, discovered that his management style was not suitable for the team he was leading. Particularly, his character was too strong, and it was overshadowing other talented members of the team. The manager took the decisions necessary and stepped back and let his team shine. Positive change in team performance followed quickly.
Instant feedback is vital for change.
Feedback induces the largest amount of change when it is instant. The long-time interval between performing the task and reviewing that performance makes the process counterproductive, passiveand very backward-looking.
The 21stcentury’s approach to performance management is more responsive, more dynamic, more intuitive—and yields far better results. Today’s 360 review solicits views and feedback from a wide range of actors and perspectives in real-time. Such an approach enables employees and managers alike to see their blindsides and make improvements, thus making the team more likely to work in harmony together.
Punitive vs growth-oriented performance management
Employees hardly ever lookforward to performance management for one reason: they fear that if their performance is deemed unsatisfactory, this might lead to punitive measures against them. This can include pay cuts, demotions or even harsher measures in extreme cases. The subjectivity of those conducting the reviews can also exasperate employees’ fears of being unjustly given bad reviews. However, the alternative 360 approach is more concerned about opportunities for improvement and growth rather than punitive actions (which are often futile in altering undesired behavior). Instead of pointless criticism, the approach gives more objective feedback and putsperformancein context. As one management scholar wisely pointed out, the term constructive criticism is an oxymoron. Employees and managers need honest, constructive feedback that can truly guide them to change their behavior in a better direction.
Performance-management tools need to adapt toadvances in technology and management practices. The purpose of the performance review has deviated from its initial intention and has become an unproductive and demoralizing practice for employees and managers alike. Not only that, but it also falls short of the kind of information a real review should provide, and from whom. The opinions of all members of the organization about the performance of each member with whom they interact should have equal value, and they should be equal in weight to the value of managers’ opinions. Furthermore, the performance of managers needs to be reviewed just the same—even, or especially, by their subordinates. If the team is to work as one unit, a culture of mutual accountability and radical transparency needs to be fostered. The rewards include better synergy, better performance and a much happier team inthe long-term.