Organizations Need to Address the Core Issues with Performance Reviews

There continues to be discussion about “ditching” or “killing” the traditional annual performance review. I get it. The business world has changed and older processes, like the annual performance review, need to change along with it.

But I think we need to be careful that we don’t sell the notion of dropping the annual performance review as some sort of silver bullet that will cure all of the organization’s performance issues. The performance review is only one piece of the overall performance management process. Like any process, removing or reducing one piece of it, puts extra emphasis on the remaining components of the process.

So, organizations thinking about eliminating the annual performance review have to look at their performance management philosophies to ensure they’re not simply removing a symptom – instead of addressing the cause.

During last year’s WorkHuman Conference, pioneered by Globoforce, I heard several speakers talk about the annual performance review. Here are three takeaways that I believe we need to keep top of mind:

  1. Companies don’t do performance reviews to inflict punishments. I’m confident that the performance review wasn’t started in a conference room somewhere under the guise of “We need to implement a process that managers will loathe and employees have no confidence in.” Performance reviews serve several organizational purposes including providing feedback, assisting with selection in promotions and transfers, and compensation. The performance review is only a form of punishment if the company lets it become that. Organizations looking to bring performance reviews into the 21st Century will have to deal with public opinion.
  1. Performance reviews have a competition component to them. Let’s face it. One of the biggest reasons for performance reviews is to determine pay increases. If that’s true, then there’s a certain amount of competition involved, even if the organization doesn’t do employee ranking. Employees are competing for a piece of the merit increase budget. Eliminating the performance review doesn’t change that. Employees will still want the biggest pay increase possible. Organizations will have to find a way to ensure the competition piece remains healthy. Because when competition goes rogue, it can hurt teamwork and collaboration.
  1. Manager’s skills must be updated. Organizations that are considering ditching the annual performance review because it doesn’t reflect today’s workforce, are not eliminating performance feedback. They can call it something different and document it differently and do it more often, but they aren’t eliminating the conversation. If managers don’t get new training to successfully conduct the “new” performance conversation, then performance review elimination is simply a “lipstick on a pig” move. It’s the old performance review conversation with a new form or timetable. Because that’s all the manager has been trained to do. If companies are serious about stepping up their performance reviews, then manager training has to come along with it.

I’m not opposed to updating the annual performance review. Frankly, it probably needs it. But I do believe it could be detrimental just to think abolishing one form is going to miraculously change organizational performance. Organizations need to carefully look at their existing performance management process before making decisions. Address the problems and goals, not the symptoms.

P.S. Speaking of WorkHuman, if you haven’t had a moment to check out the agenda for this year’s conference, you should do so. It’s one of the best conferences around and I’m really looking forward to it. This year’s speakers include Human Rights Lawyer Amal Clooney, Best-Selling Author Simon Sinek, and Actress and Activist Ashley Judd. The event is early April in Austin, TX. It’s eligible for SHRM and HRCI recertification credits. And if you use the code WH18INF-MVA, you’ll get a little discount on registration. Hope you can join us.

Image captured by Sharlyn Lauby after speaking at the SHRM Annual Conference in Washington, DC