In my interaction with team leaders in the recent past I have realized that some companies have eliminated annual or biannual performance reviews/appraisals. Those who are still using them agree that the system is either flawed or insufficient to achieve any goal. Not only is it stressful for both parties but also ineffective.

Research shows that “95% of employees are dissatisfied with their company’s appraisal process and 90% do not believe the process provides accurate information.” Society for human resource management.

I am yet to come across an employee or team leader who looks forward to performance appraisals. What are some of the flaws identified by employees and team leaders?

1. Time wasted with no observable gain. It takes hours and hours of time for employees and managers to complete performance review forms, get them approved, set up performance review meetings and handle the paperwork. Do your customers, employees or shareholders benefit?
2. Their purpose is unclear. Reasons given for performance review include; letting employees know how they are doing, to justify pay increases or to create a paper trail if someone should need to be terminated. Could all these be accomplished without the performance reviews?
3. They are unfair; rigid systems: five-point and ten-point review scales. Managers vary dramatically in their assessments of Excellent, Good, Average, Fair and Needs Improvement. They are unfair because managers have biases.
4. Performance reviews are insulting. They cement the idea that someone is your supervisor and they sit on a higher plane than you do. Like someone said “My boss won’t respond to E mails about performance evaluation but spends review time talking about poor communication skills”
5. Lack of clear objective and desired outcome. Every business process requires a clear objective and desired outcome. No one in the company can say “Here’s the outcome we want when we conduct performance reviews next year.”

Are we keeping up with a time-honored tradition simply because we have always done it?

Some organizations have successfully eliminated performance reviews while others are still experimenting, but the question is what other options do we have?

1. The real time 360

Instead of having one person determine how well someone has performed once or twice a year, a real time 360 relies on perspectives of everyone that a person works and interacts with. The feedback is instant and on an ongoing basis.

It may sound tedious but its simpler and more effective than performance reviews for personal awareness and growth. Some tips;

• Make use of technology – There are a number of available apps
• Focus on the value – create a culture that promotes regular real time 360 review; A culture that is constantly learning and growing.
• Anonymize the responses – But weigh the pros and cons of this
• Review up as well as down – Allow leaders to get accurate and unfiltered reviews from the team
• Incentivize people – Acknowledge them for being engaged in the process and supporting it.
• Mandate it – some people are not comfortable with real feedback; they do not like seeing how they are perceived or are not bothered to help others grow.

2. Enhance performance management at the expense of performance appraisal

Performance appraisal focuses on the past with retrospective corrections, its individualistic, an operational tool that is inflexible. Used typically to determine compensation while;

Performance management is an ongoing forward-looking process which involves multiple stakeholders, a strategic tool that is flexible. Used to foster growth.

How?

Create a culture of continuous feedback on work expectations, progress and development; this improves engagement and performance.

If the relationship is healthy between the manager and the employee, they are having regular conversations anyway including quarterly and annual planning sessions but having more conversations does not require an evaluation process.

Challenge; Managers do not know how to talk to employees.

Tip; Train managers on how to talk to employees; role play positive manager-employee check ins.

Periodic performance review is just a piece of the larger puzzle of performance management, but the bigger question is; Do you need them? Could they be causing more harm than good or could they be causing stress, taking away productive time and adding no value?