ASK THE OD DOCTORS
"How Do We Know It's Time To Review Our Performance Review System?"
Reflections and Thoughts by Dr. Lily Cheng
Founder and Chief OD Catalyst
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Employees don’t need annual performance reviews to know how they stack up against their peers. In fact, it's reported that in the next 3 years, half of the Fortune 1000 companies will drop stack rankings and numeric rankings as a basis for annual performance reviews.
Leading this trend are Accenture, GE, Adobe, Netflix and many other organisations that are killing their annual performance reviews. Why? Their reasons centre on the changing nature of work, the need for timely or frequent feedback, and the fact that their performance goals are more fluid and can change quite rapidly; which gives rise to the need to develop people quickly on the job in the midst of these dynamic changes. A PD@GE app was developed to ensure that employees have near-term goals and managers are expected to have frequent discussions that focus on constant improvement and coaching. Tech companies like Atlassian have managed to automate the evaluation activities that managers elsewhere perform manually. Are these good enough reasons to say goodbye to annual performance reviews?
Before we yank these annual reviews out of the window, let’s consider if we have complete understanding of the purpose of the performance management system in the first place. It’s a system that captures the type of performers we have in the organisation. It provides us with opportunities to reflect on the organisational effectiveness, which is made up of the % of performers who annually achieve their planned performance goals. In addition, it serves the purposes of performance evaluation, performance development and performance reward and recognition.
So what has changed and what has not changed?
Has the digitisation of performance management not kept to the intentions of performance management? Managers are always encouraged to have regular reviews and keep track of performance goals so that there are no surprises at annual reviews. In this aspect, the importance of development discussions have not changed for reasonably responsible appraisers.
- Do we need to yank annual performance reviews out of the window?
- Do we need to reinforce and reintegrate the entire ecosystem to support meaningful and memorable performance conversations throughout the year?
- Do we need to revisit the intentions of performance reviews?
Perhaps it’s as simple as ensuring that organisations get the most impact from performance management, through strong leadership support that executes performance differentiation well and gives consistent and accurate performance messages. In my years of consulting and coaching, what’s most intriguing is the numerous organisations that dilute the importance of development after the annual performance reviews - be it career development, talent development or aspiration development. These are treated as exercises to be "checked off" in appraisal forms.
My professional perspectives are to Educate, Equip and Enable our appraisers with the right competencies that will empower them to engage their constituents meaningfully. The emphasis of the performance management system should shift to be developmental, building employees’ capacity to meet the ever-changing demands of the global economy. The questions to ask are:
- Do we have people managers who embrace accountability and ownership that fairly appraises, with minimal psychometric errors?
- Do we have people managers who are able to present brutal facts of their team’s performance for a join problem-solving conversation?
- Do we embrace timely feedback despite our challenges of time?
We can go on to highlight the importance of the performance management system, but we do have senior leaders who will role model appraisal reviews with genuine intention to give real feedback, supplemented with efforts to provide effective developmental activities?
I would like to end with my personal perspective, which is that there’s no good or bad, perfect or imperfect, right or wrong performance management system. The appraisal review provides an objective platform that minimises subjectivity of appraisers, so that every employee is given a fair appraisal.
We would love to hear what other thoughts you have regarding the future of performance management in the workplace. Share them with us at email@example.com!