Are you still doing traditional performance reviews?

In 2015, PWC surveyed the ASX top 150 regarding performance reviews. The survey found that most high performing businesses acknowledged their performance review processes didn’t work, yet still did them in lieu of a better way. All these years later, many are still doing them and we say, it’s time to stop!

When I started to read the early research coming out of the US around 2010, I was working in-house in HR and it grabbed my attention. As an HR practitioner, I knew the traditional performance review framework was broken and it was welcomed news that a spotlight was being shone on the problem. It was one of the few HR practices that hadn’t faced the same scrutiny as others had in the transformation of the HR discipline.

Five years later, PWC’s survey published some meaningful data, noting:

• 69% of companies see line managers not prioritising performance management conversations or giving feedback, as an organisational issue;

• line manager capability in managing performance was an issue;

• 46% of companies intended to improve their coaching and feedback as a way to improve performance management; and

• while most organisations emphasised HR and senior leadership being responsible for performance management effectiveness, 61% of employees believed they are equally responsible - that it’s a shared responsibility.

In 2016 Harvard Business Review published an article “The Performance Management Revolution”. In this article, the authors cite a senior manager from Deloitee’s People + Strategy team describing their global traditional performance review process as “an investment of 1.8 million hours across the firm that didn’t fit our business needs anymore”.
You can read the article here.

In 2015 we knew, traditional performance review processes were not working. Too much time, too much money, yet not adding any value. As a commercial HR practitioner, to me, it was just the definition of madness to continue using the traditional approach.

We have spoken to hundreds of high performers over the years and can’t find one who has said they found the traditional performance appraisal process valuable. Nor did they consider it a key leadership tool in managing and leading their teams, in fact, the opposite was true. Many said it would undo a year’s worth of good work thanks to arbitrary goals designed to fit an ineffective template that didn’t provide a holistic process to managing the complexities of people and performance.

Another insight high performers told us is that they want to own and manage their own performance on their terms based on what they need, and according to PWC, 61% agree. Yet the traditional process, still alive to some today, is HR driven and Manager led, templated, event based and compliance focussed and this is why it isn’t working.

Before I answered the call to change, I managed the compliance focussed traditional performance appraisal processes and I have seen it all. I recall a manager who used to just photocopy both the goal document and the appraisal form and just change the names. I kind of admire the efficiency for a non value add task! Given, this bloke wasn’t the greatest leader, who didn’t really want to have performance conversations of any kind, but I truly believed at that time, that with the right training and the right process, one that derived value for him and his team, he would have been more willing to do it. And these types of examples are endless…

…the manager who did all the talking, the manager who just ticked the boxes, the manager who stored up 12 months of negative feedback about things long past that it was soul destroying, the manager who believed he only had to manage performance once a year when the forms came along, the CEO who demanded all his managers did them, but never did them for his managers, the manager who used the time to talk only about himself and his great achievements, the manager who refused to allow people any input into why things could not possibly have been achieved, the manager who handed out the forms, asked people to fill them out and send back all via email, no conversation at all, and the HR department who manages the whole process via email, no training managers in how to have a performance conversation, how to manage performance, I could go on.

For HR departments who are only interested in compliance, it will be paraded as a huge success - “we got 100% of the forms back on time”! Quality schmaulity! But for HR departments that are trying to have an influence on performance and culture and have to oversee this arbitrary process adds no value, it’s nothing other than a burden and a waste of time! Managing the follow up, begging and then threatening for completion, impossible deadlines (especially if there is a link to pay), and then managing all the fall out - the opposite of HR adding value.

Of all these issues, and the many I haven’t covered, here is the biggest problem of them all – it is all rear view – sometimes a very distant past, and not the here and now or the future. Literally, what is the point?! If performance conversations are being had on a regular basis, adjusting, realigning, resetting goals and providing real time feedback what is the point of one annual event? Reviewing and managing performance is not a once a year event for any business that wants a high performing culture.

Way back in 2010, before PWC’s report, and when it was just an idea, I chucked out performance reviews for the employer I was working for at the time, and I’ve done so ever since. And here is the good oil – no one complained, productivity didn’t drop, performance didn’t tank, nothing changed – that’s how little value there was, not good or bad. But this was also a huge “aha” moment. There was an opportunity to reinvent the process of reviewing and appraising performance.

To really claim that you have a high performing culture, you have to manage performance.

When I replaced the old with something new, something better, something that worked, a process that focussed on development, forward thinking, leveraging strengths and EQ competencies, the results were immediate. There was improved engagement and alignment and improved results. Since this time, I’ve constantly refined the process, applied key learnings and incorporated feedback from high performers but the results speak for themselves in all the case studies. I would never go back to traditional performance reviews. Never.

You need to do the same – your high performers will not only thank you, they will celebrate you, you will see upticks in many of your lead indicators measuring performance and you will transform from a compliance approach to the basis of building a high performance mindset and culture. If you want to take it to the next level of sophistication, you need two processes - one for engagement, alignment, culture and performance, and one for remuneration which we will cover in a future article.

Reach out if you want to learn more about how we can help you innovate your performance management process.