CULTURE AND CHANGE JANICE BURNS
Death of the performance review? Janice Burns, Chief People Officer at Degreed, questions if performance reviews are suitable for today’s fast-paced world and, if not, what should take their place?
T
he performance review is something familiar to all workforces. Yet, as our work becomes more fast-paced, and after the many disruptions that the COVID-19 pandemic has brought to our workplaces, many are questioning the future of the performance review. Is it best left in the past? Research would back up this point of view. Dissatisfaction with performance reviews is widespread internationally – 95 per cent of managers aren’t happy with the process, 90 per cent of HR professionals believe they are inaccurate. Furthermore, 87 per cent of employees find performance reviews ineffective. Even CEOs dislike them, with only 6 per cent stating that performance reviews are useful to their organisation. Clearly, a lot of room for improvement exists. The performance review can no longer be the mainstay of HR 40
HUMAN RESOURCES
SUMMER 2021
decision making. Traditional performance management approaches were developed at a different time when agility and responsiveness weren’t on the boardroom agenda.
Punishing poor performance Performance reviews began life around World War I, as a merit rating system set up by the US military (to identify poor performers for discharge and transfer). Post-war, with the pressure on companies to increase production and boost the global economy, the performance review’s popularity skyrocketed. But within its early roots lies the core issue with performance reviews. The system was designed to, essentially, punish poor performance. It wasn’t intended to inspire, engage and retain a workforce.
Whereas performance reviews focus backwards, the best feedback mechanisms look to the future.
Inaccurate insights
Another pitfall of performance reviews is they rely on outdated and inaccurate data. Most of us have trouble remembering what we did last week, let alone 12 months ago.
Plus, doing a review at the end of the year means a whole 11 months (at least) can pass where poor performance isn’t rectified. Moreover, it can cause recency bias. It will rarely reflect the entire year’s efforts and may undervalue or overvalue an employee’s actual contribution.
Expensive and stressful
Additionally, performance reviews cost a lot of money: as much as US$2.4 million to US$35 million a year in lost working hours for an organisation of 10,000 employees. Often, there’s little to show for that investment. One Deloitte manager once referred to the process as “an investment of 1.8 million hours across the firm that didn’t fit our business needs anymore”. Some schools of thought even believe the ranking system of performance reviews actually activates our flight or fight response. It causes physiological stress, and that won’t lead to the kind of reflecting, insightful conversation needed to improve job performance.
A new process
Therefore, the focus for all HR departments is now on inspiring loyalty and engagement. Particularly during The Great Resignation, where nearly 40 per cent of
