Once again, performance reviews are under attack. Some management gurus have even called for their elimination. And a few big-name companies, such as Accenture, have already complied. But the idea of gutting reviews is nothing new. As long ago as 2000, a number of management mavens recommended “86-ing” them.
Why the renewed assault? Here are the four reasons I hear most commonly:
- Time -- For most supervisors, time is their most valuable commodity. Reviews take time and often are complicated. So, those appraisals don’t get done, resulting in a requirement not met, which may be exploited in litigation. But, can’t we make the evaluation less complicated and compel its completion?
- Stale -- With the rapidity of change, today’s goal may be outdated tomorrow. By the end of the year, the goals set at the beginning may not reflect the reality of what has transpired in between. But, can't reviews be adjusted mid-year?
- Inaccurate -- Some of the mistakes we see on evaluations are mind-boggling, and budget-blowing in litigation. It is true that no review is better than a bad one. But, can't these risks be mitigated with training?
- Valuable only at the extreme -- Some observers have argued that performance appraisals are largely irrelevant to the majority of employees. Their main benefit lies only at the extremes of the employment ladder: top performers and weak performers. But, isn’t that where most of the decisions are made?
On the one hand, there is no doubt that the above concerns have some legitimacy. On the other, performance reviews offer a number of valuable purposes:
- Increased productivity -- By setting specific targets, employers are more likely to meet them. If you have no individual goals, your employees may meet overall goals, but not necessarily add any value to the bottom line.
- Shape culture -- A performance evaluation, based on the criteria you select, allows you to shape culture. Accordingly, if you want to increase your commitment to diversity, that can and should be a criterion for any decision.
- Baselines for employment decisions -- As noted, there is some truth to the statement that performance appraisals are most valuable at the extremes. But, then again, that is where most employment decisions are made: promotions and terminations. Performance reviews can help defend a claim that someone was unlawfully discriminated against in being denied a promotion, or being terminated. Reviews also defend against claims by providing a documented base line to support the disputed employment action.
- Feedback -- All employees expect feedback. However, this is particularly important to most millennials. Deprive them of feedback, and you may lose them.
Here are some recommendations to retain the value of appraisals, yet at the same time mitigate their potential pitfalls:
- Simplify -- No one needs unnecessary administrative work. So, simplify your reviews to make them user friendly. Less can be more if it means the reviews get done.
- Mid-year evaluations -- Consider semi-annual or even quarterly mini-reviews, to give ongoing feedback, so the appraisal is not a discrete event but part of a larger performance-management process. Mid-year evaluations also provide an opportunity to reassess and modify goals as necessary . . . and those things will be necessary.
- Hold supervisors accountable -- Consider as one of the criteria for your supervisors, their timely (or not) completion of appraisals. If you evaluate these employees on their appraisal responsibilities, they are more likely to take the task seriously (particularly if it's tied to a merit increase).
- Train supervisors -- Yes, supervisors make mistakes. But that is usually not due to a lack of ability, but the absence of training. Train supervisors on what to do and not do.
Three examples that illustrate the need for training include: (a) the risk of over-evaluation (legal evidence of "pretext" if subsequent adverse action is filed); (b) the lack of wisdom in using labels without behavioral examples (it's easier to challenge labels than defined behaviors); and (c) the impugning of an employee's intent, with phrases like “you are not trying” (this is a personal attack that invites litigation; lack of intent cannot be proven, so intent is largely irrelevant).
Overall, there are problems with our hiring systems. But we don’t scrap them. There are problems with our comp systems. But we don’t scrap those, either. Why should performance reviews be different?
So, fix them, don’t nix them.