Most of us have probably been subjected to a performance review at some point in our career. Some of us might have done one recently. But is the idea of the performance review as a whole a good one? Is it even relevant to the workplaces of today?
To answer these questions, we have to delve into the circumstances that created the performance review. It’s claimed that the oldest example of a ‘performance review’ could date back to ancient China, where family members apparently rated each other daily based on their accomplishments and activities.
Fast forward to the 1920s Australia, and a certain Walter D Scott introduced the idea of work-based performance reviews at his business (which he hopefully didn’t also apply to his family a la the ancient Chinese method). While not too much is known about the exact methods Scott used, the general concept of a yearly review slowly gained traction around the world. By the 1950s, performance reviews were commonplace.
Today, they still exist in one form or another in many organisations. While the format and approaches of some of these reviews have changed (and others haven’t), there are still some fundamental issues, and one in particular, that arguably transcends the flaws in processes or approach. This is important to consider, because after a business or recruiter identifies true talent, it’s crucial to retain that talent. Performance reviews, culture, benefits – all will impact how well organisations can keep the brightest and best in their ranks.
The Good
During the early days, performance reviews were based on little more than opinion. This was a disaster waiting to happen, of course and resulted in a spate of lawsuits from disgruntled employees, mainly in the US, then reform.
Most reviews today are structured around some kind of measurable metrics, and many organisations use a ‘360’ approach, which incorporates feedback from fellow staff and others across the business, not just managers. Some of the real benefits of performance reviews and a 360 approach are generally accepted to be:
- Highlighting areas for employee development
- Raising issues within the business that might have been missed
- Increasing employee engagement and motivation
- Increasing overall morale
- Providing a good basis for pay assessments
- Highlighting potential career paths for employees
- Improving overall employee performance
- Better employee accountability
- Building and strengthening teams and culture
These are all well and good, but practically speaking, these benefits are often not realised. We’ll cover some of the reasons for this below.
The Bad
While metrics and monitoring software, 360 processes, and performance reviews can potentially provide valuable insights, there are some issues.
One of the most glaring is that of implementation. All review systems and processes must be carefully tailored to a company’s goals and business model. An easy pitfall to step into is one where a performance review is treated as a separate entity or tacked on aspect when compared to the rest of the business. This will cause a complete misalignment of goals, potentially cause confusion for employees, and in the end limit any valuable insights that might have been gained.
Some other problems can be as follows:
- Using 360 processes via anonymous software can make it hard for staff to clarify any elements of feedback that aren’t clear
- Without constant review, any performance process can quickly become dated
- No performance process will be successful if employees don’t feel able to be honest and open
- 360 systems and performance management in general can cause huge amounts of admin
- It’s often easy for reviews to focus on weaknesses and negatives, which can be very counterproductive.
- The whole process can be extremely costly for a business
In addition to these aspects, it’s important to consider some rather scathing figures highlighted in some research by Gallup a few years ago. Firstly, only 14% of polled professionals strongly agreed that performance reviews helped them improve. That in itself is a rather strong basis for change, but there’s more.
Given that reviews are often only held once a year, many of the issues that might have been important are often ancient history by the time a review comes around. Some additional problems can be caused by:
- Reviews being held by managers that don’t actually work with the employee they are reviewing
- Multiple areas of concern are packed into one conversation
- Legal requirements can hamper discussions to some extent
Finally, there are two further fundamental arguments against performance reviews. Firstly, rewarding staff for getting ahead no matter what, often at the expense of the team or clients, can have far-reaching negative impacts. It promotes a culture of greed and competition, hampers teamwork and collaboration, and can adversely impact customer and client relations.
Secondly, the whole idea of performance reviews was designed for a totally different time and working environment. The world of work in the 21st Century is vastly different to the one performance reviews were created in, and this is perhaps the most salient point of all.
The Future
It might seem, then, that the performance review has far more going against it than for it. That’s probably true in a general sense, but the fact remains that both businesses and employees need some way of assessing each other, and providing feedback in a constructive, supportive way.
While general expert consensus is that once-yearly reviews are outdated and counterproductive, that’s not to say the concept of a performance review is entirely dead or no longer relevant.
It’s more about rethinking our approach. It’s been found, for example, that regular catch-ups between managers and staff are a much better way of assessing how things are going, while also being able to spot problem areas quickly and deal with them immediately rather than waiting for a whole year.
In the end, it doesn’t matter how much software or infrastructure is in place – a good performance review is about people connecting, and that means good managers with active listening skills, and a working environment that encourages honesty and transparency. Given how having a compassionate and individual driven culture is more important than ever, it makes perfect sense for evaluation processes to follow suit.
The industrial age was about mass production, mass workforces, and mass evaluation. The digital age is more about the individual, and the more businesses embrace this, not just as part of a review process, but as a philosophy, the better we’ll all be working, living, and performing.
