Will Removing Performance Reviews Backfire?
While performance reviews are universally unpopular with employees and managers, a new study by CEB suggests that in getting rid of performance reviews, high performing employees have become less engaged.
The study apparently found that the move away from performance ratings had resulted in a 28 per cent drop in the productivity of high performers because the recognition and feedback they valued was no longer provided.
I’m personally not surprised. I’d find it hard to maintain my high performance if no one gave me recognition or feedback.
I’d suggest the following lessons can be learned from this research:-
There is growing agreement that the traditional approach to performance reviews is no longer relevant or effective
Dropping reviews without other changes is not the answer for high performing employees
We still need a policy and process to deal with poor performing employees
Based on my 20 years’ experience, I’d like to offer the following as a viable, proven and sustainable alternative.
Firstly define performance management as the process that only applies to the poor performers (I and my colleagues call them the 2%-ers). For such people, design your performance management policy around the resolving the management problem caused by the behavior of these small number of individuals.
For everyone else, replace the “Bi/Annual Performance Review” with one focused on only discussing continuous improvement and skills enhancement. And only ask for minimal paperwork or reporting. Writers including Di Armbrust, Tim Baker, Sam Culbert, Roger Ferguson, Professor Nick Holley, Ted Mouradian, Dan Pink, Professor Paul Thompson and Graham Winter Read have great ideas on how to achieve this.
This contemporary approach of two policy settings and two processes has been proven to deliver significant business outcomes including increased productivity, profitability, engagement, retention and compliance.
It avoids what I and my colleagues call “The 2% Effect” which is trying to manage everyone based on the lowest common denominator. The approach bases your policies, processes and supporting systems on the needs of the 98% rather than the problems caused by the 2%.
No, removing performance reviews will not back fire if it is part of a more holistic approach to redefining and redesigning performance management. Just avoid The 2% Effect and reap the rewards.