Are Performance Reviews Really Worth It?

I played squash last week with a fellow McGill alumnus. I got my ass kicked since it’s been ten years since I’ve picked up a squash racket and he plays three times a week. Despite that, I’m glad we played. We had a good conversation about the merit of performance reviews and whether or not, in the end, they are really worth it.

His position was that they are a waste of time. He’s held several CEO positions and every time he’s seen them implemented they’ve taken a significant amount of organizational effort and have resulted in limited, if any, meaningful changes in performance. His general conclusion is that performance reviews are too little, too late. In some cases, they actually do more harm than good by delivering the wrong message and setting false expectations about performance evaluation and career longevity.

From his descriptions, I agreed, these were poor performance review systems and I didn’t blame him for having them eighty-sixed. The problem I saw was that they were trying to give feedback on performance rather than evaluating performance. Feedback should given continually. Performance reviews are intended for organizational planning.

Giving feedback once or twice a year is ineffective. Instead, feedback should be delivered on a regular basis, ideally right when the behavior takes place. At a minimum during weekly one-on-ones. If there are issues with inadequate performance, employees should be given timely and appropriate notice, not at annual performance reviews. Annual feedback is not helpful to the employee, it’s also a waste of opportunity for the company.

Performance reviews are not about giving employees feedback. Instead, the main purpose of performance reviews is organizational planning. Traditionally, performance reviews in professionally-managed organizations only went “up” the chain. Feedback to the employees was not part of the process. Upper management used that information to assess current capabilities and potential talent and determine where gaps exist.

Many companies confuse this process. The results are that employees don't get the feedback they need to develop effectively and business don't have clear organizational assessments and talent plans If you’re in an organization who’s using performance reviews focus on giving feedback rather than planning, here are some suggestion for how to improve the process.

 

Implement a weekly one-on-one meeting program

Weekly one-on-ones between managers and direct reports will provide more regular opportunities for discussion of performance. Managers and give employees more regular feedback on behaviors and results. Employees can get more input on development ideas and coaching on making changes. The weekly one-on-one also offers an opportunity to develop a deeper professional relationship between the employee and manager. As experienced managers will attest, stronger relationships mean more effective teams.

Train staff to give immediate, direct, behavior-based feedback

Giving feedback is a specific skill. Poorly delivered feedback is ineffective at best and can create friction in working relationships and discontent on teams. Good feedback is delivered in a timely fashion, delivered in a matter of fact way, and focus on behaviors that can be observed. By training everyone to give effective feedback on a continuous basis, pressure on performance reviews to delivery feedback is alleviated.

Conduct a talent succession analysis

The pressure on performance reviews to give feedback can often be the result of a lack of focus on organizational planning. A succession analysis looks at all of the key roles in the company and determines who the A, B, and C replacement would be for each role. By doing this, the need for talent and potential development is brought into focus. This focus, in turn, can redirect the performance review back towards organizational development and aware from a feedback system.

Implement quarterly OKRs

Annual planning is, honestly, a thing of the past. Business and markets move too quickly to plan in twelve-month cycles. Quarterly is a much better balance between setting long-term goals and still responding to changing business situations. The Object-Key Results (OKRs) framework provides a simple, yet extremely effective, method for bridging business strategy to actionable tasks and for connecting high-level business objectives to individual development plans. Implementing OKRs removes the burden of goal-setting from the performance review process.

 

In the end, for companies who have no strategic need for talent planning, annual performance reviews are not that valuable. Instead, focus on more direct and effective feedback during one-on-one meetings and improve planning using OKRs. However, given that business has become a war of talent, conducting performance reviews as part of a talent strategy process has become what distinguishes high-performance organizations.



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