Performance Reviews Stink. Six ways to avoid them

Only 4% of HR managers say performance reviews accurately measure employee performance.

Employees and bosses can disagree on many things these days—working from home, leaving work quietly, even what to wear to the office—but there’s one thing everyone can agree on: performance reviews stink.

Official grading systems first developed by the U.S. military during World War I were adopted in later decades by powerful corporations, including General Electric Co., to eliminate poor performance. They have become universal and generally obnoxious. The time-consuming, retrospective, box-ticking process often reveals more about the evaluator than the person being evaluated.

Looking for a better way to manage employees, some large companies, including Adobe Inc. and Accenture, which in recent years have abandoned formal annual reviews. The pandemic helped accelerate the move, with 15 percent of organizations suspending performance reviews as the number of COVID-19 cases rose, according to WorldatWork, a nonprofit that provides education for HR professionals.

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How companies measure performance

Companies that do this earn praise at first, but the good vibes can fade. Employees who hear less from their superiors feel in the dark about pay and reasons for promotion. Consultant Gartner Inc. have found that some companies that abandoned appraisals have even brought them back—indeed, 90 percent of organizations still conduct formal annual appraisals. This underscores the importance of replacing them with other strategies to better support employees, HR experts say. Here are six:

Regular and timely discussions. Conversations between the manager and the employee should take place immediately after the end of the project or at least once a quarter. Marcus Buckingham, head of people and performance research at ADP Research Institute, says the ideal check-in frequency is every 11 days. “The performance happens in the moment,” he says. According to WorldatWork, nearly 60 percent of organizations now do frequent check-ins, up from 42 percent in 2016.

Focus on the how, not the what. According to Gartner, only 4 percent of HR managers accurately measure employee performance through performance reviews. Discussions should focus more on how people work—their skills, behaviors, and competencies—rather than what they worked on, which inevitably becomes the primary focus of tasks and goals.

Train leaders to have meaningful conversations. A landmark study conducted in 2000 found that nearly two-thirds of the variance in employee ratings was due to the characteristics of individual raters rather than the employee’s actual performance. This arbitrariness often hurts people of color the most, research shows. Software platforms like BambooHR and Workday, which help companies track employee progress and performance, have become popular tools for reminding and supporting managers of ongoing discussions with employees. These should be done regularly and should include coaching, comments on recent work and setting expectations for the coming weeks.

Consult with coworkers. Involving an individual’s co-workers in performance appraisals can be especially useful in today’s hybrid offices, where managers have less insight into employee work patterns. And there’s room for improvement in this area: According to Gartner’s 2021 survey of HR leaders, only a quarter of organizations include employees’ teammates in evaluations. Buckingham says there are pitfalls to avoid: Some employees may try to undermine their peers by turning the workplace into a state of surveillance. This approach is not recommended unless the company has a fairly open and honest culture, says Amy Sung, an HR consultant with workplace advisor Willis Towers Watson who specializes in performance management.

Let the employee think. Some organizations have replaced stuffy conference room conversations with quarterly self-reflections by employees on their performance that managers can then comment on. This can help cut down on the time it takes to write traditional assessments, which can really add up. Professional services giant Deloitte once discovered that ratings consumed nearly 2 million hours of its employees’ time annually.

Look forward, not back. Even the concept of feedback is being overhauled: Sung says some of his clients prefer to offer “feedback,” which ties performance discussion directly to the employee’s own development. That way, reviews become more effective at identifying and nurturing your best people, rather than determining who gets how much of the annual bonus pie.

The challenge with these approaches, however, is that they require trust between bosses and workers, which has been depleted during the pandemic amid heated debates over vaccine mandates, return-to-work policies and productivity monitoring. Nearly two out of three adults say they are concerned that corporate executives are deliberately trying to mislead people, up seven percentage points from last year, according to the annual survey by public relations firm Edelman Trust Barometer. Employee engagement, as measured by pollster Gallup, fell last year for the first time in a decade, and the decline is set to continue this year, leading to people quitting or simply passing out.

“It’s about trust,” says Buckingham. Annual performance reviews “mean you wait a whole year before you’re told you’re going to be graded two [out of five]. It reduces trust. If companies want to improve performance, they should ask, what can we do to make people trust us?

(Except for the headline, this story has not been edited by NDTV staff and is published on a syndicated channel.)