Performance reviews – kill them or keep them?


By Elisabeth Goodman and Liz Mercer, 6th December 2016

The idea of starting our own ‘Journal Club’ cropped up recently during a demonstration of the GROW coaching model on one of RiverRhee’s Introduction to Management course.  Both of us are keen to keep up with our professional reading and so pick up and feed ideas more effectively into the training and coaching that we provide to our clients.

hbr-article-on-performance-evaluations-nov-2016

Goler, Gale and Grant’s Harvard Business Review (HBR) article “Let’s not kill performance evaluations yet” (November 2016 pp.91-94) seemed a fitting topic to start with as it’s one that we cover in our course, and has also been very much to the fore recently in our in-house training for clients.

It’s worth reminding ourselves that this HBR article is written from a US perspective and may not be reflective of the situation elsewhere.  It is also a case study of Facebook’s approach where Goler and Gale work.  Dale is a professor at Wharton and also a consultant to Facebook.  That said, there are some good, thought provoking ideas relevant to any organisation that employs people! And many organisations we’ve worked with have considered the same opportunities and challenges.

Performance evaluations, performance reviews, appraisals – what’s the difference?

The terms seem to be used somewhat interchangeably.  The article seems to focus on the use of performance ratings or scores as an integral part of performance evaluations.  We have mainly seen or heard the terms performance reviews and appraisals used interchangeably in the UK – and tend to use the former, as in the title for this blog.

Arguments for killing or keeping performance reviews

Goler et al have found that some organisations are stopping the formal performance reviews altogether, because the assignment of ratings is often biased, and the annual cycle means that employees don’t get feedback often or soon enough.

However, as the authors point out, ratings will still be assigned by management behind the scenes as a way of making decisions about pay and promotion. They suggest that the mechanism for assigning ratings should be transparent.

They also argue that something is better than nothing: people want to have feedback on their performance and discuss their development goals.  They quote Daniel Kahneman’s findings that even bad news about performance is better than no news – it gives people the certainty that they need to adjust their perspective and take action.

Some of the organisations that Goler et al have come across are switching to real-time feedback systems.  However, they suggest that an annual review is a useful way of formalising the process – allowing proper time for consideration and reflection.

Our experience of performance reviews in the UK

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All the companies that we have come across are using some form of performance reviews.  Our experience is that some of them are:

  • Taking the rating piece out of the performance review discussion, so as to allow a more open discussion – however that does mean there is less transparency about how pay and promotion decisions are made.
  • Supplementing the formal annual review with quarterly or twice yearly reviews.  Something that is particularly important for many of the Life Science organisations that we work with, as the unexpectedness and uncertainty of science can make it important to review and adapt objectives on an on-going basis.
  • Ensuring that direct reports have regular one-to-one discussions with their managers to discuss feedback in a timely way

How Facebook is taking performance evaluations a step further

Facebook has adopted some interesting approaches to their performance evaluations.

  1. Peers write evaluations, share them with their managers, and, in most cases, one another.  This supports openness and transparency.
  2. Managers then discuss their reports in a face-to-face meeting, championing and defending.  This reduces the risk of personal bias.
  3. Managers then write the performance review documents – which are examined by a team of analysts to remove bias.
  4. Ratings are translated into compensation using a pre-defined formula.

In addition:

  1. They set stretch goals, with a 50:50 chance of success, as they believe it is more motivating for people to have something high to aim for.  They suggest that people want to find out and know what they can and can’t achieve.
  2. Senior leaders share the feedback from their own performance evaluations, normalising the fact that they too can sometimes fall short of targets.
  3. There is a general acceptance that people will not get the same performance ratings from one year to the next.

What we would like to see adopted more widely by organisations

We don’t have a solution yet on whether ratings should be shared as part of the performance review discussion.  We can see arguments either way.  However we do think that:

  1. How ratings are determined should be transparent.
  2. There is definitely value in senior managers having a face-to-face discussion about all the performance reviews of their managers’ direct reports, for the reasons described by Facebook.  We know one company in the UK that does this both before and after the performance review discussions.
  3. More effort should be made to collect feedback from other managers or peers that individuals work with, especially in matrix organisations where they may report to both line and project managers.
  4. Performance discussions should be a continuous process, throughout the year – a shared conversation and based on a growth mindset.

And we do believe that some form of annual review process should be retained, for all the reasons given above!

About the authors

Elisabeth Goodman is the Owner and Principal Consultant at RiverRhee Consulting, a consultancy that specialises in “creating exceptional managers and teams”, with a focus on the Life Sciences. (We use training, facilitation, coaching, mentoring and consulting in our work with our clients.)

Elisabeth founded RiverRhee Consulting in 2009, and prior to that had 25+ years’ experience in the Pharmaceutical Industry in line management and internal training and consultancy roles supporting Information Management and other business teams on a global basis.  

RiverRhee is a support supplier for One Nucleus and a CPD provider for CILIP (Chartered Institute for Library and Information Professionals).

Elisabeth is accredited in Change Management, in Lean Sigma, in Belbin Team Roles, MBTI (Myers Briggs Type Indicator) and is an NLP (NeuroLinguistic Programming) Practitioner.  

She is a member of CILIP and of APM (Association for Project Management) where she leads on Membership, Communications and Events for the Enabling Change SIG committee.

Liz Mercer is an Associate with RiverRhee Consulting.  She is a Human Resources professional, with 30 years experience, mainly in Pharmaceuticals and Biotech and understands the challenges of leadership, management and team development.  Liz also runs her own business providing training, facilitation and coaching, for individuals and teams: with a particular interest in the challenges for virtual team leaders. She has a Masters in Organisational Behaviour, is a member of the Chartered Institute of Personnel and Development, is accredited in MBTI and has a certificate in Coaching.

 

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5 responses to “Performance reviews – kill them or keep them?

  1. Since leaving the military in the mid eighties I have been subjected to a variety of appraisal and performance management systems in industry. Most have been poor systems, some have been poorly implemented and others are plainly “tick box” exercises. Very few companies invest the necessary time and effort to effect a robust methodology. Personally I have 1 to 1 sessions with all my direct reports every 2 weeks which is divided into immediate objectives, medium and long term, split between business and personal. I tailor my meetings to help my staff develop and occasionally adapt the company systems and forms accordingly. To measure the effectiveness I record staff retention, progression and career advancement within the business, achievement of agreed goals and targets and ask them to provide input into my appraisal.

    • elisabethgoodman

      Thanks for sharing this Gilbert. Some really helpful points. I particularly like your comment about how you measure your effectiveness and the fact that you ask your staff to provide input for you.

      • We are witnessing the rise of EQ over IQ and this will have a significant effect on the working environment, probably even more than robotics and automation. People who are naturally skilled at organic management will develop and lead teams, companies and organisations to levels of achievement that others will stand and admire.

  2. elisabethgoodman

    Yes – I agree with you Gilbert!

  3. Pingback: Insights and highlights on management and team development from 2016. RiverRhee Consulting Newsletter, November – December 2016 | Newsletter

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