Perfomance reviews

How to stop wasting time and money on performance reviews

Your performance reviews could be a waste of time – and a costly waste of time at that. Yes, you read that correctly – a Human Resources professional is telling you to completely reconsider the value of what many people regard as one of the foundations of the whole HR discipline.

But here’s why….

Two million hours for what result?

In a recent HBR article, accounting giant Deloitte revealed that it spent two million hours each year on performance reviews… Imagine what your business could achieve with an extra two million hours!

And yet despite its massive investment in time (and money), Deloitte’s own research showed that 58% of its executives believed they made little difference to how the business functioned. They said it encouraged neither neither stronger employee engagement, nor high performance.

The problem with traditional performance reviews

Deloitte’s experience made for an interesting read because increasingly I’m finding a lot of my clients are making the same conclusions about their own performance review processes.

They’re often coming to the realisation that their system is broken – not just because it’s costing them an enormous amount in time and effort for little result, but because it could be damaging organisational morale. In fact, my experience is that many people would rather put their hand over a burning flame than go through the ordeal of a performance review.

One of the main problems with traditional performance reviews is that they’re often perceived as unfair. They rely on the subjectivity of whoever is reviewing and their biases about what’s important and what’s not.

They’re also ineffective because they tend to aggregate a year’s worth of feedback into one session. By then it’s usually too late. The feedback you’re giving is either so far in the distant past as to be irrelevant. Otherwise – and this is usually the case – the review skews towards the past couple of months or even weeks. Or as Deloitte puts it:

“Once-a-year goals are too “batched” for a real-time world, and conversations about year-end ratings are generally less valuable than conversations conducted in the moment about actual performance.”

The obvious answer is to provide any feedback as and when it’s needed. And for one of our clients who wanted to overhaul their system of performance reviews this was one of the first and most important things they did. But they didn’t stop there.

After all, properly ending the dubious practice of annual performance reviews requires replacing it with something altogether more meaningful.

A focus on development

Instead, they totally reinvigorated their business by turning performance into an ongoing conversation. On a practical level this meant discussing performance through four main touch points.

Formal close of project debriefs. After every project finishes they now have a formal meeting to discuss client feedback. They also talk about what went well and what didn’t and what they can take out of it for future work. They also give the project manager the power to talk about any direct feedback for staff at this point, rather than leaving it for the future.

Then they back this up with formal launch and mid-project meetings, so that everyone always knows where they stand, what they’re doing well and what needs to change. In other words, the ‘air is always clear’.

Informal quarterly catch ups. Each employee has a scheduled but voluntary quarterly catch-up with their line manager. These are self-selecting and non-compulsory opportunities to talk about workplace issues if employees they feel the need.

Annual Feedback and Planning Meeting (FPM). They still have an annual meeting but the emphasis is no longer on performance. Instead, it breaks down like this: 10% past performance, 70% planning and development for the next 12 months, and 20% career/personal/other. The employee being reviewed gets to choose when this meeting happens and, a month before the chosen date, HR launches survey-monkey questionnaires for self-completion and for information gathering from other sources.

The benefits of this approach are that it:

  • focuses the meeting on developing the employee rather than on what they’re doing wrong
  • eases the burden for managers by spreading feedback meetings throughout the year
  • shifts responsibility to the employee for taking the lead on their review, and
  • lets everyone move the meetings away out of the way of major projects and deadlines.

Ad hoc feedback. Finally, consistent with the concept of ongoing review, anyone can provide feedback at any time – so there should be no surprises whatsoever when it’s time for a more formal review.

And another approach…

If that’s not radical enough, another of my clients decided the best way to overcome performance reviews of limited utility was to dispense with the idea of rankings and ratings altogether. Instead, they now have regular ‘career development meetings’ in which they focus on having employees work out agreed goals with the managers. These look at where the employee would like to be in their career, what kind of work they want to be doing, and what the employer can do to remove obstacles and help them get to where they want to be.

The result is a much more engaged workforce through greater alignment of personal and company goals.

Conclusion

If you’re finding your performance reviews are doing more harm than good there are so many things you can do to turn it around. Done right, discussions about performance and, more importantly, development, can be a vital part of improving business performance rather than a chore.