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June 17, 2019 // 0 Comments

FIVE REASONS WHY PERFORMANCE REVIEWS ARE WORTHLESS

Let’s first review what we know about the history of annual Performance Reviews:  

Annual Performance reviews are artifacts left over from the INDUSTRIAL REVOLUTION.  They come from a time when employees stood in front of a conveyor belt all day assembling widgets.  Back then, you could easily count the “WHATs” as they came down the line, and easily measure which employees were hitting their annual goals.  Today’s KNOWLEDGE ECONOMY, on the other hand, is more complex…and certainly more nuanced.  Knowledge-work isn’t just about the WHATs…it’s about the “HOWs (e.g., the creativity, ideology, curiosity, collaboration, initiative, compassion, etc. etc. etc.) — attributes that are virtually impossible to assign numerical ratings.

So if annual performance reviews are (at the very least) an archaic strategy…why do so many companies still struggle with taking a hard look at eliminating them?  Maybe it’s because performance reviews make excellent command-and-control mechanisms, OR maybe (the less cynical might say) it’s because most managers, like most employees, fear change.

So, just in case you’re looking to find the words to influence “change-fearing” leadership in your organization (OR in your own mind), here are FIVE REASONS WHY PERFORMANCE REVIEWS ARE WORTHLESS:

One: Formal Performance Reviews tend to supplant “real-time” (more organic) feedback.   And when managers inform their employees what they did (good or bad) as many as 364 days ago…it creates the immense potential to actually STUNT employee GROWTH and MORALE.  Moreover, annual reviews do even less to support CUSTOMERS, who have presumably been suffering from employee underperformance (that has gone on for as many as 364 days!).

Two: They take up EXPENSIVE staff hours for no observable gain. It takes hours and hours of time for employees and managers to complete performance review forms, get them approved, set up performance review meetings, and manage the paperwork.  And that cumbersome process is repeated all over again…year after year after year.

Three: Their PURPOSE IS UNCLEAR — and always has been. Various people will tell you that formal performance reviews are essential for “formally letting employees know how they’re doing”, for one of two reasons:  a) they justify PAY INCREASES (which certainly don’t…or shouldn’t… require annual performance reviews); OR b) they create a “PAPER TRAIL” should the need arise to terminate underperformers (which rarely works, because…as we all know…managers almost always give their struggling employees average-to-good performance reviews in an effort to “motivate” them).

Four: They are UNFAIR for three reasons:

  • Companies typically come up with (what are meant to be) very OBJECTIVE rating scales for each WHAT, using rating TERMS (such as, “Needs Improvement”, “Fair”, “Average”, “Good” and “Excellent”) which each correspond to a numerical value (e.g., 1-5) that are then mathematically averaged in order to arrive at the “overall performance rating”. But those scales never solve the biggest “rating” challenge — the fact that manager assessments of those TERMS are entirely SUBJECTIVE (i.e., subject to a myriad of personal/professional biases).
  • Performance reviews rarely address the HOWs or the WHYs, mainly because they are virtually impossible to measure (and thereby “mathematically average”). Often though, it is the HOWs and the WHYs that most deftly explain the WHATs, so how can any plausible system ignore them by design?
  • Performance reviews tend to weight more recent events more heavily than those from earlier in the year.

Five: They are INSULTING, particularly in today’s Knowledge Economy. They tend to remove the collaborative element to Agile leadership, by reinforcing the “old” ideology that when someone is a manager, he/she sits on a higher plane than his/her team members. Instead, Agile leaders view themselves as “orchestral conductors”, who keep the WHATs of the orchestra together, but don’t presume to tell the musicians HOW to play their instruments.

In short, anything you might want to accomplish through annual performance reviews can be accomplished without them. Moreover, when we are lifted up to a loftier goal than simply measuring the whats, we can stop wasting time trying to use “math” in order to “rate” associated performance. Instead, we are so much better off spending every millisecond of our time and energy INSPIRING and ENCOURAGING our team members, routinely dialoging with them about their PASSION for and ENGAGEMENT with their customers and their leaders, UNDERSTANDING and SUPPORTING their hows, REMOVING THEIR OBSTACLES, and giving them the FREEDOM to do the whats they were hired to do!

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