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Why Your Performance Review Don’t Work

Mark Wager will be visiting Fiji from March 27 to 30. If you would like Mark to deliver training at your business contact him at Mark@Leadership.com.fj   It’s a common
11 Mar 2017 11:00
Why Your Performance Review Don’t Work
Mark Wager says that research studies reveal 30 per cent of performance reviews ended up in decreasing employee performance.

Mark Wager will be visiting Fiji from March 27 to 30. If you would like Mark to deliver training at your business contact him at Mark@Leadership.com.fj

 

It’s a common scenario every year in businesses everywhere. Managers sit down with each of their staff in turn and perform the dreaded performance review.           The intention is for employees to receive formal feedback on what they have been doing well in their job and what areas they can improve on as well as receiving a grade that impacts their salary and future prospects within their organisation.

It’s a business practice that has become increasingly popular over the past thirty to forty years yet the business world and employee’s expectations have evolved during this time and the performance review process which many still consider to be an effective tool is in fact outdated and most likely causing more damage than good.

 

People don’t like performance reviews

Let’s be realistic, staff don’t like receiving performance reviews and Managers don’t like giving them. They don’t work and this is why many top companies such as Adobe, Netflix and Google are scrapping their annual performance reviews.                Laszlo Bock, the Senior Vice President of People Operations at the internet giant Google, recently wrote, “Performance management as practiced by most organisations has become a rule-based, bureaucratic process, existing as an end in itself rather than actually shaping performance. Employees hate it. Managers hate it. Even HR departments hate it.”

I’ve worked with many companies across a range of industries and countries and as at this date I can honestly say that I’ve never met a Manager who enjoyed delivering an annual performance review to their staff. They often get delayed and it’s up to the HR department to chase them up until the Manager does them.

 

Performance reviews don’t work

Not only do people dislike performance reviews but there is significant proof that they no longer work. Psychologists A Kruger and A Denisi did a report of over 600 studies of performance evaluations and concluded that a minimum of 30 per cent of performance reviews ended up in decreasing employee performance.

A similar study by the Society for Human Resource Management found that performance reviews actually produced an extremely low percentage of high performers.

 

Why don’t they work

People operate best when they have control over their performance, and performance reviews by their very nature takes away that control and puts the assessment of a person’s performance in the hands of someone else’s opinion, so what happens is, that employees on a subconscious level, start to focus more on gaining popularity with their Manager, rather than doing their best in their role, because it’s the Manager who evaluates them rather than their role. If the employee doesn’t know beyond doubt how well they are doing before they enter the performance review then the system is fundamentally flawed.

 

What is the future?

Netflix the on-line streaming company with an annual turnover of over $6 billion dollars stopped their formal performance reviews and replaced them with Managers having regular conversations with their staff about performance and no longer is this discussion an annual ritual but instead has become an important part of the usual business day.

Netflix told their Managers to start telling the truth about performance and to stop managing and start coaching.

More and more companies are scrapping the performance review process and in its place they are turning their Managers into Coaches.

A Manager rewards good performance and punishes poor performance yet a Coach guides the employee with real time feedback to take more responsibility and become more accountable for their own performance.

The idea of a coach is more familiar in sports and in sports it works well because the members of the team know what a good result is because the score is clearly indicated on the scoreboard and they can turn to the coach who can give them technical advice on how to improve their individual performance which in turn helps improve the team performance and hopefully change the score. It’s simple yet it works and now this philosophy is moving into the business world.

The Managers of the future are coaches, they don’t need to motivate staff instead they create environments that allows employees to motivate themselves.

They don’t tell staff if they are doing good or bad instead they ensure that everyone has a clear and transparent idea of what performance is expected of them, like the scoreboard on the sports field everyone needs to know what they need to do in order to succeed as an individual and as a team.

Performance needs to be able to be judged by clear metrics rather than opinions.

Once this can happen then you too can join many other successful companies and embrace the future by getting rid of the formal performance review process and instead turn your Managers into Coaches.



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