Thursday, June 7, 2018

Are Performance Reviews Losing Steam?

The annual or semi-annual rite of passage called, “the performance review” has fallen into disfavor among personnel managers in recent years. Dreaded by managers and employees alike, several studies suggest that such evaluations aren’t very effective in improving performance, even as they cause inordinate amounts of stress around the company.

One company dropped its traditional review process for its 450 employees in favor of weekly one-on-one meetings during which supervisors discuss performance goals with each employee. The dialogue invites the employee to evaluate himself or herself using an online app, and the self-analysis serves as a springboard for discussion with the supervisor. Instead of basing pay on an annual review score, employees receive equal raises annually. However, groups within the company receive performance bonuses that include stock options.

Some experts warn that simply doing away with formal reviews creates risk for companies—particularly when they need to dismiss an underperformer. An employer can find itself defending
a wrongful-discharge lawsuit if it can’t show a pattern of poor job performance. But companies that have transitioned away from traditional reviews successfully have maintained some kind of deliberate feedback mechanism. The feedback is usually delivered in a dialogue approach—as opposed to the traditional top-down method. Rather than looking at performance annually or semi-annually, feedback becomes part of an ongoing discussion throughout the year.

Finally, companies happy with their transitions from traditional reviews have removed—or
diminished—the connection between performance feedback and pay raises. Employees demonstrate greater willingness to participate openly and honestly in feedback dialogue when they don’t fret over whether a bad score will affect their paychecks.

Most of the time, we’re offering advice to practice leaders to start doing meaningful performance reviews. Groups of all sizes notoriously neglect giving structured feedback to employees. But nearly everyone hates performance reviews. Managers and doctors don’t like to give them, and staffers don’t like to receive them. Everyone feels uncomfortable. Human resources experts increasingly criticize the typical annual (or semi-annual) performance review plan used by many employers today. Research indicates that companies seldom get the results they seek—and clumsy bosses often don’t handle well the awkwardness associated with delivering employee report cards. But that doesn’t mean you should abandon the concept. Failure to give any honest, actionable feedback is actually worse than stumbling through an annual review process. By “actionable,” we mean criticism or praise that the employee can use to improve or sustain performance. Thoughtful critics of annual reviews are often proponents of more frequent, ongoing dialogue that keeps every well they do their jobs. 
  • Where do they excel? 
  • What needs tweaking? 
  • Where are they missing the boat altogether?

For the manager or owner, this has huge implications. It’s much more than the occasional pat on the back or “attaboy” and “attagirl.” Labor laws and today’s litigious workforce require businesses to maintain thorough documentation that will support management decisions if ever challenged in a Department of Labor complaint or wrongful-discharge lawsuit. If you need to discipline or dismiss an underperformer, you had better be able to show a pattern of unsatisfactory job performance and a record of your failed attempts to correct him or her. 

So if it sounds inviting to you to do away with those annual reviews (those evaluations
you never get around to anyway), be prepared to adopt a new system to provide and record performance feedback. Failing to do that increases your risk exposure. 

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