Canadian HR Reporter

Credit: A1Stock (Shutterstock) By Christine Lamothe L ong considered a necessary evil, the effi cacy and value of performance reviews has recently been called into question by business leaders and aca- demics alike. Today, a wave of prominent organizations is doing the unthinkable and retiring the annual review process for good. But what will take its place as a feedback and measurement tool? It's the ultimate irony: e universally hated performance review is now getting a taste of its own medicine. After decades of being seen as an indispensable part of the talent-management cycle, the value of annual reviews has been put into question. Managers, business analysts and academ- ics alike have started to turn a critical eye to this HR function and question whether the performance review is actually doing a satisfactory job. Unpopularity And it's not the young, trendy companies that are turning their backs on this vener- able HR tool. e list of companies that have recently chosen to jettison the annual review include blue-chip organizations such as GE, Motorola, Microsoft, Adobe, and Gap. For reviewers and reviewees alike, the re- view process is often stressful and awkward. And it's not just under-performing employ- ees who dread them. Even "good" employ- ees are negatively aff ected. Even the most industrious and development-oriented employees viewed the process negatively, according to 2013 research published in the Journal of Personnel Psychology. Or, as the Washington Post phrased it when reporting on the research: "Basical- ly, every single person hates performance reviews." Of course, employees might also hate workplace fi re drills and having to stack the break-room dishwasher. "Everybody hates it" isn't a good enough reason to abandon something if it has a positive eff ect on the organization. But in the case of performance reviews, that positive impact is by no means cer- tain. Beyond the dip in morale that per- formance reviews eff ect, research suggests performance reviews earn a solid F-minus in terms of actually measuring and improv- ing performance levels. In a 2010 WorldatWork survey of 750 HR professionals, the majority of respon- dents (54 per cent) said the system was not worthwhile considering the amount of time expended in conducting and report- ing the evaluations. More recently, in 2015, Deloitte eliminated formal performance reviews after surveying its management stratum and discovering the majority (58 per cent) felt annual reviews did not serve their purpose, even after nearly two million hours per year were spent on the process. And a 2015 literature review in Industrial and Organizational Psychology warned that the tendency of reviewers to cluster review subjects at the mid-upper end of the rat- ings scale turned the whole exercise into an "administrative ritual." e search for an alternative If traditional performance reviews need an overhaul, what should take their place? Many early adopters, including Accen- ture and Deloitte, have moved towards a system that provides feedback early and often, and supports frequent peer-to-peer input and recognition. It's an approach that's in line with "Agile HR" principles, including the immediacy of feedback, the peer-driven element, and the focus on em- ployee engagement (rather than control and oversight). Instead of packing a year's worth of per- formance input into a meeting that may last no more than 15 to 20 minutes, the con- tinuous feedback system regularly gives employees support, direction and recogni- tion to guide their performance throughout the year. is type of performance management approach has many advantages over the traditional annual review: More accurate feedback. It's not realistic to expect people to remember performance details from several months ago. Memo- ries become progressively more imperfect and incomplete as time wears on, and the quality of the feedback collected suff ers if people are asked to remember things that happened nearly a year ago. When feedback is delivered contemporaneously, the details are still fresh in the reviewer's mind. Greater engagement. e more imme- diately an employee receives feedback or re- inforcement for her performance, the more engaged she will be in the process. is is one of the gamifi cation principles that's transforming HR. When employees receive feedback right after a task is performed or a project completed, it has greater reso- nance and is more likely to infl uence future behaviour. Faster course-correction. No organiza- tion can aff ord a year of sub-optimal perfor- mance. When feedback is only given once a year, it could mean a year of poor perfor- mance for an employee who could have im- proved with some just-in-time support or development. Conversely, employees with the potential to be promoted could end up squandering those abilities for a full year — if they aren't poached by a rival organization before the year is up. Lower costs. For Deloitte, the cost of a cumbersome annual review process re- quired nearly two million people-hours per year to maintain. While continuous perfor- mance processes aren't free, they are far less administration-heavy. ere's no shortage of aff ordable peer-recognition software — such as Impraise, TapMyBack and Give a WOW — and platforms such as Corner- stone provide more formal venues for col- lecting continuous input from managers and connecting employees to the develop- ment resources they need. ( e Corner- stone platform is also notable for integrat- ing competencies into this review process.) More forward-looking. While there's no real reason annual reviews can't use past performance to support future success, the reality is that when people are tasked with sifting through an entire year's worth of employee data, the process tends to look backwards rather than forwards. When feedback is collected and communicated on a continuous basis, it's less likely to fo- cus on the year in review and more likely to give the employee useful input he can use to improve in the immediate future. e bigger picture While continuous feedback supports a more balanced performance review pro- cess, it doesn't preclude a more formal, periodic review. Getting digital back-pats and shout-outs can be very rewarding, but they're no substitute for more strategic, one-on-one discussions that help employ- ees visualize their potential in the organiza- tion. By rolling up several months' worth of feedback into a larger narrative about a per- son's career path, employers can help them stay focused on the bigger picture while em- powering employees to take greater control over their career day to day. Christine Lamothe is director of competency- based management practice at HRSG (Human Resource Systems Group) in Ottawa. For more information, visit www.hrsg.ca. When employees receive feedback right after a task, it has greater resonance. Off target Are performance reviews missing the mark? PERFORMANCE MANAGEMENT FEATURES Deloitte has given them up, along with Microsoft and Motorola – but finding a good replacement is key

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