Few things in the corporate world generate such vociferous reactions as the performance review. Held annually, employees meet face-to-face with their judge, jury and potential executioner. Sometimes, the outcome is positive, with the employee relishing a well-earned pat on the back, hefty bonus or promise of better things to come. Other times, well, the experience is not quite so pleasant.
Walking a Tightrope
Opponents of the performance review assert that the procedure is not just a waste of time, but a highly subjective, highly destructive process. Samuel Culbert, author of “Get Rid of the Performance Review!” How Companies Can Stop Intimidating, Start Managing – and Focus on What Really Matters and professor at the Anderson School of Management at UCLA, claims that performance reviews ultimately destroy the trust between managers and their team and promote a culture that encourages employees to suck up to their boss rather than do what’s best for the company. Moreover, Culbert highlights the fact that performance reviews tend to deter people from voicing their concerns about problems because doing so may adversely affect their career path or compensation. Culbert points to the two high-profile cases, BP and the Japanese nuclear reactor site, where he says that employees knew about defects but undertook nothing. The reason for this, according to Culbert, lies in a lack of trust between management and employees.
Yet, despite abundant criticism, over 90% of companies worldwide carry out performance reviews, in part because no better alternative is available and partly because enough employees actually want them. After years of having no performance review process in place, SAS, the global leader in business analytics, software, and services, actually instituted a performance review system in response to repeated requests from employees. Most of these employees were university hires – more often than not PhDs – who had been used to regular feedback at university. This trend is also expected to increase as millennials – employees born between the late 1970s and early 1990s – permeate the workplace. Raised on a heavy diet of immediate feedback, millennials don’t expect to toil away in obscurity. They want to know how they’re doing and they want to know it now. So, if carrying out a review means cultivating the wrong kind of corporate culture, but not doing so means neglecting the employee’s need for feedback, not to mention failing to reward good work, how can HR managers successfully walk the performance review tightrope?
Good Reviewer is Crucial
Both industry professionals and employees agree that when it comes to the performance review, one thing is crucial: a well-trained reviewer. A good manager will provide constructive feedback and a clear direction to help employees achieve success. A poor manager will destroy confidence and look for someone to blame. The New York-based consulting group, Sibson Consulting, also advises upping the frequency by carrying out a review at the end of every project, instead of at the end of every year, while the performance being appraised is still fresh. Culbert takes this a step further and suggests dropping the reviews in favor of previews, which take place during a project when there is still time to make adjustments to performance. Other non-traditional approaches to the appraisal process include peer reviews and even a peer-to-peer bonus system whereby a team member can award another team member with a $50 cash bonus for excellent work – an instant tangible reward system.