They have been a staple of corporate life for half a century or more. Employees dread them. Bosses routinely put them off until they have to be done. HR executives regard them as a necessary metric – for lack of a better one – for evaluating an employee’s performance on an annual basis.
20th century management gurus like Peter Drucker and W. Edwards Deming derided them as counter-productive, archaic emblems of an outdated, top-down corporate structure. All of which begs the question: Are performance appraisals or reviews really necessary or useful tools of corporate life?
According to a growing chorus of HR professionals and corporate thought leaders, the answer would appear to be a resounding “no.”
Deloitte Consulting’s Josh Bersin, in a piece published last year in Forbes.com, discusses how forward-thinking technology companies like Adobe and Juniper, like many other 21st-century corporate success stories, are discarding traditional performance ratings in favor of more interactive – and ongoing – appraisal systems.
“Organization structures have changed and companies need to be more agile,” he writes. “We have a shortage of key talent and the keys to success now focus on regular alignment, coaching, creating passion and engagement, and continuous employee development.”
Bersin, along with other thought leaders, raises a laundry list of issues surrounding performance reviews from both sides of the aisle, such as:
Employees wanting more frequent and constructive feedback from their bosses instead of just finding out what they did wrong or could do better once a year.
Performance appraisals tend to focus on a worker’s past performance and weaknesses, instead of on enhancing the level of performance and engagement.
The need for HR and Legal personnel to document an employee’s performance, for better or worse, to more easily effect a promotion or dismissal. This would appear to be a contrived metric, as most employees are hired with “at will” status and can be dismissed, in most cases, for no particular reason.
Companies feel they need a way to make sure that managers are themselves doing their jobs effectively.
The author goes on to cite what he terms “the new keys to success.” These include:
A system where employees can give each other feedback on an ongoing basis, aided by any number of new software packages.
Being wary of “pay for performance” systems, common in investment banks and many sales functions, which can be conducive to some types of jobs but not most.
Encouraging employees to set their own goals and self-evaluate.
Setting and resetting goals frequently.
The gist of Bersin’s argument is that the old, static, formulaic system of checking off boxes on an appraisal form once or twice a year needs to give way to a system of more open communication between employee and employer, and with more frequency. To underscore his thesis, he concludes the article with “Businesses thrive on agility, speed, passion, and alignment. The process of driving and measuring performance has to do the same.”