Stop Doing Performance Evaluations

Whether you call it a performance appraisal, performance evaluation or performance review, it’s a 20^th Century concept that should have been abandoned by the change of the millennium. Managers hate writing them and delivering them and employees dread receiving them. So, why do we continue giving them and thinking they are important? I’m here to tell you, it is time to dump the annual performance review.

Companies and consultants have made millions tweaking and attempting to reinvent an inherently flawed process that was started about a century ago as a way of identifying who receives a salary increase and by how much. They are also used to justify why someone receives a promotion. Over the years, this performance management tool has been decoupled from the salary increase in many organizations, but they persist as a way of measuring performance.

Before I dive into the myriad problems I see with the annual review system, I will identify the benefits of having an evaluation system. First, for employees to know if they are doing a good job, they need feedback. They need feedback to grow, and they need feedback to see if their perception of their work quality is in line with that of their manager or peers. All of these are good things about having a structured process.

The annual review is intended to do all the above as well as to be a coaching session to discuss future goals and expectations. Although it was a new concept in the early 1900s, it wasn’t that revolutionary. It was very much designed after the “report card” that was given by teachers to evaluate students. Instead of a grade of A–F the rating became a scale of 1–5 (or 1–10). Instead of a category like “Gets along well with others,” it changed to “Maintains positive relationships with colleagues.” Additionally, many companies rank employees in relation to the other employees, very similar to the class rankings in school. One major difference between the annual performance review and the elementary and secondary school grading system, is frequency. Students are given more frequent feedback.

My list of 10 problems with annual performance evaluations:

1. Once a year is too long and effectively useless – If you only receive feedback once a year, you can’t make much progress. And if you are receiving it more frequently, why do you need a once-a-year evaluation? 
2. They are almost 100% subjective – Performance reviews are inherently subjective. It is the manager’s opinion on the employee’s performance. Although there have been attempts to create objectivity or gain input from multiple sources those too are subjective and often involve people who only see one small aspect of the employee’s job.
3. They are subject to the halo effect – If the manager likes the employee or dislikes the employee, the perception of the individual’s performance is clouded by those feelings.
4. Memory is short – Unless there was a big achievement or a big mistake, the things the person does day-to-day and incremental improvements often go unrecognized.
5. There is often an expectation of excellence – Many times, the majority of people receive the top score straight across the board, which means the person who receives anything less, is not doing a good job. Essentially, good is not good.
6. The process is often cumbersome – Writing a solid review can take a couple hours per employee. This takes away from other things the manager does or requires them to work long hours to get through multiple reviews.
7. Managers don’t receive sufficient training on how to deliver them – most organizations don’t provide any training to their managers on delivering the review and those that do provide training generally provide it in a lecture or computer-based format so there is no component of practice and feedback for the manager.
8. The manager’s personality dictates the delivery of the appraisal – If a manager is conflict avoidant the employee may think they are getting a good review until they read it. If the manager is overly critical the employee may leave demoralized without being recognized for their positive contributions.
9. They are anxiety producing for both employees and managers – back to my earlier statement that managers don’t like doing them and employees dread receiving them.
10. They are often written, delivered, and filed with no follow-up – enough said about this one.

With all the negatives about performance reviews, why do they endure? They have certainly been revisited by many consulting companies and academics. They have been massaged and manipulated and even forgotten from time-to-time. What has not happened in most companies, is a decision to eliminate them. 

When managers are doing a thorough job with the review, they could spend over two hours to write a performance appraisal on each employee. If they aren't taking that time, they often give just superficial feedback. Either the manager takes thorough notes throughout the year, has an exceptional memory, or the feedback is given based on one or two events or an overall impression the manager has of the employee. 

Some managers have employees do their own performance reviews. This could be used to provide feedback and gain and understand the similarities and gaps between the perceived performance. It can also be helpful for the manager who is not keeping track of everything their employees are doing. But it should not be an easy way out for the supervisor to use the employee’s self-appraisal to craft the employee’s performance evaluation.  

As companies are moving toward having more remote workers and flexible work schedules, it makes sense to eliminate performance evaluations and replace them with weekly check-ins or KPIs and monthly or at a minimum quarterly reports. 

The check-in consists of the goals to be accomplished for that week and how they did on last week’s goals. This could be sent to you or completed in a one-on-one. It shouldn’t be cumbersome for either of you. The monthly report would be a summary of what was accomplished that month. Key accomplishments outside of the goals can be added. These become an ongoing accurate record of the employee’s progress. You can then offer kudos, public announcements of “above-and-beyond.” This type of process is more motivating than the annual review, provides more direction, provides more opportunity for feedback, and gives an accurate picture of an individual’s performance and performance patterns. 

In summary, dump your performance appraisals. Create weekly goals. Have weekly review of progress toward the goals. Do away with ratings, rankings, and numbers. Have the employee do a monthly report sharing key accomplishments, which will include both their goal accomplishments and things they did above and beyond. 

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