Performance appraisals just don’t work. Actually, I should be more specific. Performance appraisals work, but not in the traditional way that they’re done.
There are a lot of problems with annual performance reviews, but the main issue is that they’re not done frequently enough.
This is especially important for millennials, and for “generation Z” which is even more into feedback and bettering themselves than millennials are.
I think all employees, including millennials deserve more frequent feedback.
It’s a win-win for the company, because they are able to improve themselves much faster, and not have to wait until the end of the year to find out what’s wrong, and how they should be improving.
There’s a better way to do performance appraisals, and that’s by replacing them with more frequent communication.
Smart Companies Are Getting Rid Of Performance Appraisals
Let’s look at a few examples of companies that are getting rid of the traditional performance review, and replacing it with something much smarter.
Motorola still has annual performance reviews, but they also have regular check ins and discussions. The performance reviews are just to check that the goals discussed during the sessions have been met.
Also, their traditional performance review process determined how people got bonuses, which they say was a weird way of doing it, and now bonuses are tied to financial performance, which makes much more sense.
Kind of like a ROWE in a way.
People had an unbelievable focus on their rating,” says Mr. Brown, who joined Motorola 10 years ago. “So we decided to forget the rating and just link performance to pay more directly. You no longer have a forced bell curve, which can be demoralizing and can create a culture of infighting
I’ve written before about how Adobe got rid of their performance review, but they replaced the process with more informal “check-ins”, allowing a much faster feedback loop.
The check-in is far more informal. While the check-in process is regular and on-going, it starts at the beginning of the year, since it’s tied to people having yearly expectations.
At the beginning of the year, we outline what our priorities are across Adobe. That’s done at the leadership level. For a manager, you’re already in regularly scheduled one-on-one meetings. You’re taking time out of one of those meetings and having a discussion with your respective employee on what’s expected for the year.
Expedia also got rid of their annual performance reviews, because it took managers way too much time to prepare these things, and the results weren’t always that accurate.
The hope was to create a performance culture that would help to improve both individual and team performance and ultimately drive business results, Crandall said. The emphasis would now be on frequent feedback and coaching and to evaluate the here and now, not just the results, she said.
4. Kelly Services
Kelly Services, which is a staffing agency, got rid of their performance review, and there’s actually a great case study on how they made it work.
The reason I think it’s great, is because they answer 3 very important questions that you might have if you’re thinking how this could work.
- How do you compensate employees without performance scores?
- How do you deal with compliance in countries that require documentation?
- How do you identify high-potential employees?
Twilio, which is a phone service for software developers to add call/text capabilities to their apps, also got rid of their performance reviews to focus on more frequent feedback.
We don’t wait until the annual performance review to give feedback. You never want to have a surprise. This is especially important with millennial workers, who really want feedback. They want to always be learning, always be growing, and they’re looking for that constant feedback. It’s not that they’re looking for constant praise, but rather they want to keep score. They want to know how they’re doing.
The Performance Preview
UCLA professor Sam Culbert wrote a great book called Get Rid Of Performance Reviews where he really breaks down why they don’t work.
In the book, he offers an alternative to the performance review, and it’s called the performance preview.
They feature descriptive conversations about how each person is inclined to operate, using past events for illustrative purposes, and how we worked well or did not work well individually and together.
To me, this makes so much sense.
Performance reviews are backwards-looking, so they’re not very productive.
Performance reviews are basically like saying, let’s sit down in a room, and look back at what you’ve done in the last year, and see where you went wrong.
A smarter idea, is to look forward, and define goals that you want to hit, that are aligned with the company’s core values, and then have regular check-ins to see how you’re doing on meeting those goals.