It’s time to retire the annual performance review

Posted On December 15, 2015
by Mark Miller

There are so many reasons the annual performance review is a ridiculous, counter-productive remnant of 1940’s management philosophy that I’m not going to attempt to list them all. Instead, I’ll refer you to the description of the annual performance review from Samuel Culbert, Professor of Management and Organizations at UCLA’s Anderson School of Management:  

This corporate sham is one of the most insidious, most damaging, and yet most ubiquitous of corporate activities. Everybody does it, and almost everyone who’s evaluated hates it. It’s a pretentious, bogus practice that produces absolutely nothing that any thinking executive should call a corporate plus.

Tell us how you really feel, Sam. Well he did. He and Wall Street Journal senior editor Lawrence Rout wrote an entire book on the subject titled Get Rid of the Performance Review. It’s a massive take-down on an organizational sacred cow worthy of massive take-down.

If you’d like a comprehensive understanding of how destructive and counter-productive annual performance reviews are, you can pick up a copy of his book on Amazon. Alternatively, here are six practices you and your business should be following to set yourselves up for greater success than annual performance reviews can:

Train your managers to be better managers

Good managers inspire, provide guidance, offer non-judgmental feedback, solicit new ideas, understand employee-specific motivation, mentor, and establish clear expectations. Poor managers conduct annual performance reviews instead of being good managers. Kick away the crutch and provide some “physical therapy” to strengthen the manager muscles.

Train managers to listen for and appropriately respond to new ideas

Think about what should happen to a new idea or suggestion of any kind. Most managers are not trained to respond to new ideas or suggestions in a fruitful manner. In fact, most organizations today don’t have a culture that supports the healthy growth of new ideas. Consider training your managers, their bosses, and their bosses’ bosses to become idea facilitators, trained to inspire the genius in their employees, organize the ideas, and help execute them down the line.

Help managers develop more innovative employees

The best managers managers know how to develop more productive and more innovative employees. Your company should have systems and processes in place to leverage that productivity and capture the innovation. When these systems are in place, your entire workforce can be responsible for growing your business, rather than simply getting the day’s work accomplished. Unfortunately, most SMB’s haven’t built the processes to fully take advantage of what could happen with an organization full of well-trained managers and a fully-engaged workforce, and this is an area in which Burke & Schindler could help your business facilitate positive workforce change.

Create a more structured review

The “Review” should be a combination of guidance, inspiration, and planning. And it should take place every month. Imagine the clarity within an organization where everyone knew what was expected of them over the next thirty days, they knew some things they should work on to become more valuable, and they shared the vision of where the organization was headed. That’s a place where a lot of smart people would want to work.

Put a system in place to enable anonymous suggestions

It’s an easy-to-implement technology, but difficult to adopt culture. Your business must have the trust of the employees and act on those things that truly warrant action. That’s part of the bargain, but only part of the benefit. The bigger part of the benefit is the suggestions you will receive will make your company a better place to work and a more innovative competitor with an unbridled workforce.

Schedule periodic performance review updates

At Burke & Schindler and Aptissimi, management meets with their direct reports every week. It’s non-intrusive, short, informal (but structured), informative, and productive. It helps build our relationship, trust, and concordance. We have a company where staff as well as senior management feel perfectly comfortable text messaging or Skyping each other at 10pm – and know when not to. We have an incredibly engaged workforce. We don’t do annual performance reviews.

For more ideas on how to transform your culture and your workforce, please contact me at Burke & Schindler and Aptissimi.