The future of work is now and companies no longer have the luxury of time when it comes to having a performance enhanced culture.
There are three business imperatives driving companies to drop performance reviews.
#1 - The whole appraisal process is generally detested by employees. Researchers have found that employees hate numerical scores and disliked rankings. In addition a study done by Wharton determined that performance actually worsened when employees were compared to one another. Additional research has found that a performance reviews scores had as much to do with personal bias ( the reviewer would rate those similar to themselves higher).
#2 - Managers HATE writing reviews - taking the time to write reviews is a big drag on productivity. Managers would procrastinate the looming task of writing the dreaded reviews and they would view it as a major burden ( not the best frame of mind to write a fantastic review that would inspire the person being reviewed). Deloitte reported that 58% of HR executives saw reviews as inefficient use of time.
#3 - Traditional reviews hinder agility and flexibility. Adobe dropped traditional reviews in 2012 and began using the ‘agile method’ where the emphasis is on collaboration, responding to change, and real time behavior changes.
There are three reasons why traditional performance appraisals no longer work:
#1 - The process is not a motivating process - the results of a review does not lead to performance changes UNLESS delivered with tactical and supportive coaching by the reviewer. Employees want ‘real time’ feedback and they want to be constantly learning and growing.
#2 - They waste time - add up the hours to gather data for an annual review, for managers to write the review and then to sit down and go through the review and that time could have been better invested in real time mentoring. By the time the feedback from a review gets back to an employee it is dated and no longer relevant - real time coaching provides real time performance changes.
#3 - The work place is much more dynamic and ever changing - the skills sets needed a year ago for an employee may no longer be the same skills needed for the current reality. Organizations do not want employees to keep doing the same things and it doesn’t make sense to hold on to practices that hold people accountable for behavior that has happened in the past.
Companies like GE and Impraise have created their own internal real time feedback apps. Apps such as Anytime Feedback from Workday is being used at Amazon to not only provide real time feedback for employees but also provide feedback to managers in a 360 degree format and more.
The future of work is forcing companies to take a look at performance programs that support business goals, using new tools to identify poor performance and leveraging real time feedback for instant performance improvement.