5 Things to Know Before Abolishing Your Performance Review

Are you thinking of throwing out your company's performance appraisal? A lot of companies are including GE, Accenture, Netflix, and Adobe. It is easy to understand why. Annual appraisals feel antiquated in a world where priorities continuously change and being nimble is a strategic advantage.

Compounding the problem with performance reviews is the near certainty that everyone in your company dislikes them.

Despite all the efforts to make reviews easier, more participatory, and less time consuming, managers complain about the time it takes to complete them. They don't like telling others their shortcomings or making decisions that could affect their pay and career. As a result, they make the outcome worse by avoiding and not preparing for a meaningful feedback conversation.

Employees hate them, too. No one likes feeling as if they are being summoned to defend the last year of their career. The process is awkward because the person who was your collaborative colleague yesterday is now the supervisor who determines your raise. Even worse, you might have an absentee supervisor who reviews your performance based on assumption not observation.

Considering all the problems with the annual performance review, it is no wonder that the ground swell for scrapping it is gaining traction. So throw it out, but before you do there are five things you need to know if you are going to make this work.

  1. You still need a system for aligning your belief about the value of people with daily practice. Encouraging immediate, on-going coaching is often cited as the alternative to the annual review. Great, but that's not a new idea. Positive approaches to performance management have emphasized continually developing superior performance for decades. How are you going to make that happen? Sending your leaders to a training class is not enough. You will need an approach for coaching, redirecting, and correcting performance that is consistent with your values and integrated into a system that ensures consistency.
  2. You must develop or refine other processes to overcome the absence of a performance review. The annual performance review, for all its flaws, serves a number of important purposes. It is often the basis for determining compensation, justifying terminations, formalizing career development plans, and identifying top talent for succession planning. The challenges of using one tool for so many purposes aside, these are all areas that you will need to refine or develop when you abolish your reviews. You really don't want to walk into a hearing about discrimination claims with "it seemed like the right thing to do" as your only defense do you?
  3. Your mangers, supervisors, and team leads must become better developers and coaches of talent. Managers and supervisors complain that they don't have time to actively develop and coach their team members. They may be responsible for producing work in addition to coaching others, or they aren't particularly skilled at managing the performance of remote workers. Annual performance reviews didn't create these challenges, but abolishing them can make them more visible. Your leaders must improve their skills and increase their commitment to make a culture of continuous coaching work.
  4. Technology might make things easier, but people make performance better. Adding a technology solution to make the coaching and feedback process easier is not enough. The best, most effective resource for helping your people develop and improve their performance is an honest, caring leader. Those responsible for providing feedback must invest the time to hold meaningful conversations when the annual review goes away.
  5. People will still evaluate the performance of others. Team members compare their contribution against that of their colleagues. Supervisors evaluate individuals in determining raises, deciding who to call to solve a pressing problem, or deciding to take corrective action. Abolishing the annual review won't change this. It will, however, make it even more crucial that expectations for behavior and performance are clear.

The marketplace requires you to be nimble to compete. Your team wants to work in a collaborate environment that provides continual development. Those factors might make the traditional performance review unworkable, but simply abolishing it doesn't solve all your problems.

Randy Pennington is author of the award-winning book Make Change Work and creator of Positive Performance® Management. He is a hall-of-fame speaker and leading authority on helping organizations achieve positive results in a world of accelerating change. To bring Randy to your organization or event, visit www.penningtongroup.com , email info@penningtongroup.com, or call 972.980.9857.