Kill performance reviews? Some big corporations say yes

My boss recently gave me my mid-year review. It went well.

But neither of us found it especially enlightening.

Such is the state of American performance management these days: It’s under performing.

The annual HR dance is full of earnest talk and attempts to make use of goal-of-the-moment words. Much time is spent quantifying and documenting. I’ve worked it both as an editor and a writer. Didn’t love it either way.

Quick show of hands if you think your company’s performance evaluation process is consistently a smart, efficient, transparent and inspiring way to measure and boost your value and deepen your job satisfaction.

Anyone?

Now raise your digits if you find the process largely ineffective or even inaccurate, counter-productive and morale-sapping.

You are not alone.

Some big companies say they are trying to change that. We’ll see if it makes a real difference.

Some businesses are reducing focus on formal annual reviews. Instead they are emphasizing more frequent, informal, forward-looking conversations often led by the employee rather than the manager.

Others are chucking performance scoring and ranking altogether.

Say what? Aren’t those things supposed to be crucial for determining merit pay and protecting the company’s legal backside against litigious employees?

Maureen Whatley remembers the reaction from other industry human resource executives when she described the changes being made on her watch at Alere, a medical diagnostics and device company with more than 10,000 employees. Alere’s new program, rolling out in phases this year, includes scrapping performance scores.

“They said, ‘It’s not possible. It’s not legal,’” recalls Whatley, who is based in Atlanta and leads Alere’s global talent management practice.

But the company figured out that the scores from standard annual performance reviews weren’t the kind of documentation that was particularly helpful when legal issues were raised, she said. Improvement plans produced for weak performers were more important.

And as to how to set merit pay increases, Alere came up with ways to help managers think about who their “highest contributors” are.

“It’s not rocket science,” Whatley said. “Who is the main go-to person who is willing to get it done on budget and on time? They don’t need a ratings scale to tell them that.”

I’ve read recently about dramatic HR changes that have also been made or are about to be by companies from Microsoft and Gap to Accenture and Deloitte.

But the most shocking is a shift being piloted by GE, which gained fame and infamy for former chief executive Jack Welch’s “rank and yank” practice of ditching a hefty chunk of the lowest performers every year. Now, GE is experimenting with dropping standard annual reviews and perhaps, though less likely, ditching scoring altogether, according to the Washington Post.

Behind the change is an acknowledgement that the nature of work has morphed.

Managers on average have significantly more people reporting to them than they had a few years ago, said Brian Kropp, an HR practice leader for management consultant CEB. And the average employee has been assigned to their current manager for less than a year.

Which sounds like managers know less about what they are talking about when asked to do annual reviews.

Meanwhile, jobs are increasingly likely to revolve around teamwork, collaboration and analysis. That makes it messy and difficult to measure employees with some tidy scoring system, Kropp said.

Which means employees often can’t guess how they will fare in their performance reviews.

“It’s like having no idea what the dentist is going to find,” Kropp said.

There you have it: a clear similarity between performance reviews and a surprise root canal.

But the worst thing is that reviews often get it wrong. That’s not just the conviction of some whiny employees who got bad evals.

A CEB survey last year found that nearly 90 percent of HR chiefs say their performance reviews don’t produce accurate information. The vast majority of managers surveyed aren’t happy with their review system. And more than half of employees don’t think the reviews are worth the time they take.

Sounds ugly to me. Yet only a fraction of Fortune 500 companies have made major changes. About 6 percent don’t have scores any more, up from about 2 percent three years ago.

I asked a friend who is a manager at a large local company for his unvarnished assessment. Here’s what he told me: A manager’s most important responsibility is to motivate employee performance as much as possible.

“Annual performance reviews,” he said, “utterly suck at accomplishing that.”

I also got a chance to talk to Bryan Garner. He recently lost his job in sweeping corporate layoffs, but he said his job ratings have been strong. He’s worked in digital marketing at small and large companies, and he’s liked his employers.

Still, he told me the performance review processes at big companies where he worked were “worthless.”

The ratings had little impact on his merit pay, he said. During a company “calibration” process, his rating dropped from how his immediate boss had scored him. And the whole process seemed to take months.

Having ratings makes sense in theory, Garner told me. But he wonders if the worthy benefits hoped for are unachievable.

“We know this is kind of a dog and pony show,” he told me.

“Let’s just get through this so I can get on with my work, instead of pretending that it matters a whole lot to my paycheck and how I am perceived in the company.”

Garner likes the idea of employees and managers switching to more frequent conversations about projects.

But I do wonder how much difference the changes will make in actual practice. Managers at GE wrote that one of its new pilot programs increased productivity significantly. And Whatley at Alere said she’s already hearing very positive feedback from employees.

We shouldn’t have any illusions, though, Kropp of CEB told me.

“I don’t think there is ever going to be a widespread time where people are looking forward to performance reviews like it is Christmas,” he said. “But I think we can change it to where people aren’t fearing it.”

To be treated humanely isn’t so much to ask for. Of course, I personally don’t like being judged unless I can be reasonably sure that I’ll be told I’m super wonderful.

I hope my editor keeps that in mind during my next performance review.

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