Performance reviews remain in the news. Last week I wrote about Accenture’s abandoning them, but this week came the even more shattering news that GE – the bastion of the “rank and yank” – is also killing annual performance reviews. This seems to be good news for most managers and employees alike. You need, however, to ask, “What precisely is being killed?”
There are two possible interpretations here. One is that it is annual performance reviews that are being ditched and the other that it is performance reviews that are being discarded. You will readily appreciate that there is a significant difference. So let me ask you, if you had to decide this instant, which option would you choose?
GE’s head of human resources gives a hint to the direction GE is taking when she says, “The world isn’t really on an annual cycle for anything anymore.” Her opinion is supported by the head of HR of Adobe, another company moving away from annual reviews and ratings. She states, “It’s a process that looks in the rear view mirror, that’s focused on what you’ve done a year ago.”
Of course they are right. Management is about optimising results and that necessitates timely action. Waiting a year to identify and rectify shortcomings is extremely foolish and doesn’t make any sense in our modern, fast-paced and competitive world.
Ask yourself, “When is the right time to review performance?” To answer that you need to consider when the performance is taking place. As performance is ongoing this naturally means it should be reviewed on an ongoing basis. This means that any review has to be part of the process. Happily GE has recognised this and has even developed an app to identify performance development needs, which in turn is reinforced by frequent “touchpoint” conversations to review progress.
Even better, they have also dispensed with any kind of numerical rating. If annual reviews/appraisals are foolish, the idea of ranking performers to weed out poorer performers is absolutely asinine. It is the organisational equivalent of cutting off your nose to spite your face.
These are very definitely progressive steps. But they may also be wrong – at least in so far as they have missed a trick or two. There are several reasons for suggesting this.
Firstly, performance is ultimately a collaborative process. As such there may be a tendency here to link performance too closely to the person.
Secondly, performance is reviewed from the organisational perspective and consequently has an inherent organisational bias. It takes no account of the employee’s personal situation, circumstances or aspirations.
Lastly, there is no indication that it breaks the link the link between performance and reward. Any link between performance and reward means that there is always an inherent ranking process, and with that comes the risk of inequitable treatment – real or perceived – which negatively impacts performance through the discontent and conflict it creates.
That is why I propose a separate personal review rather than a performance review. This doesn’t in any way reduce the need for managing performance, but fits better with my ‘Every Individual Matters’ model and makes it about the individual as much as their performance. This makes it more embracing and fosters greater commitment, collaboration and effort. It is ultimately better for both parties. This may turn out to be an annual review but even with their ongoing performance reviews GE are not claiming to dispense with the annual review: simply that it will be “less consequential and fraught” than the current process. A personal review would ensure that just as well.
Bay is the founder and director of Zealise, and the creator of the ‘Every Individual Matters’ organisational culture model that helps transform organisational performance and bottom-line results. Bay is also the author of several books, including “Lean Organisations Need FAT People” and “The 7 Deadly Toxins of Employee Engagement.”