Whether you call them evaluations, appraisals, or counseling sessions, most managers dread giving this annual dose of medicine almost as much as employees dislike receiving it.
So why is everyone doing something everyone hates?
Actually, the trend is rapidly moving in the opposite direction. Increasing numbers are shunning the traditional approach of grading employees and forcing rankings. Even GE, where CEO Jack Welch popularized the infamous “Rank and Yank” system, retired this practice after his departure. Other behemoth companies such as Coca-Cola and Home Depot followed suit and they are not alone.
Good for anything?
Research shows the performance review ritual continues in some form or fashion despite its unpopularity and often destructive effect on morale and culture. The problem is, the rationale to do so is built on these fatal flaws:
The Legal Protection Myth: Companies need performance reviews to minimize exposure
“In my 25-plus years of employment law practice, performance reviews have surfaced on numerous occasions. Every once in a while, they help the defense. Usually, however, it’s the plaintiff who benefits. That’s because performance reviews are frequently untimely and inaccurate.”
Janove, Jathan. “Reviews Good For Anything?” HR Magazine June 2011: 121.
The Pay for Performance Myth: Companies need performance reviews to justify salary treatment
Most of the real differentiation in this year’s base salary adjustments has nothing to do with last year’s performance. The organization’s salary budget and the employee’s compa-ratio has a much greater influence on this year’s raise for that individual than any measure of performance.
There are 10 key components of an effective Performance Management System
- Clearly Define, Limit, and Prioritize Desired Business Outcomes
- Focus on the Future
- Redefine the Roles of Participants
- Break the Direct Ties Between Performance and Salary Administration
- Make Messages Memorable
- Limit, prioritize, and state positively the improvement items
- Complete forms for the employee, not about the employee
- Be Unflinchingly Honest
- Say to them what others say about them
- Describe the benefits of accomplishing each improvement item
- Know What Your Employee’s Want and Value
- Review and Approve All Performance Messages Two Levels Down
- Train Each Group of Participants on their Role in the Process
- Make Follow-up Easy and Quick – Or it Won’t Get Done
|Traditional Performance Reviews||Catalytic Coaching|
|Summary Grade or Label||Yes||No|
|Tie to Salary Treatment||Direct||Indirect|
|Emphasis on Employee Input||Incidental||Pivotal|
|Average Length of Feedback Form||4-7 Pages||1 Page|
|Responsibility for Development Plan||HR or Management||Employee|
|Primary “Customer” of Process||“The File”||Employee|
|Role of Boss||Evaluator||Coach|
|Role of Employee||Recipient of Feedback||Empowered Career Craftsman|
|Role of Human Resources||Process Police||Coach 2 (Coach of Coaches)|