We’ve discussed before how several industry thought-leaders are touting the benefits of eliminating performance reviews at large organizations. The rhetoric makes sense on the surface; managers’ and employees’ frustrations with traditional performance review processes have been well documented, and traditional review processes have done little to strive organizational business outcomes.
However, is completely eliminating performance reviews the right way to go? Here are 3 reasons we think prove that saying no isn’t the right way to go:
- Eliminating Performance Reviews Are Negatively Impacting Businesses
Some organizations were early adopters of the “no performance review” concept of performance management, and the results there are in. According to these recent studies, eliminating performance reviews did not improve casual collaboration between coworkers and managers to employees, and they did not increase business results. In fact, without the traditional review process in place, managers and employees communicated less frequently about performance, and employees struggled with understanding how their pay was affected by their performance. This confusion led to lower performance outcomes, as well as lower rates of employee engagement.
It’s not too hard to understand why there was a communication breakdown; managers are often not trained to become leaders or to accurately assess and communicate with employees about their performance; when coupled with reluctance to have difficult conversations with employees without a defined process or structure, this informal style of performance management is doomed to fail – or to not exist at all.
- Organizations Have to Demonstrate Continued Investment in Employees
It’s a tight candidate’s market; with a shortage of qualified job candidates across industries and high demand for the few available, organizations need to separate themselves from the pack to attract high quality talent, and demonstrate an investment in their current workforce to retain high performing employees. In the past, enterprise organizations could accomplish both of these by branding their organization as technologically advanced. The best candidates and employees wanted to work for organizations that provided great technology and tools to their workforces; this demonstrated investment into their workforces was a great recruiting and retention tool. Now, just having great technology isn’t enough of a differentiator for organizations; everyone can purchase a new tool. Savvy organizations are instead investing in performance management processes and practices that better develop and retain their employees, and communicate that dedication to new and potential hires as well. Eliminating performance reviews muddles the succession and career paths for many job tracks – and confusion doesn’t attract or keep good talent in the building.
- A Better Review Practice Already Exists
Organizations don’t need to eliminate performance reviews to affect positive change; instead, they need to alter the process so it is more useful to employees and managers so they can change and reinforce behaviors that create business success. Organizations should move away from the traditional, annual performance review and instead look into implementing continuous performance management. By providing pointed, frequent feedback to employees based on specific tasks, projects, or outcomes, and by documenting these conversations into the talent management or performance management solution, managers are able to better direct and collaborate with their direct reports. This repetition also gives managers practice at reviewing employees – both positively and negatively, which were major detractors in both traditional performance reviews and in eliminating them altogether.
The right technology partner can make all the difference in creating a successful continuous performance management strategy and program. Learn why PeopleFluent is a global leader in performance management software that empowers teams and drives organizational success; read IDC’s evaluation of the performance management vendors here.