Is the yearly performance review becoming extinct – or is it expanding in new and potentially valuable ways?
It’s no secret that something about the performance review process isn’t working for a lot of companies.
The proof: Over two-thirds of appraisals have no effect or even negative effects on staffer performance, according to an academic review of over 600 employee-feedback studies.
It’s no surprise, then, that some companies are taking drastic steps to revise or even eliminate their performance review process completely.
Here are two trends catching on in performance appraisals.
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Get rid of ‘em
The first tactic: Ditching reviews entirely.
It’s not an idea sweeping the nation’s workplaces, nor is it even relatively new. But about 1% of companies have opted to scrap performance reviews altogether.
The reasons for doing so are many: Yearly appraisals can cause intimidation among staff members, make employees afraid of acknowledging their weaknesses and create angst for managers and workers.
On the other hand, an unpublished study of 17 firms working without a formal review process has found that those companies reported:
- high morale
- low turnover, and
- strong relationships between employees and managers.
One example of a company that’s decided to shake things up: Atlassian, Inc., a software company in Australia that was featured in a recent Wall Street Journal article. The firm used to do biannual reviews, but when the appraisals caused disruptions, anxiety and demotivated supervisors and workers, they did away with them.
Instead, the employer now asks managers and staff members to sit down once a week to discuss goals and performance, with feedback going both ways.
If, like Atlassian, you think getting rid of reviews sounds enticing, know that, according to experts, they must be replaced by some other form of feedback.
Otherwise, employees may slack off due to not being disciplined for mistakes, or, conversely, not be recognized or praised for their hard work.
Furthermore, companies without a required review process put a lot of faith in supervisors and employees to have those difficult discussions about performance that may not happen without a mandate in place.
Make ‘em very public
The second trend: Conducting “360-degree reviews” and then sharing the results with subordinates, highlighted in a separate recent Wall Street Journal article.
How 360-degree appraisals work: Individuals are ranked by their subordinates, peers and superiors (hence the “360-degree” part) about everything from their ability to manage conflict to how they coach workers.
Typically, execs who undergo a 360-degree review then share the results only with their peers. But there’s a new approach that’s working for some firms: Managers sharing the results with their direct reports.
Nearly 35% of execs currently share their “360-degree” results with their direct reports, up from 20% several years ago, according to Aon Hewitt Associates, Inc.
Why would members of upper management share their weaknesses with subordinates? For one, it can strengthen staffers’ loyalty via transparency – when employees know what a manager is trying to work on, they more often than not will facilitate the supervisors’ attempt to meet goals and take on new skills.
It can also help managers stand out in workplaces that encourage candor.
Like ditching reviews entirely, the 360-degree review sharing process isn’t without its downsides. Employees can lose confidence in managers they previously thought were infallible. Worse, staffers could exploit execs’ weaknesses.
One in-between tactic that can work: Sharing the areas where an exec dropped the ball in the previous year and what he or she can do to fix those areas – all without outlining the full critique of the person.