Reviews. Appraisals. Evaluations. Not exactly known for being inspirational, these terms have come to signify a dreaded time of year when managers wade through reams of paperwork in order to “rate” employees. It’s easy to see where this negative image comes from: structurally, interpersonally and practically, the traditional Annual Performance Review (or APR) is full of holes. Centred upon what Vauhini Vara calls “numerical scales and reinforcement of rigid business hierarchies,” APRs don’t just spark anxiety about individual performance; they tend to be counterproductive, too.
Annual Performance Reviews take time - a lot of it
According to a survey conducted by CEB, managers claim that performance management activities cost them an average of 210 hours per year - that’s over five weeks’ full time work! Employees, meanwhile, reported committing an average of 40 hours per year to the task. Reiterating these figures, one Deloitte manager described the review process as “an investment of 1.8 million hours across the firm that didn’t fit our business needs anymore.” Over 90% of managers are dissatisfied with Annual Performance Reviews, and an SHRM survey from the 1990s showed that only 5% of organisations were very satisfied with their performance review process.
Part of the problem is that managers are being asked to assess numerous employees’ work going as far back as 12 months. That period is too broad for human memory to remember accurately, and drawing on company records usually involves a whole lot of paperwork scattered around various departments. Even if you could access all the relevant data, that information is then expected to be summarised in a single report or talk. Neither employees nor managers feel this process paints an accurate picture of anyone’s work.
A necessary evil?
"Companies need more agile review processes that emphasise the value and potential of each and every employee walking through their doors."
So why were Annual Performance Reviews ever introduced in the first place? Well, in the early 20th century they were perfect for the era of industrialisation where HR as we know it didn’t exist and employment strategy was all about getting ‘good’ workers in and ‘bad’ workers out. Back then there was a surplus of talent and less focus on development.
Now companies need more agile review processes that emphasise the value and potential of each and every employee walking through their doors. It’s not that reviews are inherently terrible: they just need to be redesigned in order to serve a purpose in the 21st century.
Case study: Google
"Reviews provide an opportunity for recognition - where and how employees have made valuable contributions to specific projects or even the whole company."
There’s a cohort of leading companies who have scrapped traditional annual performance reviews. None of these firms have left a void where Annual Performance Reviews used to be. Let’s take a look at Google, for example.
Google has one of the most dedicated and innovative HR teams in the world. They spent years surveying their employees and testing out different processes before concluding that yes, performance reviews still matter, and Google’s former SVP Laszlo Bock maintains that employees want to be evaluated so that they can grow and do their jobs better. But you can’t conduct your performance reviews in just any old way.
Firstly, Google holds two reviews each year: one is a highly comprehensive review that takes place in November, and the other is a follow-up ‘check-in’ review that occurs in March or April. Notice that this format encourages continuity and progress, which is already a huge step away from retrospective, once-a-year appraisals. Secondly, in addition to direct reports from managers to employees, employees review themselves; each other; and their managers in a process known as a 360º review. This gives a much more balanced overview of people’s progress and eliminates subjective bias.
Thirdly, Google makes sure to separate its pay discussions from its performance reviews. By doing this they demonstrate that performance reviews are for employee development, or intrinsic motivation, and that salary talks, or extrinsic motivations, belong to another conversation. In fact, Google has come up with an original, non-monetary metric to use in their reviews: “Googliness” is a measure of company values loosely defined as “a mashup of passion and drive”, which is divisible into specific areas like problem-solving skills, leadership skills and presence.
Focusing on strengths allows Google to clearly define what employees should keep doing, while simultaneously presenting weakness as something to be worked on. Moreover, reviews provide an opportunity for recognition - where and how employees have made valuable contributions to specific projects or even the whole company. These achievements can be tracked within an active Objectives and Key Results (or OKR) system.
After collating peer and self-assessments, managers are able to draft a review of their employees - but even these reviews have to then be consolidated by other managers in order to maximise fair evaluation. This has the added benefit of taking the onus off one person to evaluate an employee.
"A touchstone for growth"
In implementing these new strategies, Google has continued to be known for its employee satisfaction and innovation. It’s not the only one reaping the benefits of a modern review system: in fact, it’s estimated that around 70% of multinational companies are considering or making similar transitions, even if they haven’t completed the change. Here are just a few of them:
Performance reviews do still matter in 2019: they just need to be given an upgrade to make them fit for today’s business world. By using tried-and-tested strategies, or a performance review tool like Leapsome, reviews don’t have to cause weeks of stress, mountains of paperwork or employee resentment at a biased evaluation. When done right they can be a source of learning, development and progress - a touchstone for growth.