Some top companies such as GE, Adobe, Gap, Deloitte, Accenture and Microsoft have been getting attention for cutting their traditional annual performance review and ranking process. Performance reviews are not relics of the past, though.
Instead, leading companies are shifting to create a “feedback culture” involving both ongoing and fluid feedback systems, as well as more structured, comprehensive processes.
Modern, 360˚ reviews play an essential role in building a meaningful feedback framework. They drive performance and support employees in their growth and development.
A good performance review happens more frequently than just annually, involves more perspectives than a single manager’s, and is development-focused and forward looking rather than just assessment focused and backward-looking. Review cycles can then be complemented by other feedback processes throughout the year.
A good performance review process will happen semi-annually or quarterly, depending on company needs. It is tough to feel motivated in December for feedback one has gained last January. Semi-annual or quarterly reviews are often enough to ensure feedback is given in a relevant timeframe. More frequent periods also allows easier comparison and learning about performance over time.
Employees interact with a diversity of people at a company. Although managers review employee work, others also often have valuable perspectives to share. Employees themselves also have insight on their own strengths and weaknesses. Expand reviews to 360˚, and open up new learnings.
Have employees reviewed by one or members from their team or neighbouring team. The more perspectives on an employee’s performance, the easier it is to grasp where the employee really is, not just where the manager thinks they are. Additionally, involving peers mitigates any bias a manager might have, and helps highlight contributions a manager might overlook.
Self-review helps compare and giving context to a team and manager’s review of an employee, with the employee’s own thinking. It also a valuable tool for the employee to reflect on their own performance, how they view their skills, and what they want to improve upon. Employees can better understand their strengths by matching up their self-perspective with external perspectives.
Apart from the manager reviewing the employee, good performance reviews go both ways. Give employees a chance to provide feedback to their managers.
Reviews are a great opportunity to help employees and managers develop. This opportunity is lost if a review is simply seen as an assessment or scorecard. Instead, frame reviews as an intentional way to pause and ask where the employee currently is in regards to performance, skills, and development, and where they need to and want to be.
Performance Reviews work best when complemented by other measures, such as
Processes that allow frequent formal and informal feedback on an ongoing basis. For example, after an employee gives a presentation, they might check in with their team to ask about their preparation and presentation skills.
Regular sit-downs between managers and employees. The focus is coaching and improvement. Three questions to ask to prepare regular 1:1 Meetings could be: What are key achievements from the last week? What are next steps for the next week? What are current issues or requests for support?
Regular surveys on topics such as e.g., engagement, manager support or development opportunities help to leverage honest and timely feedback from employees. These can be short surveys with just a few questions, sent regularly, or longer and sent out only a few times a year.
Surveys by leading US research firm ProClinical found that across the US, Europe, and Asia, more frequent reviews (ex, monthly) made employees almost 60% more motivated, 67% more likely to recommend their company as a place to work, and over 50% more likely to be working there in a years’ time.
According to Gallup, organizations with higher than average levels of employee engagement see 27% higher profits and 50% higher sales.
The Harvard Business Review found engaged employees have 31% higher productivity, and 37% higher sales.
Bad performance management practices do need to change, but that doesn’t mean performance reviews should be done away with completely.
Modern, 360˚ performance reviews are a powerful tool when implemented alongside everyday continuous feedback, and meaningful coaching and 1:1 meetings with managers.
Studies show 70% of employees are unhappy with their current performance review process. There is a lot of potential for positive growth!
Good performance reviews increase employee motivation and engagement, which drive performance, growth, and retention.
Performance reviews have not always been a positive force within companies. Traditionally, many reviews have emphasized financial rewards and punishments. This diminishes internal motivation and learning.
Traditional reviews also often award rankings based on a “curve” where only a certain number could be called “excellent,” and a certain fixed number must be labeled “low performers.”
These measures increase competition between employees, rather than collaboration. They create a mindset focused on avoiding failure, rather than embracing growth.
Why reduce 2000 hours of annual work into one number without providing a clear path to development potential, and hurt learning and motivation? There needs to be a better way - and there is.
Performance reviews do not stand alone. They fulfill their role best when they are integrated in a culture of feedback and growth orientation, and complemented by ongoing feedback and 1:1 meetings with managers.
This frequent feedback is needed to avoid recency bias and give specific feedback at the time when people need it. It also provides small, ongoing points of positive encouragement, and future-focused improvement.
Being able to review continuous feedback provided over the past months also simplifies providing feedback to an employee, peer or manager when performance reviews are due.
Good learning environments have a back and forth exchange between learners and teachers. They balance ongoing feedback, with regular check-ins, and then comprehensive reviews. Work is a learning environment. Why shouldn’t it be the same?
Ongoing feedback is essential, and some would argue that a semi-annual or quarterly review is unnecessary if good ongoing processes exist.
However, performance reviews give a structured, bigger-picture view outside the scope of smaller, ongoing feedback. Both scales are needed.
Performance reviews create a structured time to take a break and fully reflect, gaining a deeper understanding of where they are at.
Combined with ongoing feedback, employees can then continually finetune their progress.
Google has one of the most dedicated and innovative human resources (or, as they call it, People Operations) teams in the world. After years of trial and error, surveying, and testing, they concluded this: performance reviews still matter. Here’s how Google implements them.
Google does reviews twice a year: Once a highly comprehensive review that happens once a year in November, and then a mid-year check-in on that review six months later in March or April.
Employees review themselves, each other, and their manager, and managers review direct reports. Managers have full access to all feedback, including non-anonymized peer reviews. Individuals see only anonymized peer review results.
After seeing peer and self assessments, and taking into account employee contributions on OKRs, managers draft ratings for their own employees. These are not final, however. Groups of managers then gather to “calibrate” ratings.
This reduces bias, as managers have to justify their decisions to one another. Shared responsibility also takes the pressure off of individual managers to assign high reviews.
After finalizing a performance review, managers sit down for two separate conversations with employees. One is development and learning focused. The next, one month later, is promotion and compensation focused.
Google knows it is hard for employees to be in a intrinsically motivated, development-focused mindset at the same time that extrinsic rewards are on the table. So they seperate the conversations.
Companies may be tempted by traditional, ranking-based reviews because they want a simple basis for promotion and compensation. It is time to let go of that thinking, however.
Compensation might be informed by - among other factors - the outcome of performance reviews. However, those talks should always be clearly separated, preferably by a time period of at least one month.
By themselves, individual performance reviews are not the best way to determine compensation. For more guidance on frameworks for fair compensation, check out Google’s re:Work guide.
Leapsome has developed best practices for questions that are grounded in both scientific frameworks, and real world experience.
You can read more of Leapsome’s best practice questions here.
Define your the skills and values your company prioritizes (“company skills”). Then, choose questions that target those skills and values. Companies can then track performance on these skills and values over time.
Some questions will be common no matter who the reviewer is: ex, quantitative questions on company skills. Others, you may want to be specific based on who the reviewer is: ex, qualitative questions.
Quantitative survey questions should ask questions that can be objectively assessed. Leapsome recommends a five-point scale.
Manager to Employee, or Employee to Manager
Peer to Peer
Deciding who should review who can be tough to navigate, but it doesn’t have to be. This choice is highly customizable in Leapsome, and the Leapsome Customer Success Team is there to advise.
Pro: Managers have insight into the strengths of their reports, and can assign reviewers who make sense
Con: Managers may know less than employees about who would benefit most from what reviewer
*This option then includes manager confirmation
Pro: Employees can select those peers who know their work best, and have the most to add
Con: If employees feel pressured to achieve good results, or think their peer’s rating strongly affects their compensation, they may select peers they think will review them more favourably. However the manager confirmation step accounts for this.
Pro: Managers have greater context into feedback given, and thus greater insight
Con: Managers may elevate or dismiss feedback based on their opinion of reviewer
Pro: Managers are not biased by who the reviewer is
Con: Managers may still make assumptions of reviewer identity, and managers cannot follow up for additional context
Pro: Individual has greater context into their feedback, can follow up
Con: May impact relationship if employee is hurt by feedback
Pro: No risk of damaged relationships
Con: Employees may still make assumptions of reviewer identity, especially in small teams, and cannot follow up for additional context
Pro: Managers opinion not overly swayed by others’ positive or negative reviews
Con: Managers may miss points or build on or gaps to fill, sparked by seeing others’ reviews, Managers can integrate peer feedback and put it into perspective
Pro: Manager can build on employee’s self and peer reviews, gaining new perspectives, complimenting points or filling gaps
Con: Manager’s opinion and review may be overly swayed by positive or negative reviews
Harvard Business Review
Berkeley Human Resources
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