Can we talk about performance appraisals?
This corporate sham is one of the most insidious, most damaging, and yet most ubiquitous of corporate activities. Everybody does it, and almost everyone who’s evaluated hates it. It’s a pretentious, bogus practice that produces absolutely nothing that any thinking executive should call a corporate plus.
Harsh and provocative, isn’t it? This is an opening paragraph to Samuel A. Culbert’s 2010 book, Get Rid of the Performance Review. Dr. Culbert wrote what I’ve been thinking for a long time. And I’m not alone.
3 Reasons to Dump Employee Performance Reviews
Deloitte Consulting recent surveyed over 2,500 organizations in more than 90 countries and issued a report on Global Human Capital Trends. Deloitte’s performance management research found:
- Only 6% of organizations believe their current process for managing performance is worth the time;
- Only 8 percent of companies report that their performance management process drives high levels of value, while
- 58% called their process “weak,” with North American companies 20% worse than the rest of the world.
So why do we continue this ineffective practice? According to Dr. Culbert, one of the reasons is because of the perceived power it affords HR professionals as administrators of the process.
I beg to differ with Dr. Culbert on this point. After reading Get Rid of the Performance Review, I collected additional research, prepared a business case and presented a proposal for replacing my company’s performance appraisal rating process to the executive team. After a brief moment of C-Suite jubilation, fear set in.
The executives worried about how they would explain base pay decisions to employees, how regulators would react to a change in the performance management process, how bottom performers would be managed, and a whole host of other possible corporate calamities. I watched as the executive team talked themselves out of changing the status quo.
Fear of change and the unknown is holding us back. And the biggest fear is how a change in the performance appraisal process will impact compensation decisions.
The good news is that viable alternatives are available. Several major companies, including Adobe, Expedia, Juniper Networks, New York Life, Motorola and Kelly Services, have reengineered their performance management processes, eliminated ratings and experienced improved business results.
Best practices reported by the trailblazing companies include:
- Focus performance conversations between managers and employees on coaching and development for improved results;
- Delink compensation decisions from performance and coaching discussions. Consider market and skill-based compensation determinations;
- Simplify the process and forms to reduce administrative burden on managers.
HR’s role in performance management is not that of administrator of a broken and ineffective process. HR professionals are in the best possible position to lead a process improvement revolution. There are ways to develop individuals and improve workforce performance without the performance appraisal processes of the past.
It is HR’s role to evaluate the current process, build a business case and lead the change.