Dear Performance Review: You Need Improvement

This article first appeared in Hotel Management Magazine, March 2020.

Annual performance reviews have been a staple of most human resources departments for at least the past 70 years. This one-size-fits-all tool is designed to measure and compare employee performance based on broadly defined goals, identify areas for improvement, and determine merit-based pay increases. But while the annual performance review with its excessive forms has been largely static in its implementation over the decades, the business climate has been anything but.

Today’s competitive business environment requires organizations to be nimble and responsive, which translates to rapidly shifting expectations for employees. The once-per-year evaluation just doesn’t cut it anymore. Real-time feedback is critical for employee success, and addressing areas of concern can’t wait until the next annual review cycle. In addition, high-pressure evaluations can negatively impact employee morale and company culture, which can affect employee wellness as well as productivity.

Low scores are demoralizing and don’t provide a framework for improvement or shaping performance. Annual performance reviews are rapidly falling out of favor, with influential companies such as Adobe, McDonald’s, Deloitte, Microsoft, General Electric, and Netflix abandoning them in favor of more frequent “check-in” systems. This new framework not only eliminates the high-stakes scoring system, but takes the form of a collaborative conversation that invites feedback and individualized goal-setting. This format eliminates reviewer bias and removes the stress involved with evaluations. In addition, employees are empowered to take control of their own development by asking for frequent feedback from their supervisors.

Here are five elements to consider when implementing new review practices:

• Employee well-being needs to be part of the process. Well-being and employee performance go hand in hand; detecting and addressing mental health issues early on is key.

• Train associates to ask for feedback. This puts the asker in a position of control and reduces stress.

• Job personalization and customized training are current best practices. Empower employees to find the best path to mastering skills needed to do their jobs, based on their individual skills and skill gaps.

• Consider artificial intelligence.  AI already is having a big impact in recruitment and learning, but will start showing up in performance management as well.

• Coaching, coaching, COACHING.  Creating a culture of continuous feedback and shifting efforts away from the completion of excessive forms puts the focus on coaching and development of associates.

Organizations are shifting away from outdated management models and toward models that emphasize coaching, individualized training and employee well-being, which has an enormous impact on productivity and performance. It should be no surprise that the annual performance review is finding itself relegated to the museum of human resources history.