Suzi Alligood leads a discussion with Molly Kelley and Brandon Laws on an article from the Washington Post about why Accenture plans to get rid of annual performance reviews and rankings.
During the episode, they discuss whether or not annual performance reviews are still relevant for employers and employees and what a good substitute for the process would be.
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Suzi: Welcome to the It’s About People podcast, I am Suzi Alligood and I am joined here by Molly Kelley and Brandon Laws. Today I brought an article with me that was published in The Washington Post and then re-purposed in The Oregonian on July 22nd.
It’s about the large consulting firm Accenture ditching their performance reviews and rankings. And it talks about this trend, especially with a lot of the larger organizations; it cites Deloitte, Microsoft, Adobe, Gap. Those organizations have made the decision to do away with their annual performance review process. They have determined through internal and outside studies that their process is not yielding any outcomes, desired outcomes. So it’s not necessarily impacting performance, and they’re also finding that the managers hate it. It’s cumbersome, time consuming, and the employees, especially with the ranking systems, feel uncomfortable and they perceive it as a judge-and-jury type situation.
A lot of these companies are not doing away with performance reviews altogether, but they’re saying, you know what, these forced rankings where we’re pitting employees against each other versus focusing on individual strengths and waiting until the end of the year to do this big project and have these conversations with the employees is just not efficient nor is it producing any real results.
This is something that we’ve discussed internally and we have talked with our clients about as we’re helping them design their performance management programs. And we’re seeing this trend toward more frequent and ongoing feedback, which we’ve always talked about with one-on-ones, but essentially, even looking at replacing that annual review formal meeting with just regular ongoing performance meetings and discussions. So what are your thoughts on that?
Brandon: So, you guys are the experts on this, but here’s my two cents: I agree it’s a cumbersome process. Suzi, you streamlined our process and literally blew up our process and I love it so much more now. What I would say is, yes, ongoing feedback is necessary—I think that’s really performance management holistically, that’s what we need to be doing.
Suzi: It is.
Brandon: However, as an employee, as a producer, I want to know, did I get better year over year? And I think when you do a snapshot in time—and that’s what a performance review, in my opinion, is—it’s a snapshot in time, taking that last year into account, and if you do it year over year, you can look back and say, here’s my score this year and this year, here’s what was ranked differently, maybe competencies were different. But again, I’m asking myself did I get better year over year and I think the performance review just sort of takes all of that into account. What do you guys think?
Molly: I would agree with you here at Xenium. So I think that my experience as a consultant who’s always talking to employees and managers and the folks who attend our
classes looking for a better process, the reality is we’ve been spoiled. And even before Suzi blew up our process and made it better, we had a pretty good review process and we took it seriously, all of our managers did. And we invested the time and the conversation and talked about development and goals and opportunities and strengths. So I think we’ve always put a lot of stake in that, probably the nature of the company that we are and the culture that we have. But I’ll tell you that for many, many, many companies out there, it is something that HR is hounding people to do. It has absolutely no tie to relationships. The goals are something that are coming down from a corporate level that are rolled down to the employees—here, put this in your review as your goal. They’re not meaningful, and I think, again, if you’re talking about taking away the process and you’re still having the conversations–that’s great. From an HR perspective I would say, if we’re going to take away the conversation altogether and there aren’t the frequent more informal check-ins, conversations around development, one-on-ones—which we talk about a lot—then you have silence. And that doesn’t make people feel good, either. So it’s really about the value put into the process and the conversation more than what the process looks like in my mind.Suzi: It’s interesting. I almost wonder if this is a dramatic shift, because for so many organizations, they don’t have a system or they don’t have managers who are disciplined about giving the timely ongoing feedback. And we all know that that’s so important and that’s what really gets people engaged in their performance, getting that frequent feedback. I’m wondering if it’s like, okay, we can’t get managers to do that consistently so we’re going to change our whole process to where that is the new process, so that they have to do that. I’m inclined to think that, like you said, it does depend on the individuals in the organization and the culture of the organization, the value they place on performance management. But there’s probably a blended approach that might be good, to Brandon’s point. The annual review doesn’t need to be lengthy and cumbersome, and it certainly shouldn’t be the only opportunity for which you’re providing feedback. But it could be viewed similarly to a strategic planning type discussion where it allows the manager and their employee just to talk about, what did we accomplish this year that we feel good about and looking at the business goals going forward, how do you play a part in that and how do you want to develop, going forward? And then use that meeting as an opportunity to focus on that.
Molly: I think performance reviews for years have gotten a really bad reputation amongst employees because, to Suzi’s point, in many organizations it is the only formal sit-down conversation around performance. So as an employee I walk into that meeting with nerves because it’s a pretty vulnerable situation to be in, to have somebody critiquing your life’s work in the space of an hour.
Suzi: Absolutely.
Molly: And yet, if there’s good rapport, if there’s frequent conversations and if I’ve been getting feedback, a lot of those nerves dissipate and I know there’s not going to be any surprises. It’s not going to be, My goodness, you’re really failing in this area, your performance is under scrutiny. It might be your last year with the company. That kind of conversation happens, and I’ve heard that over and over.
Brandon: And it should happen regularly, that way it’s not a surprise to you.
Molly: Exactly, exactly.
Brandon: What’s that video you show regularly, Suzi? It’s a YouTube video where the employee, he’s talking with a coworker–or maybe it’s Molly who uses it–but he’s talking with a coworker about how, Oh I’m excited for my review! I’m going to get this promotion, and then it cuts to the manager and she’s saying, Oh I’m dreading this, we have to let him go. They’re not aligned, and that’s because performance management doesn’t happen on a regular basis.
And the other part that comes to mind when we’re wondering if we should get rid of performance reviews, we’ve got to ask ourselves—is this for the employee or the employer? Molly, when I heard you talk about, Ok, some of these KPIs or benchmarks are coming down from corporate, that is not for the employee. How is that going to help their development process?
Molly: Absolutely, yeah. I love the example I have that happened to my husband years ago, which was receiving a review that had someone else’s name in it.
Suzi: Oh gosh.
Molly: And this happens a lot where there’s an automated system where as a manager you select put item a, b, c, and d in these sections, print it out and deliver it, sign it. And it’s not customized. It’s more work.
I will point out, this is not new. There was a New York Times article six or seven years ago I think where they talked about getting rid of performance reviews because they’re not effectual. They’re meaningless processes now and everybody hates it. The employees hate it, HR hates it, managers hate it. So this is a conversation that’ll keep coming up as long as we have meaningless review processes, honestly.
Suzi: So you’re saying it’s more about the culture, the leadership, and the process?
Molly: Yep. The quality of the conversation, period.
Suzi: Right. The other couple things I will mention that were interesting to me is there are a lot of organizations that use the rankings and ratings for compensation reviews and decisions. And people feel like that’s more of an objective measure, right? When in reality those ratings are subjective! So at the end of the day it’s all subjective. It’s funny, we get into this scientific, quantitative mindset, but at the end of the day it’s still subjective, and a lot of companies don’t have a formal calibration process so at the end of the day it’s really no different than getting verbal feedback.
Brandon: It’s like when you do a survey for marketing but it’s a population of one. Your sample size is on person.
Suzi: Yeah.
Molly: Right.
Brandon: The data’s not valid because it’s one person’s opinion.
Molly: I think one of the worst moments for me as an HR consultant was when we rolled out a review that was based in Excel that had rankings and ratings for employees that had a formula error, so it was calculating incorrectly and we did a whole company wide set of reviews before we realized everybody was ranked I think slightly higher than what they should have been. And then having to go back and clean up that conversation was just brutal. And that’s honestly an organization where confidence in the tool has never quite been restored. That’s a do-over moment, no question.
Suzi: So I think this is something that companies should be looking at, because when you think about the time that managers spend on your annual review process, looking at what your process is, how much time your managers and employees are spending in training, preparing, conducting reviews, if you’re not getting results, that’s money wasted. So I think it’s definitely worth looking at it and making sure that you are getting meaningful feedback, it is timely, and it’s efficient. It’s not cumbersome.
Molly: Don’t let your reviews become a de-motivator.
Suzi: Right. Well, great discussion! Thanks for joining us and we look forward to you attending future podcasts!