When major corporations like Adobe, GE, Deloitte, and Microsoft ditched their annual performance reviews, they set off a sea change in the world of performance management. There’s now nearly universal agreement that these antiquated practices don’t work and need to go, but very little agreement about what to do instead. This gap has left HR and business leaders scratching their heads.
Last month I sent an email to all of our employees (which I’ve included below) where I shared my vision for 15Five’s next major thrust — namely, how we intend to replace the annual performance review with something uniquely designed for the times we find ourselves in today.
It should be no surprise that the practice of traditional annual performance reviews is finally being abandoned, given the fact that the world of work looks very different than it did when the annual performance appraisals first rose to prominence in the 1940s. We, humans, tend to create practices designed to address the situations we face at a specific point in time, but then cling to those same practices far beyond their useful life, until they actually become counter-productive.
In the case of annual reviews, they’re not only an ineffective holdover of a bygone age but in many situations are also actually detrimental to the teams, individuals and company cultures that utilize them.
In a recent HBR article about this shift, Peter Cappelli and Anna Tavis share a story about the head of HR of the drugmaker Coloran, who back in 2002 abandoned the annual performance review and replaced it with what he’d found was a more effective way of reinforcing desired behaviors. The article continues,
Back then the idea of abandoning the traditional appraisal process — and all that followed from it — seemed heretical. But now, by some estimates, more than one-third of U.S. companies are doing just that. From Silicon Valley to New York, and in offices across the world, firms are replacing annual reviews with frequent, informal check-ins between managers and employees.
My company 15Five just happened to find ourselves in the middle of this massive shift. We pioneered the use of technology to facilitate those very same frequent, informal check-ins between managers and employees that so many companies have been flocking to. That’s been great for business, but I’ve also had a sense for a long time that it’s not enough.
Yes, I agree that performance reviews in their traditional form (typically done annually, often cumbersome, more backward than forward-looking, and more focused more on giving someone a grade than authentically helping them improve themselves or their performance over time) need to go, but I think abandoning them entirely is throwing the baby out with the bathwater.
There is a great benefit to the practice of reflection, both self-reflection as well as the reflection we receive from others. Reflecting weekly during something like a check-in is wonderful for making sure that we and the people who work for us are staying on track, are able to course correct when need be and are able to give and get the continuous feedback necessary to perform at our best.
But weekly is far too frequent an interval to reflect on how we’re growing and developing over time. Given the pace and nature of business today combined with the pitfalls of recency bias (i.e. we give far more weight and credence to our recent memories), annually is far too long. If we’re going to create a structure to support someone in growing and developing over time, we need something in between.
So, I’ve wondered, if we were starting with an absolutely clean slate, what might we create for the times we find ourselves in today?
My answer to that question is detailed in the email below that I shared with 15Five employees last month.
I would love to hear your thoughts and feedback in the comments below. And if you want to come along with us on this journey (we’re planning to release by the end of November), you can find us at http://15five.com.
P.S. Harvard Business Review has done a stellar job at tracking the development of this shift. If you want to read further, check out the now famous April 2015 article Reinventing Performance Management and The Performance Management Revolution: The Future of Performance Reviewspublished in their October 2016 issue.