Why More and More Companies Are Ditching Performance Ratings

Harvard Business Review

Why More and More Companies Are Ditching Performance Ratings

Every year in the United States, we waste 2 million hours on performance reviews. Business and research leaders are encouraging companies to ditch the traditional performance review. In this interesting article from the Harvard Business Review, David Rock and Beth Jones explain how companies can still maintain a pay for performance culture without clinging to “forced ranking” or rating employees on a performance curve.

With more and more data coming out on what truly motivates employees, standard performance reviews are inadequate to make any meaningful progress. Here are a few reasons why these traditional approaches to employee assessment dont’ work.

Work is changing. Some employees or managers can set 12 month goals but others need daily or weekly benchmarks to achieve. Some need to hit productivity peaks at different times of the year and can go almost dormant at other times of the year. Independent contractors who help your business at a distance are one example, perhaps revamping your on-line presence or assisting with some video production. If you wait to review their performance until the end of the year, they might not even be completing any active work for you at the time.

Communication has changed. Managers and employees need to interact much more frequently, especially with today’s always-on communiation. What used to be discovered in an annual survey of customer satisfaction now comes instantly via Twitter, Facebook, Google and Yelp reviews. Managers can’t wait until the annual performance review to speak with Susie about why she’s strangling your patients. You’ve got to fix Susie now!

Keeping talented employees is harder and harder. Decades ago, employees might stick with a company for their entire career. Not today. The average employee moves between companies or even entire industries every 4.5 years. If you want to keep the good ones, you’ve got to engage them on a higher level. Waiting to see what they love about their job and what they hate until an annual performance review is a really bad idea.

The overarching purpose here is to achieve better employee development and engagement. Ditching traditional performance reviews in exchange for a more interactive and frequent feedback process, with goals and result measurement tailored to the indiviudal team or job position seem better positioned to achieve these goals.

Worked at Burleson Orthodontics. Attended University of Missouri–Kansas City. Lives in Kansas City, Missouri.