Ah, Rambling Wednesdays.

Get Rid of the Performance Review!

… It destroys morale, kills teamwork and hurts the bottom line.  And that’s just for starters.

Wow.  Now that’s a headline.  And in the WSJ no less.  Dr. Culbert, consultant, author, and professor of management at the UCLA Anderson School of Management in Los Angeles knows how to write a “grabber”.

Doc Culbert goes on…  “To my way of thinking, a one-sided-accountable, boss-administered review is little more than a dysfunctional pretense.  It’s a negative to corporate performance, an obstacle to straight-talk relationships, and a prime cause of low morale at work.  Even the mere knowledge that such an event will take place damages daily communications and teamwork”.

YIKERS.  Sounds like someone has gotten a bad performance review (or two, or three) in his past.  Really bad.

Samuel continues… “The alleged primary purpose of performance reviews is to enlighten subordinates about what they should be doing better or differently”.

OUCH.  Another insight into someone’s past performance issues at work?  Nothing about congratulating the employee on their positive achievements in the past 12 months?  OUCH.  Somebody was a bad employee, or somebody had a series of really bad bosses.  You take your pick.

Anyways…where to start, where to start.

Doctor Culbert makes some valid points in his full page article.  However, I have an issue with the “alleged primary purpose” of the annual performance review.  Although the point of the annual sit-down is to discuss an employees strengths and improvement opportunities, it also serves a more vital, longer term mission:  an opportunity for the employee to discuss their short and long term career development opportunities in their division, department, and company.

Employee’s don’t have a problem with the performance review process, the feedback they receive seldom comes as a surprise.  Superstars know they are over-performing, those that are just skating by know that too.   Sure, crappy managers can screw up even this straight-forward part of the review, and the impact can be lasting and far-reaching in terms of employee engagement and retention.

But if employees don’t believe their organization cares about their training and development and their long-term career objectives they’ll take their “business elsewhere” and start selling their talent to another organization who does.  Even as unemployment increases, the average business has a 36% turnover, with two thirds of that being at the discretion of the employee, not the employer.

The answer isn’t to get rid of the performance review, it’s an important part of the relationship an organization has with their workforce.  Study after study have shown the importance of providing feedback to employees, starting with a frank discussion of the job requirements during the application/selection process.   The annual review shouldn’t be the only time this performance discussion takes place, feedback should be continual, consistent, and explicit.

By concentrating on job progression and career advancement (what the author calls small issues, perhaps as a joke), the annual performance review can be a development opportunity designed to enhance the strengths and weaknesses of the employee while better understanding what will drive their engagement in the future.

Engaged employees stay longer, work harder, and recommend the organization as a great place to work.  Perhaps the good doctor doesn’t see the value of spending 60 minutes with an employee once a year to improve their performance during the other 119,940 minutes they’ll spend at work the rest of the year.

Duh.

It’s the Same All Under

A recent online search uncovered an annual report from a public company in Australia.  It’s interesting to see what P.R. folks put in these reports.

DIRECTORS’ AND SENIOR EXECUTIVES’ EMOLUMENTS

The Board remuneration policy is to ensure the remuneration package properly reflects the duties and responsibilities of the director. The emuneration Committee ascertains non-executive Director remuneration and also staff remuneration which are separate and distinct. Remuneration is set by the Board of Directors. The Company has a remuneration policy aimed at retention of key technical staff to ensure the progression and commercialisation of the Companys technologies. 

The underline and italics are mine.  The idea is global.  And short-sighted.

Money makes you stay.  Annual compensation, stock, bonuses, per diems, company cars, etc… They all are aimed at “retention of key staff”.  However I want to invest my money in a company who designs strategies intended to encourage employees to stay because they want to, not because they have to.

If the only thing that you are doing to keep your most critical personal is paying them more than they are getting somewhere else, realize there is a hungrier company who is either smart enough or dumb enough to pay a little more to steal these same critical resources from you.

I love annual reports.  Kudos for telling us your retention strategy, demerits for not realizing how bad of an investment it is.