How to improve the dreaded performance review

There is no getting away from performance reviews. They are important for productivity and overall business success, yet they are universally hated by managers and employees alike.

"Ask any employee if they are happy with their performance review and the answer will almost certainly be no. Ask any manager if they are happy with their performance management system and the answer will almost certainly be no too," says Prof Adrian Furnham, professor of psychology at University College London.

“Performance reviews are a hot issues in business and one of the most problematic. Employees find them bureaucratic and insensitive, and managers hate giving negative feedback.”

What needs to change, Furnham says, is how performance is measured. “The idea that you can simply throw out a performance management system without replacing it with something else simply won’t work. Companies need some measure on which to base promotions and pay awards for example,” he says.

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Entrepreneur and business consultant Margaret Heffernan is on the same page.

"There is growing recognition that the annual performance review is a dead duck," she says. "Everybody hates writing them, everybody hates getting them and nobody believes them. They have become a completely discredited ritual, which is why you've seen companies such as Accenture and Netflix throw them out. What has replaced them in most cases is immediate feedback. 'Thank you for helping me on that project' or 'wow you really messed everyone up by missing your deadline', – in short, pragmatic actionable feedback."

Actionable feedback

The hitch with this, Heffernan says, is that most people haven’t a clue how to give pragmatic actionable feedback.

“They say useless things like ‘good job’, which doesn’t tell an employee anything or what they should do more or less of,” she says. “What most people want is feedback that will enable them to improve and grow.

“What companies are now recognising is that it is essential to give feedback as close to the occasion as possible,” she says. “Indeed some have used gaming scenarios to achieve this. A manager or team leader gives public kudos to those who really helped them. It’s not a channel for saying ‘you’re lousy, late and lazy’ but a way of acknowledging performance for all to see.

“The speed of feedback and the speed at which it is implemented is what allows people to improve.”

What seems clear is that many organisations give lip service to the importance of job-related feedback but never carry through or do it in such an ineffective way that it is meaningless.

“You get situations where an employee is given a list of say 20 KPIs [key performance indicators] for the coming year. Does anyone seriously think they are going to be achieved?” asks Heffernan. “Too much detail in performance management actually discourages innovation and problem solving and people start finding ways of looking like they’re ticking the box.”

A now retired sales director of a US multinational in the fast-moving consumer goods sector says the “key principle of our performance management system was that it was an opportunity to recognise good performance as well as drive improvement”.

“We always worked to the rule that nobody should get any surprises at review on the basis that this reflected a failure to manage difficulties arising during the period,” he said. “Managers were expected to ensure their reports did well and to arrange training or other help if something was sliding. At senior level, the review was 360 degrees. At director level, you received evaluation from your boss, two peers and two of your own direct reports.

Simple approaches

“It was also normal to expect feedback from your team about how effectively you supported them. The system was linked to Hay Job Evaluation and we often brought in outsiders to look at our approach and execution.”

Furnham says that simple approaches work best. “Set clear, reasonable targets and have regular progress reviews during the year,” he says. “Make it more than a paper exercise. There should be consequences if someone doesn’t step up.

“Train managers how to conduct reviews and give negative feedback. People are so bad at this that they end up justifying an employee’s low score rather than describing behaviour they want to change or encourage. Be specific around positive feedback – unpack it and tell people what they did right and what they did well.”

Heffernan believes performance management has the potential to be highly divisive especially if it is over zealous or if employees are graded into tiers.

“This approach wrongly assumes that making people fight for a top spot will make them more productive. It doesn’t. When people are forced to compete, they stop helping and trusting each other and, in collaborative working environments in particular, this is a disaster.”

Tips for managers and employees

– Fast and effective performance reviews.

– Write a short note about what each employee is doing well or poorly.

– Explain that you will comment on both.

– Ask employees how they like their feedback, direct or softly. Start with the positives or negatives depending on their answer.

– Agree key areas to be worked on and ask if they would like help or training in order to achieve them.

– Ask for feedback about yourself. Are you a support or part of the problem?

– Give employees their say at the end.

– Keep your language neutral and your tone calm.