Training & Development

Kill the Performance Review and Your Talent Management Strategy Won’t Survive Either

Perfromance2

Earlier this week I read John Hollon’s post here at TLNT,  “A Persuasive Argument for Getting Rid of Employee Performance Reviews,” with keen interest.

This death knell for the performance appraisal — renewed and fueled again by the recent release of UCLA Professor Samuel Culbert’s new book, Get Rid of the Performance Review — has yet to convince me that we need to scrap the performance review all together. Although I’ve yet to read his book, his published interviews present clear arguments against bad management altogether.

But look closely and you’ll see that more than anything he’s referring to a process which is entirely broken and does not inspire or engage employees, let alone drive business results. Since the argument to kill the performance review has been around for some time, we asked 10 big thinkers in HR about the issue late last year, and none of them called for its death, but rather for an overhaul of the process where it has been executed poorly.

Performance appraisals can be extremely valuable and relevant, they just need to be executed as part of a larger talent management strategy, and become much more than a one-way flow of information from the manager to the employee. Before throwing out the performance review, why not take a stab at fixing the process? Consider what it could or should be delivering to your organization and employees.

Performance Management provides critical insight

Performance reviews are the very heart of talent management, and without them, your organization is going to be lacking critical insight when it comes to other processes like succession, development, goal alignment and even pay for performance. These programs all rely heavily on the information and intelligence gathered on an ongoing basis as part of the performance appraisal process.

Furthermore, there are many compliance requirements in industries such as manufacturing and health care that require that organizations execute reviews and evaluate competencies. Without a performance review process, key certifications would be put in jeopardy.

For example, many health care organizations choose to become Joint Commission or Magnet accredited as a differentiator in a highly competitive market, and are required to conduct and report on performance appraisals. Brookhaven, Mississippi-based King’s Daughters Medical Center (KDMC), for instance, has a robust talent management program in place and since modernizing their approach to performance management, they are able to easily meet compliance deadlines and estimate they have saved 30 to 45 days in the reporting process. Without reviews, they simply would not be able to maintain Joint Commission certification.

Making reviews a positive experience

As John discussed in his post, reviews often are a negative, if not a completely soul sucking exercise that demoralizes employees. Take a long hard look at how reviews are conducted in your organization and remember, the goal should be to encourage and inspire people to be their best, rather than to critique, rate and rank them. A big part of this process is encouraging self-awareness by having both manager and employees reflect on performance throughout the year, and including performance journals and self-assessments as part of the process.

Development plans should foster personal development and aim to enhance an employee’s expertise and experience to prepare them for career advancement, not just address performance gaps. If we want performance appraisals to be a positive experience, we need to take the focus away from ratings and instead have employees identify what successes they had, what contributed to their success, skills/areas they would like to develop further, and what they need to support their success.

A great example of this is going on at Campus Management Corporation, a technology company providing enterprise resource planning software to educational institutions. This organization’s leadership team is focused on linking engagement to performance management by making sure performance management is an ongoing process, not a once-a-year administrative activity.

Managers and employees regularly post notes to performance journals, record progress on projects and revisit goals. Employee involvement is important because it helps gets employees out of the “I came to work for eight hours” mindset and into the “What did I accomplish that is relevant to my goals mindset.” It allows the employee to take more ownership of the process.

Things you might be missing

Much of the discussion about reviews and what’s wrong with them discuss the basics of the process, like the actual performance meeting and how managers are making decisions. With a well-executed performance management strategy, those are fairly basic and routine items which are not an issue. Once an organization fixes those areas, a whole new series of talent management related practices open up to them.

Take the use of self-assessments and 360 degree reviews help to address many of the concerns put forth by Culbert, and help to provide an accurate snapshot of the employee’s performance and experiences within the organization. These can be extremely valuable tools in situations where conflict or tension exists between the manager and employee, or where difficult personalities are involved. Substantiating feedback with input from multiple sources makes it not only more objective, but increases its impact.

Another key area that is overlooked and can contribute to failings of traditional performance reviews is that development planning tends to be done separately from the performance management process. This leads to another major disconnect causing many of the issues identified by both Culbert and Hollon. The performance appraisal meeting is when a lot of the areas for development are identified and discussed, is where the development plan, with a specific plan for training activities, should be set, not three months later when there is little context or relevance in the employee’s mind. A strong, clearly understood link between performance and development creates a higher level of employee engagement in the long run.

The Link to Business Results

More and more research, by companies like the Hackett Group, Bersin, Aberdeen, IBM, HCI and IDC, is showing the strong link between mature, integrated talent management processes and financial results.

  • From the Hackett Group: Companies with more mature talent management capabilities have on average 18 percent higher earnings, 54 percent greater net profit margins, and greater return on equity and assets than their counterparts without mature capabilities.
  • From Aberdeen Group: Companies who integrate their talent management processes see significantly greater performance gains, and can measure a correlation between their talent management efforts and business operational results.
  • From Bersin and Associates: Companies with consistent performance management processes outperform peers with no formal practices or processes.

Successful organizations realize that the only sustainable competitive advantage they have is their people, and they use strategic talent management to maintain this advantage. Strategic talent management isn’t going to be a reality in any organization without a solid, well thought out performance management program at the heart – and that includes reviews.

Instead of ditching performance reviews, why not take the time to reflect on what you are giving up? Strong talent management is built on employee performance management. Anything less can have a major impact on your employee engagement and development efforts, your sustainable competitive advantage in people, and corporate performance.

Sean Conrad is a Senior Analyst with talent management vendor Halogen Software (www.halogensoftware.com). He regularly blogs on HR and talent management trends and issues on the Employee Performance and Talent Management Blog (www.halogensoftware.com/blog/).
  • http://twitter.com/DaveTheHRCzar Dave Ryan

    Yeah for the performance review, rumors of its death obviously are premature. Excellent post Sean… even if you are selling software! :-)

  • Steve Boese

    Sean – I liked the piece, as I like all the stuff you do. Shameless plug – I booked Sam Culbert to come on the HR Happy Hour on August 16 to talk about the book and the issues with performance reviews. I hope you can listen, and better still, join in. Apologies to TLNT for the self-promoting comment :)

  • http://www.halogensoftware.com/blog/author/sconrad/ Sean Conrad

    Thanks Steve – I'll definately be listening to the podcast – and schedule permitting I would love to join in.

    Thanks Dave – Halogen is in the talent management software business to be certain but that's a lot more than performance reviews. I'd say that if you agreed with Culbert's position and did away with the performance reviews you need good management tools even more. We're really talking about tools managers use to set and manage goals, identify areas for development, and put those development plans into action.

  • Peter Cook

    You will find a chapter on appraisals in my new micro book ‘Punk Rock People Management’ – available free via http://www.academy-of-rock.co.uk/Punk-Rock-HR

    Previous books acclaimed by Tom Peters and Charles Handy.