It's annual review time and for the last few years, a series of tech industry titans have dropped their traditional employee review methods by the wayside. So what has made companies like Microsoft, IBM and Adobe abandon these age old systems? The war for talent.
Of course, changes to the employee performance review systems aren't limited to the tech industry. An estimated one-third of all U.S. companies have now abandoned the traditional employee performance review process, with industry giants like SAP and Deloitte saying the expense and investment of hours to conduct reviews no longer fits their business needs. Even General Electric, whose legendary review system served as a model for many Fortune 500 companies, has stopped doing annual performance reviews. Alleycorp Chairman and CEO Kevin Ryan has an idea why this shift is taking place: "In general, performance reviews actually shouldn't need to exist if you [the employee] and I have a dialogue all the time."
The trend is refreshing. I've never heard of anyone liking their performance review, even a glowing one. But the problem with reviews isn't that people don't like negative feedback. The opposite is true, as seen in a Gallup study in 2009 that showed employees who predominantly received negative feedback from their bosses were 20 times more likely to be engaged in their work than those who got little or no feedback.
Why is this?
It all goes back to the annual review system. Despite the good intentions of the system, the reality is that many companies are using a system designed to encourage feedback that often produce little or no feedback to employees. How many times have you heard from someone: "My annual review is the only time I air my problems to my manager" or worse still "my annual review is the only time I sit down with my manager." It's nuts! And more importantly, it's not an effective way to help employees improve.
As numerous studies have shown--and as our Radiate Experts will tell you--constant feedback is a must when it comes to engaging employees. "I actually believe performance reviews should be done on a continuous basis, I think day in and day out," says John Chen the Executive Chairman and CEO of Blackberry, "It's not a 'oh, it happens to be December, and therefore right before bonus time!'...I think performance reviews should be about how one betters themselves, and how they're [the employee is] doing," he continued. That same Gallup study found that managers who gave little or no feedback to their team failed to engage 98% of them. Perhaps for this reason, SAP--among other companies--have now begun testing a process to encourage more constant engagement and check-ins.
Still, abandoning the entire performance process altogether is not the solution either. Some aspects of it--including giving employees metrics and goals to achieve--are still very valid to help motivate them if done frequently. Conducting performance reviews once a year isn't going to help your staff accomplish them. Christmas comes only once a year--but performance reviews shouldn't!
I love reading your responses so tell me what is your take on this? Is constant feedback the way forward?