The demise of annual performance reviews is a hot topic today—thankfully so.

There is a groundswell throughout the HR community and ongoing discussion, even in the mainstream media, about companies throwing out annual performance reviews or performance reviews altogether. They have been recognized as outdated, ineffective, and not providing real value to the ultimate goal of improving organizational workforce performance.

By now, the rationale has been spelled out often. HR leaders and thoughtful professionals understand the problems—feedback is too late, highlights (and lowlights) are forgotten, categories, such as strengths and weaknesses, can be nebulous.

Performance Management—Formal Reviews Out, Technology In

It might seem a dichotomy that formal performance reviews are falling out of favor at the same time that “performance management” software and technology to help organizations improve workforce performance are gaining in popularity. Looking at the situation more closely, however, helps clarify the situation.

The concept of the two-way dialog is gaining favor and this is great news. Rather than a one-way conversation, with the supervisor relaying his or her ratings and observations gained over the course of several months or a year and the employee either agreeing or supplying a rebuttal, a balanced, two-way discussion leads to a more beneficial exercise.

A conversation will hopefully lead to more open and honest communication. Real value to the employee as well as the manager can be realized with a back-and-forth exchange that results in improvements to employee and manager performance. All for the better of the organization. There is still a lot more necessary to improve performance than merely having a conversation, for example, training, coaching, and leadership development, but these new conversations are an important step.

Where’s the incongruity?

The Valuable Pieces

Despite the above-mentioned benefits, it does not make sense to throw out all aspects of  performance reviews. Certainly, it does not mean that managers and employees only need to have conversations, however frequently, and think that will fix everything.

Consider:

• Conversations can be forgotten or misinterpreted by one or both parties. For this reason, key elements of conversations need to be recorded and agreed upon by the employee and the manager. This is especially true as the amount of time between interaction increases, even if it is more frequently than once or twice a year.
• Without documentation of conversations, the opportunity for disagreement is high. This will result in frustration at best, but more likely continued or worsening behavior that never gets corrected. And, that can lead to an unfortunate and perhaps unnecessary separation down the road.
• Without some formality or uniformity to the process, unfairness can easily seep into the overall review of any conversation. See the above point for the depressing consequences.

Technology: The Performance Enabler

While not a cure or substitute for the above potential pitfalls, technology is an enabler of the improved performance management process in this new era of valuable two-way conversations. Indeed, the larger the organization, the larger the teams and the more direct reports, the more important and valuable technology becomes. At a minimum, it becomes a point of record. But more importantly, it leads to a wealth of information and insight that leads to continued employee, team, and organizational improvement.

Through the insight gained through data available via improved performance management and with the ongoing conversations as a foundation, organizations will realize numerous benefits:

• improved communication and alignment between employee and supervisor
• goal alignment between employees and organization and between teams and organization
• improved trust among employees and leadership
• improved employee retention
• better succession planning
• identification of training needs and opportunities
• better resource allocation
• reduced legal exposure

Keep the Good

But none of this will be accomplished if an organization simply ends the practice of performance reviews. Embedded within that dreaded practice is a wealth of valuable information, which can be obtained in a not-so-disheartening manner.

While it may be time for you to throw out annual performance reviews, don’t throw out the valuable insight that you can still obtain through new, ongoing conversations.

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