Annual Performance Management Cycles: The Ups and Downs of Developing People
Recently, a number of large, high profile companies have said that they will be abolishing the annual performance review cycle. For those of us who have enjoyed, or endured, the process of gathering feedback from our (project) managers and having them reviewed by our career coach/counsellor or line manager, we have probably been through the ups and downs such a process can bring.
On the upside, mandating a process that requires us to get feedback (preferably both positive and developmental) on a regular basis each six to twelve months (depending on whether it is a semi-annual or annual cycle) means we are more likely to receive regular feedback that helps us to develop and grow in our careers. And if the process is tied to compensation and benefits, then we should, all things being equal, get closer to achieving or exceeding our goals providing the process is transparent and helps us understand where to focus our efforts. Of course, with feedback of any kind being a gift (it truly is, though that’s a separate topic for another day), it’s good to have either a pat on the back or an opportunity for improvement.
On the downside, if any of the parties (employee, project/line reviewer, coach/line manager) don’t actually buy into the process, they can pay lip service to any of the components that make up the process and depending on which party they are and how little they invest in the process, it can fail, even if it is a mandated process. For example, if a junior member of the team who has worked on three projects in a year gets one completed review, one very high level review and one review is not completed, the value of the annual cycle is pretty low anyway. If any of the parties do not truly understand how to set objectives, provide timely, appropriate feedback, then the process can also falter. And if any kind of performance distribution/bell curve is applied to the overall ratings, then even if every performer is a top performer, someone is forced statistically to be recognized as a “poorer” performer than their peers.
One of the immersive, experiential training courses I run is all about the topic of performance management, including how to effectively coach people and give feedback. I hear many horror stories about people being given feedback on incidents from two years ago even when there is an annual performance management process. I’ve also heard of people not having set objectives six months into a project. Believe me, I’ve heard all of the stories, and that’s without my own experience of having worked at Accenture and experienced it myself.
So, is this grand plan to abolish the annual review cycle a good idea? Popular in the professional services culture (especially in consulting) is the answer, “it depends” and that’s certainly the case here.
The Washington Post reported that by removing the annual performance review, it would "do all of its employees and managers an enormous favor”. Is this really the case? The promise of employees receiving timely feedback from their managers is one that would be needed in a system where performance is measured annually anyway. The employee completes a project over 3-6 months and then there’s a review of that work, prior to the employee repeating that process until they have the required number of project reviews to cover the annual period. Most of the value sits within the project reviews, but equally, most of the time spent running the process is in the project review process. So, just by getting rid of the annual element that brings together all reviews for each employee (and often gives them a rating) doesn’t really make much of a saving in terms of time. And, it might be argued that having a coherent summary view across a period of time would be a good way to measure someone’s performance, and the individual might expect to hear a consolidated view, too.
Let’s be clear, removing forced rankings is a good step and allows people to be measured against expectations rather than being measured against expectations and everyone else’s performance at that level/grade. Removing time consuming paperwork is key, too. That said, the annual process doesn’t have to be a administrative process. Often, it’s the systems that cause the frustration rather than the process of providing feedback and developing others. In my view, every manager should be expected to develop their teams. All staff should be required to give feedback to people they work with. And none of this needs to be a paperwork heavy process. Indeed, it can be really (honestly) light touch. Although there is often a purpose behind recording feedback in a system that serves the individual employee, their manager and the company as a whole, the value in the process is truly in giving feedback and developing the person. The rest should be light write up and where companies often get it wrong is that the system of record is the main event for the annual process and the provision of feedback, development and support becomes the brief, secondary activity. That balance is totally opposite from where it should be. We should be spending 90% of our time on developing others through feedback and coaching and 10% of the time (absolute tops) on recording that in this form, that form, the other system and so on. To look at it another way, if the hours spent on filling in forms and updating systems were actually spent on developing people, identifying areas for improvement, offering feedback on their strengths, coaching them on how to get to the next level, then the time investment would be repaid many times over because of the individual growth each employee would experience. Now that is a performance management process that is worth investing in, and, frankly, pays for itself in terms of the huge growth and development of individuals, increased end client satisfaction, reduced re-work, increased company share price, etc.
Deloitte’s new approach is testament to this; four simple questions (two binary, two open ended) reduce the administration significantly, without reducing the value of the information or the discussions that precede them. That said, at the time of writing, Deloitte hasn’t determined whether/how it will share the outcome of these questions with the employee that is the subject of the answers. That, to me, is ridiculous. As adults, we should be able to hear the feedback that is about us and in the event of these brief and binary question sets, we should get clear reasons as to why the answers are what they are. Without these, we are not giving individuals the opportunities to grow and develop. Instead, we’re just saying “you’re good” or “you’re not so good”. If I was on the receiving end of this, I’d like to know the answers to the (now only) four questions and I’d like some data and information to explain the “why”. There are other upsides to the changes Deloitte is introducing, including weekly check-ins with team members to help provide real-time feedback and guidance and, perhaps critically for the manager performing this role, it being part of his/her job, rather than in addition to it.
So, at a practical level, feedback given on the basis of a little though often will be more powerful. If I provide feedback 52 times a year, then I give the recipient of the feedback 52 opportunities to understand what they are doing well (so they can do it even more) and what they could do differently (so they can improve in these areas) and that’s much more powerful – and appropriate – than receiving feedback annually, or even 3-4 times a year. Plus, on-the-job feedback and coaching is more effective than giving someone feedback three months (or more!) after the event.
Each company will implement a process that they believe is right for them. Any performance management process can work well if it is implemented properly and it is based on sound principles. Shifting the focus from annual to quarterly project reviews doesn’t help per se, if the administrative side remains burdensome and perceived as more important than the act of giving feedback, coaching team members and developing people. It’s better to have a culture where giving and receiving feedback is the norm and documenting that is seen as a light touch afterthought (required to reduce corporate risk, etc.) than it is to have a solid, sturdy process that checks all of the boxes but fails to develop people along the way.
Rob Whitfield is the CEO and Founder of One Brit, No Bull, a corporate training and coaching company based in Los Angeles. Rob can be contacted here or on +1 5189 NO BULL.