7 Compelling Reasons to Dump Performance Reviews-and Fast

Performance reviews are an old staple of corporate America. We use them to communicate how an employee has performed in the past and how to improve. And did you know we’ve been doing it since the Industrial Revolution? 

Both the reviewer and the reviewed expend a great deal of energy and time in the review process each year, but are formal performance evaluations really the most effective tool to help employees become stronger performers? Does this process have a proven track record?  Evidence suggests that performance appraisals are not working and that they sink morale.   

Here’s what the research says:  

 1. Nobody likes the evaluation process. 95 percent of employees are dissatisfied with their company’s review process.  (Society for Human Resource Management) 

 2. Most employees are skeptical of the process as a whole. 90 percent do not believe the performance review process provides accurate information. (Society for Human Resource Management) 

 3. The evaluation process does not improve employee performance. 59 percent of workers surveyed said their approach to their jobs does not change at all after receiving feedback through a performance review. (Adobe)  

 4. Employees do not walk away from the review process encouraged or inspired. They feel frustrated. 66 percent of employees are strongly dissatisfied with the performance evaluations they received in their organizations. (CEB)  

 5. Most employees view the evaluation process as pointless. 65 percent of employees believe performance evaluations are not relevant to their jobs. (CEB) 

 6. Performance reviews cost the company a lot. On average $3,000 per year, per employee is spent on the performance review process when accounting for performance appraisal technology and time. Managers spend an average of 200 hours per year on activities related to performance reviews.  (CEB)  

 7. Most employees do not think the process is fair and the truth is–it’s not. 71 percent of American employees think their evaluations were unfair (Gallup) and research shows no evidence that supervisors hold back increases for their best performers and over-reward slackers. In fact, top performers are disproportionately over-rewarded and low performers are disproportionately held back. (National Bureau of Economic Research)  

Here’s what the experts say:  

“Performance reviews cement the bad, old idea that when someone is your supervisor, they sit on a higher plane than you do. That’s ridiculous. A supervisor in today’s Knowledge Economy is an orchestral conductor. The conductor keeps the orchestra together but doesn’t presume to tell the musicians how to play their instruments.” –Liz Ryan, CEO/Founder of Human Workplace and author of Reinvention Roadmap 

Management expert Marcus Buckingham even suggests “managers provide feedback and coaching on a weekly or bi-weekly basis.” If workers are given feedback only once or twice a year, it’s very difficult to recall the work that was completed, and it’s even more difficult to pivot in a timely manner.  

 Perhaps one of the largest problems with performance reviews is that they lack clear objectives. The purpose of evaluations remains ambiguous and there is no method for tracking incremental improvements. Strong workers get celebrated and struggling workers do not get the help they need.  

 Just because performance reviews are “what we’ve always done,” doesn’t mean they are of value or useful in the workplace. Consider that this may be a good year to dump the formal review process and consider a new course of action for providing feedback and coaching at your company.