In the 1980s the General Electric CEO, Jack Welch, advocated a system of employee performance he called ‘rank and yank’. Employees were, on an annual basis, sorted and ranked; poisson curves were drawn as lines on a battlefield and employees found themselves promoted, rejected or forced to remain as they were and try again next year. Since then, the ‘dreaded’ annual review has been an intrinsic part of major organisations for nearly thirty years. Managers curse the inevitable deluge of paperwork and difficult conversations. Employees compete for promotion or fear unemployment. If this sounds familiar, rejoice! A revolution is underway.
Ditching the Employee Performance Review
In 2014 Microsoft, amongst others, set a trend by ditching their annual review process which, for many years, has primarily driven their employee attrition. Accenture, Deloitte and others have followed suit and General Electric, the company who started it all, have also started to move away from the model they first advocated.
That FTSE organisations have started to reject the annual review will come as no surprise to those who have endured it. Naturally the process drives unproductive competition amongst peers and the demise of good, productive employees, all based on the subjective and often outdated opinion of those either peripherally (and others intimately) involved in the day-to-day activities of the employee. Conversely, there are some benefits to the review process that need be retained – we still need to be able to rank individuals against competencies and role profiles to inform our internal recruitment processes and career-pathing. The question now remains, what do we replace the annual performance review with?
What is your company doing about it?
If the leadership team in your organisation is not already talking about revolutionising their performance process, they almost certainly will do soon. The benefits are clear: removing a time-consuming process potentially involving hundreds-of-thousands of staff, which has been deemed to be ineffective. You may have already introduced a new approach, but currently there is no consensus for how to replace the annual review.
Do we need a more agile approach to performance coaching?
At Voyager Solutions, we have been grappling with how to create a process that gives us the data we need to make decisions about promotions and improvement plans. One of the most common complaints about the annual review is that it is not timely – that is to say, when completing a 360 assessment, you are asked to think back across an entire year and draw out common themes, some of which may no longer be relevant. To us the answer is clear: talk frequently and combine freeform and structured discussions to draw conclusions and therefore supportive or mitigating activities.
This is the guidance we have given to our teams:
Discuss performance relating to individual deliverables. This might include feedback on a written report, comments on a presentation or praise for leading a conversation with a senior executive. A few words exchanged in an elevator can be as valuable as a structured conversation, but employees should be meeting managers to discuss performance in some way on at least a fortnightly basis.
Meet with your team individually on a frequent basis to discuss what has gone well or could be improved on since the last meeting. The manager should structure the discussion around the competencies the individual is mapped to, for example presentations, written communications, stakeholder management, coaching and leadership. Themes should be recorded with actions or interventions, such as training or coaching.
We recognise that people develop at different rates. That is why it is now in the power of the manager to recommend individuals for promotions when they are ready, rather than waiting for an arbitrary date. This ensures that employees are sufficiently remunerated for their actual performance in a timely way.
Our trial approach is now underway, but we’re keen to hear how you would deal with this issue. Please do contact us if you would like to discuss the performance review revolution.