“Soooo, you’ve been here a long, long time. And your output has been pretty much the same for years. But, that’s sort of the problem, isn’t it? You just aren’t keeping pace with the times. See, we’re in the digital age now, and you’re not doing anything that we couldn’t still do with a typewriter and carbon paper… You’re like a time capsule from the 1970s. Plus—and don’t take this the wrong way—but nobody likes you. In fact, people dread you. They actually cringe when they find out you’re coming. Managers. Employees. Even Senior Management aren’t very excited about you. You had promise, Mr. Performance Review, but you’ve fossilized. You’re just not adding value around here. Something has to change.”
Perhaps you think I am being tough on that old standby: the annual review. But think about it. The performance appraisal is a lot like Stephen Root’s character (Milton) from the movie Office Space—bumbling around the office focused on the wrong things (his red stapler), getting the wrong information, and almost completely out of touch with reality.
It wasn’t always that way. There was a time when performance reviews were new and fresh and evolving to meet the times. The review had its genesis in workplace reforms at the turn of the 20th century, and was formed in the crucible of the labor and human relations movements of the 1920s and 1930s. In the 1950s, the federal government paved the way for the modern review with the 1950 Performance Rating Act and 1954 Incentive Awards Act for federal employees.
When the review first took its current form, it was a way of quantifying performance—and one that was badly needed in a changing workplace. It was a hallmark of modernity like the filmstrip, the mimeograph or a rotary dial telephone.
But do you see any of those inventions in the office today? Not likely. Those inventions changed with the times, taking advantage of the latest technology to reinvent and update themselves. By contrast, the review has changed little. Somewhere along the way it just became frozen in time—a dinosaur that just never seems to evolve.
More problematically, the old-fashioned review actually reinforces old-fashioned management techniques and—it has been argued by the Wall Street Journal, among others—actually does more damage than good.
The weakness of the annual review is not exactly a newsflash. It was already growing problematic in the 1990s, when a 1997 SHRM survey noted that only 5% of companies were “very satisfied” with the performance review process. Another 1990s survey by Watson Wyatt showed that only 3 out of 10 workers agreed that their company’s performance management system helped improve performance.
By the 21st century, in face of major advances affecting every other aspect of HR and how we do business, the problem has grown acute. WorldatWork’s 2007 State of Performance Management study found that only 5% of organizations would give their performance management systems an “A” grade. A 2009 Taleo survey showed that four out of five U.S. workers are dissatisfied with their job performance reviews and would like to see them better reflect their work, with 78 percent wanting to change some aspect of the review process. And in the SHRM/Globoforce Winter 2012 research report, 45 percent of HR leaders thought reviews weren’t good gauges of a worker’s performance.
Yet in most companies the antiquated review process remains the keystone of the talent management process. Some 51% of companies still conduct formal performance reviews annually, while 41% of firms do semi-annual appraisals, according to a 2011 survey of 500 companies by the Corporate Executive Board Co., a research and advisory firm.
Resting our success on such a brittle foundation—when there are real and powerful new alternatives—is becoming more and more risky in our current business climate. There are culture-killing flaws embedded in the traditional review’s system design that are steadily eroding the fabric of our organizations and preventing performance reviews from being effective. Unless we fix that structure, we put our companies in constant danger of performing “below expectations.”
So, how can we fix it? Can it even be saved? In my next post I’ll talk about what the specific issues are that keep the performance review from working, and we’ll address how technology can bring the review into the modern age.