2010 is the year that annual performance accelerated their inexorable path to “old antiquated idea that used to make sense, but doesn’t now”.
Enlightened companies know it. And they know why. It’s the same reason these companies are leading the way out of the recession.
Enlightened companies view their people as star players at the core of the company’s achievements. Players, not tools, who deserve to benefit and learn from real-time feedback and information.
For many workers, it used to be a luxury to enjoy anything more than financial fulfillment from a job. Now, for the best workers, satisfaction is a reasonable expectation. The enlightened companies don’t mind, either. In building structures that enable employees to pursue their dreams, they create ecosystems that support individual contribution and out-of-the-box thinking. Smart companies like Zappos, Netflix, Southwest, jetBlue, Joie de Vivre Hotels, HubSpot, Mozilla, Rackspace, and LiveOps have benefited from encouraging and rewarding personal autonomy and mastery. They want to build post-modern business cultures. They know that fulfilled employees produce innovative products and satisfy their customers.
Of course, enlightened leaders have figured out how to deploy technology in amazing ways. They have reduced and even eliminated costs that obstructed investment in hard-hitting competitive strategies. They’ve used technology to enable employees to perform more effectively — to consider how they can find more meaning in their work.
The traditional performance review just doesn’t work in this scenario. Annual, or even semiannual, meetings can’t expose the information employees and managers need for gauging contributions and rewarding them in real time. Annual reviews drag a company down with their forms and evaluations. They inhibit communication. Worse, they leave results and achievements open to interpretation, whether it’s forgetfulness or subterfuge. As Dan Pink recently wrote
…performance reviews are rarely authentic conversations. More often, they are the West’s form of kabuki theatre – highly stylised rituals in which people recite predictable lines in a formulaic way and hope the experience ends very quickly
In his book, Get Rid of the Performance Review!, Samuel Culbert, the UCLA professor, challenges companies to remove the subjective aspect of reviews and focus on measurable results. He’s for a balance of power that holds everyone in the relationship accountable for both failure and success. And success means more than dollars. It means a working, motivated, fulfilled team. I think it will mean more meritocratic, and therefore more competitive, businesses.
Performance reviews don’t make sense in environments that already use real-time technology to produce and ship goods or provide services. Especially when we have tools that enable ongoing conversation about activities and results. Especially when we have social technology.
Social technology in the workplace is different from social networks, although they have taught us a great deal. Social technology in the work setting connects the employee to the manager, the job to the business, individuals to results. This is beyond automating manual tasks and producing mounds of data. We can produce rich information about how and why an employee performs. Without the shackles of hierarchies and with the full support of management.
Gary Hamel wrote this recently in The Wall Street Journal:
In the years to come, a company will be able to preserve its freedoms only if it embraces a new and more enlightened view of its responsibilities. Many CEOs have already resigned themselves to this new reality, and a handful have eagerly welcomed it. There are others, though, who still cling to the belief that a company is first and foremost an economic entity rather than a social one. Sooner or later, these holdouts will discover that they face the same hard choice that confronts every teenager—drive responsibly or lose your license.
A social entity studies how people interact and get stuff done. People. Employees, managers, customers, regulators – all stakeholders in the company’s success. The behaviors associated with each role might be different, but you find the opportunities for productivity in the interactions between these stakeholders. Companies have the tools – right now – to be more transparent, communicative and collaborative. To enable the stakeholders to coach, get and give feedback, recognize each other.
People have been advocating this for years. W. Edwards Deming, the eminent teacher and corporate advisor, called the annual performance review one of the seven deadly diseases afflicting business. Now we have the technology to capture, report and celebrate accomplishment as it happens. We can study performance information in context. We know where we stand.
In 2011, the performance review will finally become an old acquaintance that we can fade away into irrelevance. It was good for its time, but its time has passed.