Fire Your Performance Management Process

Wharton Speaks Up Against Annual Reviews

In a recent article titled “Should Performance Reviews Be Fired” Wharton Business School’s in-house publication outlines a comprehensive argument on the history of annual reviews and their ineffectiveness. Citing numerous experts, from Dan Pink to Jeffrey Pfeffer, the authors explain that “performance reviews typically are not done often enough, [or], are all too often, done poorly”.  According to Wharton’s experts, the performance management process has 5 main problems:

1: Frequency: This is the main issue, says professor Peter Cappelli. “If you wait a year to tell employees how they are doing, they are almost always surprised and unhappy if the results are not positive”.

2. Timing: Capelli and others point to rapid changes in the way work is done as compelling evidence for tackling the yearly review problem. Experts agree, in a real time world, it just doesn’t make sense to have annual feedback.

3. Connecting rewards to pay: John Paul MacDuffie describes how organizations seem to “want to allocate rewards according to performance and merit” but this causes a friction between the feedback employees get, and how they improve. Matthew Bidwell explains, “employees, for their part, are looking for frank, honest and helpful feedback, but know that if they don’t use the review time to pump up their performance, they might not get the top bonus or best raise.

4. Lack of Value: Samuel Culburt explains that reviews create distrust between employees and managers, and encourage employees not to speak about problems they see incase their comments negatively effect their career progression.The process is looses its value when there is not trust, because the communication is insincere. Dan Pink builds on this argument, describing reviews as “highly stylized rituals in which people recite predictable lines in a formulaic way and hope the experience ends quickly”.

5. Who Owns Feedback: Wharton explains that since reviews falls “under the auspicious of the human resources department, [the] focus is on getting review completed – 100% compliance – and not on their quality. While managers are in a better position to give frequent feedback, most managers don’t get the training they need to deliver effective appraisals.

The Solution?

Wharton points to frequent feedback as the answer.

They cite Rypple’s “small continuous loops, done in real time” as an innovation in replacing traditional review. By combining recognition, coaching, and feedback teams can set goals and help others achieve them by having collaborative, one-on-one meetings – much more valuable then the Kabuki theatre Dan Pink describes.

Joe Cruz, senior IT project leader at Wharton, explains how his team has been using Rypple. Cruz and others in his division “set up teams on the Rypple site with relationships built in. So I am directly connected to three people on my team. We can provide to-do lists, goals and feedback about each other’s performance. We use Rypple to drive our biweekly, one-on-one discussions and monthly group meetings. Because Rypple’s communication system is separate from all the emails we get, there isn’t as much noise in the experience. It can help filter out unnecessary information and keep us on track.”

Wharton ends their discussion by reaffirming the importance of having feedback at work, and the dire need that many teams face in finding a better way to do this.

“Despite criticism of performance reviews from all sides, very few experts would suggest throwing [reviews completely] out. According to the Sibson Consulting/WorldatWork survey, “an overall performance management process — one that focuses on goal setting, feedback, coaching and clear statements of the company’s performance expectations — is absolutely critical” and indeed, is found in the highest-performing companies, says Insler”.