HR Management

How Year-Round Development Is Replacing the Formal Review

The idea of replacing the formal employee review with a 2.0 version has been a growing consensus in HR over the past few years. While most companies still have an employee review process, it’s true that traditional annual reviews have long been on life support.review

That doesn’t mean companies have given up on performance management: It means their performance reviews have just gone to a better place – the cloud. Data is replacing the traditional review, in the form of cloud technology.

For a process that began with typewriters and carbon paper, it’s a profound change. But performance reviews have been fatally flawed from the start. Ever since their rise in the mid-20th century, even our best-performing employees have dreaded them. They were always a necessary evil—the tax they paid annually in order to find out whether they’d gotten a raise or a promotion, or were on thin ice.

Managers were never fans either. They stayed up late at night racking their brains to try to assess performance that stretched back a year, or trying to find examples to support their gut feelings. HR probably hated the process the most, tasked as we were to shepherd a process everyone hated.

Over time, we tried to fix a broken problem by laying processes on top of reviews. We standardized them. We made them more frequent. We put in rating systems. We added goals to measure against. We compared reviews in stacks. We looped in values and objectives and metrics.

None of it seemed to help. The reviews were still emotionally hard on everyone. And even worse, they didn’t seem to be having much impact on our teams and performance.

Here are a few of the problems with the traditional review:

  1. They were impacted by the recency bias, which meant that a few weeks of performance could color the whole year in the minds of managers
  2. They were also biased because they came from only one perspective
  3. An annual review meant time was lost when employees could have been fixing an issue.  And, in not knowing and being able to fix that issue, by the time of the annual review, it could have become insurmountable.
  4. Employees could feel blind-sided when hearing something for the first time, sometimes months after the original event
  5. The presentation of positive and negative feedback at the same time meant that positive feedback was often not “heard” by employees

Performance Review as a Wave of Light

In the world of science, people who are way smarter than me tell me that light is a particle. We can take a snapshot of a photon, that particle of light, and prove that like a traditional performance review, it happens in a single place at a single time.

But light is also a wave. It is a constant stream of illumination that exists in many places and times, and is flowing and interconnected. It all depends on how you measure it.

Performance reviews are like that too, and this is how they are evolving.

Reviews were born in an age of typewriters, but now we live in the world of data and the cloud.  Whole new worlds are opening for us with these tools, and how we measure is transforming how we think.

In the past, we asked managers to treat employee reviews like a particle, writing a report once, or maybe several times in a year, to map performance to desired goals. But now, with our ability to constantly manage and record data, we are able to think of performance management as a wave, happening constantly.

It didn’t happen automatically. What’s enabling this change, specifically, is the advent of performance management. Coaching and feedback software that lets managers give feedback and recognition right when it happens, from anywhere and at any time. We augment this feedback by aligning it to our coaching plans and company values and goals.

We also triangulate against peer feedback, learning and development activities and company metrics.  We gather all this data—all these particles— and they turn into a wave.

Adding a Wave Mentality to Performance Reviews

Each particle of data combines with the rest to form a powerful beam of light that illuminates the full picture of employee behavior and performance in a way that typewriters and carbon paper never could.

And like light, this sort of always-on performance review can still be “snap-shotted” for the purposes of measurement at “review” time for raises and promotions. But now instead of one annual data point, we have hundreds or even thousands of particles to show us a more complete picture over time.

We can now use software to capture:

  • Employee feedback
  • Check-ins and 1:1s
  • Employee recognition
  • Peer feedback and recognition
  • Coaching plans
  • Succession and development plans
  • Employee responses

Does this solve the problems of the past? The short answer is yes. It can help a lot.

The collection and convergence of so many data points vastly reduces the chances of human error or cognitive bias, which makes reviews more accurate. Having a constant flow of back and forth feedback can limit any sense of surprise for an employee—since they always know how they are doing.

It also removes reviews from a vacuum. We can now aggregate one employee’s data with a team or company, to see larger patterns and address them on an organizational level.

The Benefits of a Cloud and Wave Approach to Performance Management

  • Feedback can come exactly when it happens, which behavioral scientists tell us is key for it to be effective
  • Negative and positive feedback can be separated and therefore more impactful
  • Managers can address performance issues before they snowball
  • Employees are never blind-sided (no surprises, as per above)
  • Additional perspectives can be added to potentially eliminate a single point of failure
  • Objective information such as metrics and coaching activity can be weighed in, to balance more subjective impressions
  • Feedback is constantly and objectively captured and not subject to the recency bias or other cognitive biases.
  • Everything is recorded as it happens, and not reliant on (often faulty) memories.

So, is the performance review dead? I’d say no. Like a caterpillar, it has used HRIS technology to evolve into something far more powerful, and—in the end—something far more effective for measuring and affecting employee performance.

Ted Power Ted Power is the Chief Customer Officer at iCoachfirst. A trusted adviser in the field of talent management and employee coaching, Ted advises organizations including GlaxoSmithKline, Merck, Sanofi-Aventis, Johnson & Johnson, Panasonic, and the U.S. Military (Army Rangers). Connect with him on LinkedIn or on Twitter at @iCoach1st