If Performance Reviews are Doomed, What's Next?

Large tech companies have been leading the way to drop the costly annual performance reviews. The big debate, however, is about what will replace them.

Some of the negatives:

  • Employees across industries and countries dislike numerical ratings of performance.
  • The investment of time and resources to complete annual reviews is enormous. Having managers perform the reviews has failed to eliminate discrimination and bias.
  • Ratings focus on history, not development of the employee.

Companies that are changing the way that they deal with performance reviews are focusing on learning and development. Numerous internal apps have emerged to give peers and subordinates feedback in real time. However, this can be overwhelming just by the sheer volume of feedback a manager needs to pay attention to throughout the year. In the absence of performance ratings, managers resort to “shadow ratings” like pay levels to help guide merit increases.

No clear-cut solution to replacing the annual review has emerged yet and there are many challenges when exploring alternatives.

The debate continues about what will replace annual reviews. There certainly is a Performance Management Revolution as written about in a HBR article by Peter Cappelli and Anna Tavis.

Providing good coaching for employees so that they can learn new skills and develop is fundamental to the new approaches being tried. I think the question is, has there been a shift in training for managers to learn the skills to coach effectively?

Maybe that is what needs to happen next.

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