The big boys have done it.
Juniper, Adobe, Deloitte, Accenture and Cigna have all done it.
And even General Electric (GE) – the one that popularised Performance Ratings – have all thrown Performance Ratings out the window.
So why are all these large organisations ditching performance ratings? The more important question you should be asking yourself is : “Should you ditch performance ratings also? Will it work for you?”
Here are 3 reasons why some large organisations decided to ditch Performance Ratings:
1. Nature of work
Our work has become global in nature. We are getting increasingly involved in multiple teams that often are spread around the world. We are doing and getting in work that our managers don’t see and perhaps don’t even understand. So how can managers know what performance ratings to give the employee when they don’t fully understand what each employee does on a day-to-day basis?
2. Collaboration undermined
As they say, “The sum is greater than its parts”. Collaboration in teams has been undermined by performance ratings. This is because in a performance rating system, all employees are “forced” to fit the curve (aka Bell Curve). In other words, if you have a team of 10 excellent performers, you will be forced to reward only 1 or 2 for excellent performance. The rest would have to settle for lower ratings. This often leads to increased internal competition, where employees compete with one another and undermines team collaboration. It also leads to increased hostility between individuals and this undermines collaboration.
3. The world is changing too fast
Spending time once a year to do performance ratings for an employee is no longer effective in today’s fast changing business environment. It is a VUCA world we live in today and in order for organisations to thrive, they need people who are agile, flexible and adaptable. People who can learn, unlearn and relearn in a constantly changing and shifting business environment. Once-a-year performance rating is no longer able to keep up with the constant changes. What is needed is a constant and regular review of an employee’s performance throughout the year.
So should you throw out your performance rating system too?
We need to keep in mind that what suits these big boys like Accenture, Deloitte, Cigna, etc does not necessarily suit your organisation. No two organisations are alike and it would be premature to jump on the bandwagon by throwing out your current performance rating system.
What you should do instead is to take a good hard look at your current system and determine what needs to go, what needs to change and what needs to continue.
Here are some questions you might wish to ask yourself when you review your current process:
1. Do you need to increase the number of reviews per year per employee?
2. What would be the ideal number of reviews per year per employee?
3. Do you need to get different people involved in the evaluation process, so as to give the employee a fair rating?
4. How can you simplify your current performance rating system so that your employees can adapt to the fast changing business environment?
5. What can I do to make the current process more equitable and fair for the employees?
The bottom-line is you should not hastily ditch your performance rating system. Take time to review and improve on your current processes. One thing you could implement straight away is to have more regular reviews between managers and employees. Once a year review is grossly inadequate and this should be thrown out. Your employees will thank you for it.
About the Author
STEVEN LOCK is a Speaker, Trainer, Author and a Leadership Coach. Steven brings with him two decades of corporate experience.
Steven is passionate about helping organisations transform their teams into high performing teams. He does that by first helping organisations identify and hire the right people, and then training their leaders and managers on how to manage and lead their people to achieve peak performance consistently.
He is the developer of The CAAP® High Performance Model. This model focuses on Culture (cultural fit), Attitude, Aptitude and Personality dimensions of their employees and job candidates. It is a highly practical, effective and proven approach. Steven believes that for organizations to be truly successful and perform at their highest levels, they need to shift their mind-sets to having the RIGHT people on-board – and not necessarily the best or the brightest.
Steven is the Author of two books:
• “Hiring for Performance: The CAAP® Model to Hiring and Building High-Performance Teams.”
• “The Right Talent: The Agility-Focused Interviewing Approach™ to Hiring the Right Candidate Every Time.”
He is also the developer of The Leadership STYLE Report™ that is based on Dr. Daniel Goleman’s research on leadership styles.
Steven has been featured on MediaCorp’s live radio show The Breakfast Club on 938FM, and has contributed numerous articles to Singapore Business Review, ST Recruit, SHRI Human Capital and other publications. His comments on Team Collaboration was quoted in the Spring 2014 Edition of the Harvard Business Review OnPoint Magazine.
Steven holds a Master of Business (Information Technology) from Curtin University of Technology, Western Australia. He is a certified DISC & MBTI® (Step I & II) practitioner.
Recently Steven was invited as a guest speaker to share about his CAAP(R) High Performance Model with over 600 delegates at the Vietnam HR Summit 2016 in Ho Chi Minh City.