Performance reviews have been part of the annual Human Resource (HR) cycle for many years. In theory, they represent an opportunity for management to discuss the performance of employees on an ongoing basis. However, performance reviews have been notoriously an event which evoke anxiety in employees and a certain level of discomfort for managers. Because of this, they have been something which are subject to avoidance and procrastination. HR often ends up playing the role of “performance appraisal police” to ensure managerial compliance in performing this annual ritual.
There are three basic functions which appraisals play in the performance management process. First, they are a basis for administrative decisions such as bonuses, promotions, and raises on one hand, and discipline and termination on the other. Since these decisions are often difficult, it is no wonder why these uneasy conversations are prone to being put off. From the manager’s perspective, it is uncomfortable to evaluate others. Even if the evaluation is satisfactory or positive, from the employee’s perspective, it might not be good enough especially when a bonus might be riding on the outcome. Plus, it is uncomfortable hearing others point out our deficiencies. When management does not have sufficient training in conveying feedback, then it might not be delivered in the most tactful or constructive manner.
The second function of performance appraisal is for employee development. This is an opportunity for a manager to sit down with an employee to discuss performance. This might include if any additional resources might be provided or impediments removed. It might also be a way of identifying training or other professional development opportunities that might support the employee.
The third purpose of performance appraisal is to serve as a data metric to assess how well the organization’s selection decisions have been faring. For example, if those who had been selected based on a high interview score ultimately perform on the job at high levels, that demonstrates that hiring decisions have been by and large effective.
Based on reasons most linked to the challenges associated the first function mentioned above, some notable organizations like Netflix, Adobe, and Deloitte have reinvented their performance management system. A recent article published by the Society for Human Resource Management describes this recent paradigm shift and the reasons for it. One of the other premises behind this is the evolution of work. To think of performance as adhering to a static annual period after which an evaluation is recorded represents a certain disconnect. If an appraisal takes place every year in December, situations which happen in January may not be able to wait until the end of that year. In addition, communication in life and in organizations is shorter and constant. So, it makes sense that the performance management process is indicative of that reality. For these reasons, many organizations have shifted to more periodic check-ins. In a sense, this places more of a short-term responsibility on managers. But, in the long run, it might make the end-of-year conversations to be less fraught with surprises.
As an HR professional and professor of UMBC’s Masters of I/O Psychology at USG, I was asked to discuss the evolution of the performance appraisal on Maryland Public Television. In my interview I discuss how HR needs to shift from a “transactional” emphasis toward one of “talent management.” HR should be seen less as a gatekeeper for functions like payroll and benefits and more of a facilitator for career development and workforce planning. Watch the video to learn more.