The annual performance review is one of the most ubiquitous features of working in corporate America. A vast majority of companies do some version of them, tasking managers with rating employees numerically Anyone who’s been through the process, either producing or receiving such evaluations, can testify to how unpleasant it is. It’s fundamentally uncomfortable to either have a year, or many years, of work reduced to a number, or to do that to somebody else.
The Washington Post’s Jena McGregor reveals that in addition to being frustrating, traditionally performance reviews can be incredibly ineffective. High ratings don’t necessarily correspond to high performance, and they have been found to restrict creativity.
She spoke to former Medtronic Chief Talent Officer Caroline Stockdale, who helped her company get rid of its traditional performance measurements. She was incredibly critical of the way most companies go about trying to rate and motivate employees.
“Ratings detract from the conversation,” says Stockdale. “If an employee is sitting there waiting for the number to drop, they’re not engaged in the conversation, at best. At worst, it can actually make them angry and disaffected for a period of up to a year.”
Despite an increasing consensus from social scientists that these ratings demotivate people, few companies are willing to take the leap and change.
“This is one of the sacred cows. The typical performance review system doesn’t work because you’re demotivating half your population, poking them in the eye with a sharp stick.”
Instead of setting real goals or improving work habits, these evaluations alienate a large portion of employees, and make others complacent. They’ve mostly stuck around due to organizational inertia, or because companies want a number and paper trail to point to when they fire people to avoid lawsuits.
A better way to motivate people is to integrate continuous feedback, and have conversations instead of a yearly ordeal. These sorts of reviews keep employee feedback from reaching the leaders of an organisation. More companies, particularly startups, are choosing to use different measures of performance and give feedback in real time.
These assessments are antiquated holdovers from before the digital age, and need to be replaced.
Business Insider Emails & Alerts
Site highlights each day to your inbox.