Georgia Murch explains how, by ditching annual performance reviews, organizations can finally press their foot firmly on the accelerator – and achieve progress
Research and costing from Deloitte reveals that an annual appraisal for its 65,000 staff took 2 million hours. Expedia says it mostly wanted to ‘rehumanize’ the relationship between employees and bosses. A recent PricewaterhouseCoopers study conducted in Australia showed that 81% of companies had performance management systems that were only “somewhat effective” at achieving their goals.
Global software giant Adobe estimates that their annual performance reviews were costing them 80,000 hours of managers’ time each year, the equivalent of 40 full-time employees. And after all that effort, internal surveys revealed that employees felt less inspired and motivated, and staff turnover increased.
Increasingly, progressive companies are recognizing this. There are now more than 30 leading companies ditching performance reviews in place of feedback cultures and regular check-ins. Adobe led the way, soon followed by Juniper, Accenture, Microsoft, Deloitte, Zappos, Expedia, Dell and GE.
It’s no surprise that these companies are the ones that attract the best and brightest employees, as they are receiving the feedback they need and deserve, and improving themselves and productivity as a result.
Why don’t we implement powerful feedback cultures?
There are four main reasons that get in the way of leaders and organizations creating these cultures:
1. Organizations don’t muster the courage to invest in their people and culture. They are stuck in the 1940s, and they just don’t get it. They fail to acknowledge that their biggest assets are not their products or services, but their people. As a result, these are not high-performing companies.
2. People think the change will be too hard and too disruptive. Creating a cultural shift requires effort, but without the investment, there will be no change. It’s like the frustrated lumberjack who continues to use a blunt saw to chop down the trees. He decides he doesn’t have time to stop and sharpen it. Yet all he is doing is making more work for himself.
3. We blame the organization and its leaders for failures in feedback and get stuck in what I call ‘the blame trap.' Getting stuck in the blame trap means we blame others, organizations and leaders, and do not take any responsibility ourselves. It’s not a healthy space, nor does it allow anyone to move forward.
4. We think that ‘robust’ biannual or annual performance reviews will be enough. They won’t. In fact, the Corporate Leadership Council tells us that when informal feedback, given outside the formal review process, is delivered well, it can improve productivity by nearly 40%. It’s pretty compelling how well conversations outside the performance review work.
It’s time to move to the future
The concept of ‘performance management’ was introduced about 60 years ago as a means to determine the wages of an employee based on their performance. It was used to drive behaviours to generate specific outcomes. When employees were solely driven by financial rewards, this tended to work well.
In the late 1980s, not all employees felt rewarded, nor motivated, by financial gain alone. Many were driven by learning and the development of their skills. From here, performance management started moving into more frequent monitoring and reviews with a focus on regular feedback outside the formal review process.
As organizations put more regular conversations into the mix, there was a notable improvement in productivity and employee engagement – when the conversations were handled well. This still meant that the onus was on the person giving the feedback rather than the person receiving.
Organizations that are in touch with the now – the high-performing organizations – exist where all employees, not just the leaders, are being taught how to give great feedback and also how to receive feedback with equal candour and grace. Organizations that do this are in their ‘feedback flow.’ But there are far fewer that are gaining this as their competitive edge.
BRW cited that one of the important factors in creating these high-performance workplaces is that ‘the bosses saw issues from the employee’s point of view, and gave meaningful feedback and information.’ I know this to be true, as I work with many of them, and they are committed to improving the quality of their conversations. Then they improve collaboration with each other, and their customers, and drive better strategies and relationships. The great companies get it. No wonder they are becoming the places that employees flock to and stay with.
So, if we want to remain not only competitive, but ahead of the game, we need to move into the future and have feedback become part of our everyday tasks – part of how we flow. Creating a feedback flow is how progressive and competitive organizations get things done and create happy, fully engaged employees and customers. It is where we reverse the push of giving feedback and add to it the pull of receiving it, and alter systems to create an even flow.
We need to make the changes to not only get ahead, but to stay there. Fixing feedback is about creating a cultural cadence. It’s more than feedback training. It’s about creating a self-sustaining flow that feeds itself and becomes effortless.
It’s about moving to the future. The onus is on both parties: one to deliver the feedback in real time and the other to receive it well in the moment. The outcomes of this include:
- Eliminating dependence on performance management systems
- Significantly improving productivity
- Creating a culture of accountability and commitment
- Evolving authentic transparency and openness
- Allowing individuals to own their own development
When we create a frequency of accountability that feeds itself, giving and receiving becomes an inevitable part of the way you do business. You and the organization are in your flow. You and your people become remarkable, and no one can stop talking about it.
Georgia Murch is an expert in teaching individuals how to have the tough conversations and creating feedback cultures in organizations. She is the author of Fixing Feedback and a highly engaging speaker.