6 Reasons To Ditch the Annual Performance Review

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Aaah … the annual performance review.

How many annual performance reviews have you participated in in your career?

How many performance reviews are you responsible for writing each year? (Which is another way of asking about your direct reports I guess).

From what I can see, the ritual of the annual performance review is going strong across higher ed. (And here I’m talking about staff, not faculty - as faculty evaluation is a different kettle of fish).

Huge surprise I know - but it just may be that our thinking in higher ed is lagging behind the rest of the world. For your reading pleasure I’ve copied a few links from stories of why and how the corporate world is abandoning the annual performance review (see below). These articles may be good reading for your next HR retreat.

6 reasons why higher ed should at least consider ditching the annual performance review:

Reason 1 - Time:

How much time is spent on your campus each on year on performance reviews? At Deloitte, that figure was about 2 million hours per year - one the reasons why this company got rid of the practice.

Could it be that the ritual of the annual performance review began when work time was less scarce? Today, our days are so full of meetings and e-mails and other collaboration opportunities that we end up doing our “real” work (focused non-interrupted work) during nights and weekends.

We should be brave enough to carefully assess if the tasks that we engage create a reasonable return on effort. We should be willing to cancel some regular meetings, spend less time on e-mail, and maybe (just maybe) re-evaluate if the opportunity costs of all the time spent on annual reviews are justifiable.

Reason 2 - Learning Theory, Intrinsic/Extrinsic Motivation, and Compensation:

The problem that I’ve always had with performance reviews in educational settings is that they don’t conform to what we know about either learning or human performance. Internal motivation is a much better predictor of performance than extrinsic rewards. Extrinsic motivators, such as ratings on an annual performance evaluation, can actually de-motivate performance. They can cause people to play it safe - or worse yet try to behave in ways that will achieve a certain outcome on the performance review rather than the best outcome for the organization.

Connecting summative ratings on performance reviews to compensation is a particularly bad idea. How do you feel if your performance is judged inadequate to deserve “extra” compensation? Will you be more likely to question the methods that created this numerical rating, or to somehow change your behavior so that next year you are eligible for the raise? Nothing kills the development of intrinsic motivation faster than linking a performance rating to compensation decisions.

Reason 3 - Averages and Strengths:

The scoring of every individual annual performance review is always done against some notion of the average employee. You are either better, the same, or worse than this mythical average. Rankings may not be explicit in the measures, but they are always implicit.

The problem with judging people against “the average” is that this method ignores individual strengths. What we want from the people that we work with is that they bring unique strengths to our work, and that they are able to play to those strengths.

Reason 4 - Teams and Projects:

Individual performance evaluations are just that - individual evaluations. The problem with this method is that we don’t work as individuals - we work as teams. How much work do you do that is completely alone? How many projects do you undertake where you do all the work?

We would do much better to evaluate how well our teams and projects are doing, rather than stick to the fiction of the individual performer. These team and project evaluations should not be annual affairs, but a regularly baked in part of the work. Evaluation and assessment are key to continuous improvement. We need to get much better at measuring and than evaluating our work together. The key is getting both the right unit of analysis (team and project), and the right tempo of evaluation (continuously).

Reason 5 - Risk Taking:

Every higher ed leader talks about the importance of risk taking. Every president and provost will say that we need to get more comfortable with trying new things, with failing quickly, and from learning from failure.

Our performance evaluation system, however, goes completely against the push to get comfortable with risk. Particularly in higher ed, where there is not all that much room for career mobility, the downsides of failure will be much bigger than the upsides of success. A great performance review may net you a small raise, where a bad review can derail a career.

Reason 6 - Forward Looking, SMART Goals, and Black Swans:

A good annual performance review is at least 80% forward looking. They seldom are. Instead, the most recent events (those that stick in the memory) tend to dominate the discussion.

The new fad in performance reviews is to set SMART goals. (Specific, Measurable, Achievable, Results-Focused, Time-Bound). The problem with SMART goals is that our success in work is mostly determined by how we react to unexpected circumstances, rather than the degree to which we can make and stick to a rigid plan. Flexibility, creativity, and a positive orientation to challenges are the key drivers of success. Nor can SMART goals account for the Black Swans that will truly determine if our institutions thrive or stagnate.

All of this is not to say that we should move away from evaluation and assessment. Quite the opposite. We need to evaluate, assess, and adjust continuously. A good project leader and/or manager is constantly giving feedback.

We should all be setting goals, and communicating those goals to our colleagues. We should push for, and welcome, whatever 360 degree feedback we can get.

The question is can we get the benefits of evaluation and assessment without the costs and unintended consequences of the annual performance review?

This is a question that, given where the corporate world is going with the annual performance review, is at least worth discussing on our campuses.

Articles on Rethinking the Annual Performance Review:

Why More and More Companies Are Ditching Performance Ratings

HBR, 9/15

More U.S. Companies Moving Away from Traditional Performance Reviews

Washington Post, 8/15

Why The Annual Performance Review Is Going Extinct

Fast Company, 9/15

Dread Performance Reviews? This Company's Getting Rid Of Them

Huffington Post, 7/15

Why Employee Performance Reviews Are So Old School