Performance reviews are held to be a product of Theory X thinking (and all that went with that) and were famously criticised by quality guru Deming who said “The fact is that the system that people work in and the interaction with people may account for 90 or 95 percent of performance”
New research from CEB (reported in People Management) suggests that HR people are in agreement. Only 4% of them felt that performance reviews were effective.
And 42% of the 9,000 managers and employees surveyed across 18 countries said that “significant changes or a complete redesign was needed to improve their existing performance review processes” which were branded ‘backward-looking, inconsistent, and too complex‘.
There is a problem however. Ditching performance reviews can have a negative effect on productivity as Microsoft found. The survey also found that not only did productivity drop by 10% but that employees were more likely to leave and fewer employees thought pay rises were fairly allocated.
Less than 5% of managers said they felt able to manage effectively without a rating system.
The survey doesn’t say what was used to replace performance reviews but poor as performance review methods might be it appears that many staff and managers like a degree of structure no matter how unreliable.