A survey of SHRM members conducted in August indicates that although most organizations say that a performance management system is important to them, few think that their companies are doing a good job managing performance.  Given that having annual and semi-annual formal performance reviews is a key aspect of performance management in nearly all of these organizations, it’s no wonder that HR leaders don’t rate their organizations highly in this regard.

If these organizations want to improve their performance management systems, they need to eliminate formal performance reviews and have managers develop a learning alliance with their direct reports. The formal performance review, whether annual or more often, has failed as a tool for improving performance.

UCLA management professor Samuel Culbert has been very direct about the failure of performance reviews. Talking about performance reviews in an interview for NPR, he said:

They’re fraudulent, bogus and dishonest. And second, they’re indicative of and they support bad management…for employees, they don’t like getting them, and for managers, they don’t like giving them.

It’s amazing the staying power of this tool. I think executives are afraid to eliminate performance reviews.  They give managers a sense that they are in control, especially when they are responsible for a large number of direct reports that they rarely see in action. Doing performance reviews makes HR feel like it’s helping to identify the stars and weed out the low performers, which is their charge from management.

Performance reviews should be about learning and performance improvement. Otherwise, there is no EmployeesShakingHandsreason to do formal performance reviews. However, making performance reviews an effective learning tool is very difficult. Since learning is better when it is timely, waiting for a formal performance review is usually too late. Feedback needs to be at the moment of success or failure in order to have the greatest impact. And we know from research that positive feedback is more powerful than negative feedback, so if the intent of a performance review is to tell someone what’s wrong with what they’ve been doing, that won’t have as much impact on behavior as more frequent comments about what they are doing right and what they can learn from their successes.

Rather than doing performance reviews because that’s what you’ve always done, or because that’s what most other organizations do, or because you’re afraid of losing control, make frequent contacts between managers and their direct reports the source of feedback. Encourage them to learn together from their successes and from their failures. Make performance improvement an ongoing process, not an annual event.