Better than Year-End Performance Reviews

If you haven’t abandoned performance reviews yet, you probably have the same reason as Facebook: “Critics of performance evaluations have suggested that ratings automatically produce a fight-or-flight response,” their executives write. “Actually, many people have stronger reactions to not being rated.” 

On the other hand, if you’ve already abandoned reviews, it’s probably because your A-players thought they were subjective and counter-productive, demotivating everyone.

It’s possible to have the best of both worlds, and that’s where modern management appears to be heading. People like to know how well they’re doing, so periodic indications help them stay focused. Your A-players certainly want that, and so do your Millennials. A-players want to know where they stand so they can go above and beyond. Millennials, who now comprise almost 40% of the workforce, need frequent feedback so they know they’re making the right contribution.

On the other hand, Millennials and post-recession employees in general need to feel trusted, valued, and respected, and the formal performance review process seems to undermine that work environment.  It’s nearly impossible for management to avoid seeming judgmental, and it probably is impossible for management to avoid accusations of favoritism, even if they can prove that they evaluated everyone in exactly the same manner.

The solution lies in your understanding of progress.


A recent HBR article that’s stirred up plenty of interest was entitled, provocatively, Let Your Workers Rebel. To encourage creative contributions, it’s authors assert, managers need to back off a bit and loosen their processes. Workplaces tend to reward conformity, and conformity tends to dampen originality. “Let employees solve problems on their own,” they recommend, “Leaders can encourage authenticity by allowing workers to decide how to handle certain situations.”

In today’s economy, moving and changing at breakneck speed, creativity matters more than ever. The authors suggest that relying upon leadership to come up with all the good ideas not only doesn’t work, it’s also boring for your best employees. Today’s “authentic” work experience respects everyone’s ideas and actively asks for them because they’re a business resource management’s already paying for. Leave them on the table, and your employees have less confidence in your company. Seek them out, and they’ll bring you more.

As this psychology spreads through the business world, the obvious risk is dissipating focus. It echoes the performance review conundrum. A traditional performance review evaluated how well someone followed a process. That’s the opposite of encouraging originality and creativity, but it did insure that management knew exactly what the employee was up to. In the absence of the review, it’s easy for management to lose that certainty. Something has to replace the “process.” There need to be boundaries. “To be successful and evolve,” the Rebel authors explain, “organizations need to strike a balance between adherence to the…rules…and the freedom that helps employees do their best work.”

Twenty years of business consulting across dozens of industries and countries has taught us that the best way to define those boundaries is with a project or an objective metric, and the best way to engage people is to hold them accountable.


Starting with engagement, today’s employee needs to do “meaningful work.” Some executives overthink this concept; at its most fundamental, “meaningful work” means contributing to a company that ought to exist. Today, with low unemployment enabling workers to change jobs easily, you can assume that your team members are with you because they think your company ought to exist, and that they think what they’re doing is meaningful.

That leaves you to make sure what they’re doing is also “work.” Those are the boundaries. Projects and objective metrics become useful in this regard, and they can also address the performance review problem. Projects and metrics can give people a clear sense of how their work contributes to the company’s success. And both can be measured — objectively, with data — to show how much progress has been made.

This lets you eliminate the need for traditional process-oriented performance reviews. Replacing them with frequent measurements satisfies those people who need to know where they stand all the time. It vastly reduces the appearance of subjectivity when it comes to evaluations. And most importantly, it gives people the sense that they’re making progress. “The more frequently people experience that sense of progress,” HBR explains, “the more likely they are to be creatively productive in the long run…everyday progress—even a small win—can make all the difference in how they feel and perform.”

That’s the progress principal, and believe it or not, studies show that daily progress — no matter how small — impacts an employee’s sense of well-being as much as being recognized for excellence in the presence of his peers. Combining the two can be even more satisfactory for all involved; an internal study done by IBM found that “the engagement level of employees who receive recognition is almost three times higher than the engagement level of those who do not.”

So if you’re on the fence regarding year-end performance reviews, you might look past them and think about 2017 as a whole. Rather than review an employee’s performance last quarter, you might choose to set them up so they can progress confidently and successfully through the next.