Rethinking the performance review

Illustration by Angela Keoghan
How – and why – Deloitte’s decided to radically revamp its performance appraisal system

On a recent Saturday night raging it up in my pyjamas and reading the Harvard Business Review for kicks, I came across an article on Deloitte’s new performance appraisal system

Now, there are countless things I loathe in life, feijoas being a principal one. But when it comes to the workplace, high on the list is the review process, not least because trying to rate myself out of five when I am clearly at least a six, is impossible. 

Unfortunately, as Mary Jenkins, co-author of Abolishing performance appraisals: Why they backfire and what to do instead, points out, the whole idea of not doing them is almost seen as irresponsible. So performance reviews are likely to be here to stay. 

But how we do them could be about to change.

“Deloitte discovered conducting performance
reviews for its 65,000-odd staff took two million hours a year. ”

Many moons ago, Michael Mount, Steven Scullen and Maynard Goff did some research involving almost 4,500 managers being rated on three performance dimensions by two bosses, two peers, two subordinates and themselves. 

Based on this, Mount, Scullen and Goff concluded (in the book How people evaluate others in organisations) that, “Although it is implicitly assumed that the ratings measure the performance of the ratee, most of what is being measured by the ratings is the unique rating tendencies of the rater.

“Thus ratings reveal more about the rater than they do about the ratee.”

Image courtesy of Shutterstock

Deloitte, ahem, rated this research and, crucially, discovered conducting performance reviews for its 65,000-odd staff took two million hours a year. (It is a financial consultancy firm after all.)

The April 2015 Harvard Business Review article details how the company is starting to turn the system upside down, revolutionising the manager-employee review process to save money and ensure the company isn’t capturing what Mount, Scullen and Goff termed “idiosyncratic rater effects”.

Going forward, its new review system will ask team leaders not about the skills of each team member but about their own future actions with respect to that person. At the end of each quarter or project, managers will give themselves four propositions about each team member:

1. Given what I know of this person’s performance, and if it were my money,
I would award this person the highest possible compensation increase and bonus. (1–5)

2. Given what I know of this person’s performance, I would always want him or her on my team. (1–5)

3. This person is at risk for low performance.
(Yes/no)

4. This person is ready for promotion today.
(Yes/no)

Image courtesy of Shutterstock

This shiny new process means employees aren’t rated against a long list of skills and projects that were finished months ago. Instead the process is forward looking and talking about people instead of ratings. 

One of my colleagues often likes to ask us in withering tones if we’re doing something this year just because we did it last year. Irksomely, he has a point. 

Are you running your performance reviews the same way you always have because you think they work, or because that’s just the way you’ve always done them?

American singer Sheryl Crow says that a change will do you good. And Sheryl is never wrong.