In our last podcast, we looked at a number of reasons why performance reviews are set up to fail, and more importantly, set up to fail the organizations that use them. This week, we dig deeper to ask: Why do them at all? What purpose do they serve? The answers may surprise you, and you’ll definitely want to share this with your manager.
When a factory invests in a piece of industrial machinery, it wants to know that, over time, it continues to perform to specifications. Whenever it fails to meet its production expectations, we can call in a maintenance crew to bring it back up to spec, or replace it with a newer, more efficient and effective model. In the 20th-century, “scalable efficiency” model of organization, in which more efficiency and productivity are required as the company grows, performance reviews provide this quality control check on the investment in machine resources otherwise known as humans.
Nominally, the intention of performance reviews is to align worker’s activities with organizational objectives. The review seeks to accomplish this by creating an incentivized check-up system designed to ensure that people accomplish assigned tasks and goals that collectively sum up to the organization’s short and long-term objectives. Additionally, performance reviews supposedly identify individual opportunities for personal and professional development – in other words, so-called weaknesses – to be fixed in order to collectively strengthen the organization. After all, you’re only as strong as your weakest link.
More significantly, to achieve the organization’s long-term vision and mission, an organization requires more-or-less predictable, determinant outcomes. To be successful in this undertaking, the organization’s leaders need stability, and that necessitates systemic control over as many aspects of the organization’s operations as humanly possible. Performance reviews are a way of operationalizing such control via the associated incentives of rewards and punishments, including the always present threat of being rank-ordered into the outplacement office.
But here’s the thing: Today’s world is not stable. It is not predictable. It is certainly not controllable. In fact, any attempt to exert control over some aspect of your organization will only result in some other aspect going out of control in an unexpected way because contemporary organizations and the environment in which they exist are complex.
For organizations in a knowledge-based economy to achieve Scalable Capability, that is, the bigger you grow the more you know, it is mandatory that leaders create workplace environments that encourage individuals’ autonomy based on their key strengths. Employees will act on opportunities that are aligned with their personal aspirations and thereby deliver meaningful results to the organization with a passion and energy that no performance-review-driven incentive plan could possibly hope to achieve. And in this world where collaboration among knowledge networks is the key to success, a person’s direct manager is generally not the one who can make the best, up-close-and-personal assessment of the impact and consequences of their achievements.
So, given that check-off-the-goals performance reviews serve neither contemporary organizations nor their people (not to mention that nobody enjoys them or does them well), I will introduce you to an amazing alternative that not only works to acknowledge and bolster a person’s strengths, but naturally creates alignment among organizational knowledge networks, and the overall strategic intentions of the enterprise. That’s coming up on our very next podcast.