Should we consider seriously moving towards continuous performance evaluation ?

What’s at stake ?

As organizations become more complex, so do management practices requiring consistent and regular transformational changes in management. We are all part of a living system.

An interesting change has emerged with regards to performance review that raises questions. This is the case at GE, a reference in management practices due to it’s size – conglomerate of over 300,000 employees – and culture with the standards set by charismatic J.Welch at the turn of the 21st century.

After advocating, for more than three decades, for a formal ranking system for its employees known as the “vitality curve”, the group announced last year it was launching a transformational shift from a formal annual management performance review system to a flexible frequent feedback programme via digital apps. This is a daring move because we know how sensitive the issue of employee assessment with reference to engagement and motivation is.

So what is at stake here ? If we are to acknowledge that improvements in management practices are closely linked to performance review, it’s probably a good idea to figure out what the pros and cons of moving to a continuous performance review system could be.

Pros and cons of continuous performance assessment

The main driver behind GE’s decision to drop annual assessment is simplification of process. The project called FastWorks is directly inspired from lean startup practices. Instead of being made responsible for annual targets, employees are given « priorities » that change over the year. 360 assessment monitor closely these changes and focus on the implementation of coaching and mentoring skills rather than blames or other punitive actions. The fact that assessments are non-anonymous to sponsor reflexive inquiries and real conversations is another striking feature. Globally, continuous assessment would offer reduced administrative costs, higher levels of employee commitments and quicker adjustments of team targets.

But, if responsibilities are to be challenged at an ever increasing pace, if goals and outcomes are going to change every month or even week, individual contributions could be blurred and feedback may be weakened, affecting employee sense of progress and recognition. It might sound appealing to, somehow, forget the idea of following individual performance and just monitor global team and/or organizational performance. A lot of time in rearview performance conversations can be saved in favor of a sharper focus on future business impacts. But, how motivating is that going to be for team members who are sometimes part of very large scale groups and what are the consequences for progress in self management, if they are to work in an environment where ranking depends on continuous 360 evaluations managed through internal social networks ? Very clearly, a change in performance assessment will impact the organizational culture with the risk of downsizing trust levels at inter and intra personal levels. So how can we address this double-edged issue of adapting performance reviews to the rapid changes affecting the organization while at the same time reinforcing the sense of belonging and self-confidence for the employees ?

Moving away from a fear based culture

We know that the root cause of many dysfunctional organizations has to do with manager-employees relationships equally failing to understand how to align one another in terms of expectations and targets. This is especially the case when it is extrinsic motivations (money, bonuses, rewards, punishment,…) that are dominant and nourished by a fear based culture. Moving away from it can only be achieved in a sustainable way by building a work environment reflecting three basic levers : competence, autonomy and relatedness. So we can assume that, if a continuous assessment system is to be successful, it’s going to have to facilitate the development of competence and autonomy and it must also reinforce relatedness. Let’s examine all three components in respect to performance review.

If competence can be defined as « a perceived ability and capacity to complete a task » (1), performance review should check upfront that the adequate means have been provided to the employee, in order to enable him to successfully comply with his targets. Frequent reviews can help managers ensure this is happening and avoid the trap of endlessly postponing required training.

Autonomy reflects how « volitionally, the employee is in his task » (2), or, in other words, how freely he chooses to undertake it because he can see the purpose and meaning. Here, once again, we could advocate that continuous performance review gives a first class opportunity for the manager to restate his vision and clarify what he expects from his direct reports. In our VUCA (3) times, this can hardly be called a luxury.

Last, relatedness, understood as the feeling of being connected with team members and therefore engaged, is probably one of the most fragile perceptions for any employee. A wrong or unexplained decision can turn around the sense of relatedness in a matter of days. And we know this touches all aspects of our lives. Frequent conversations and feedbacks can help nurture this acute need of individuals today.

Fasten seatbelts

So maybe the issue of moving to continuous performance review is not such a bad idea. But because it touches the highly sensitive area of organizational culture, precautions are recommended. The main trap organizations will seek to avoid is to send inadvertently an additional wave of stress and anguish on employees. To succeed is to reinforce deeply levels of trust, by developing jointly simple but effective tools that everyone understands, by providing a lot of explaining and reassuring, by applying it to all segments of the organization. Because we know there is resistance to change, doesn’t mean we can’t do it. But we need to do things carefully and fasten our seatbelts to fly safely through turbulences.