NAB recently joined the ranks of organisations such as Deloitte, Adobe and Accenture by announcing that it will no longer be using the traditional performance review as part of its employee assessment tools. Once the go-to method for managers everywhere, performance reviews have garnered a bad reputation in recent years.
Criticisms of the performance review range from subjectivity, lack of relevant feedback, using performance reviews to determine pay grades and the concept of ‘ranking’ or reducing employee work to a number.
The polarising opinions on the subject certainly make for interesting debate about their effectiveness and whether this shift in the landscape is likely to spread.
If you are thinking about alternatives to the traditional performance review, it’s worth getting acquainted with the alternatives that some organisations are using to replace the standard, ‘on a scale of 1-10’ method.
1. Performance Previews
In contrast to one-side-accountable reviews, performance previews are discussions about how an employer and an employee are mutually accountable for the success of the company and the employee. Rather than focus on what has already taken place, performance previews involve both sides stating what they would like to happen and establishing a two-way conversation. Instead of a manager talking to an employee, allow the employee an opportunity to talk about what they need from leadership in order to excel at their work. Advocates claim it makes for a more trusting, reciprocal relationship in the long run.
2. Performance coaching
Rather than biannual or annual reviews, think about setting up regular, one-on-one coaching sessions between managers and subordinates. Meetings could be anywhere from 15 minutes to one hour, and held every month or so. The goal is to have a continuing conversation aimed at helping employees become great at what they do. Ask workers to write up a small report of where they are and where they need to be. Then, tailor each short coaching session to address these concerns and determine what metrics work best to measure performance.
3. A crowd-sourced rewards program
A crowd-sourced rewards program allows employees to anonymously gift tokens to their colleagues as recognition for outstanding work. This system measures the impact individual workers have on the success of a company and allocates bonuses accordingly. It sounds a little out there, but companies such as gaming software company IGN and Shopify have already implemented this system with great success.
4. Goal-management reviews
This method is centred around a meeting with an employee to outline his or her career goals and then formulating development programs to reach these targets. Not only does this system clarify what is expected of employees, but it also helps workers self-examine what they want to achieve and how they can get there. When tasked with monitoring their own behaviour, employees are forced to assess what value they bring to an organisation, which in turn drives their performance.
5. Non-performance based compensation
Compensation is a tricky topic to manoeuvre; when tied to performance reviews, it can make people defensive, or feel like they need to justify themselves to management. For this reason, reviews with competency ratings and employee rankings usually fail. To bypass this, you can move towards non-merit based pay where salaries are calculated based on a worker’s market value and market conditions. If you have a goal-setting process in place, you can also adjust someone’s market value by the results they achieve, set against established goals.
Whatever method of feedback you use, it’s important to constantly re-evaluate your performance review process. If you find it’s not adding value to your organisation, examine the needs of your company and let that and the employee culture dictate how it should change to better serve both managers and employees.