Why abandoning performance management is not the answer; The Benefits of a Performance Management system.

In recent years the trend of ‘disrupting’ or ‘upsetting’ HR has grown considerably as companies and HR professionals look to innovate their performance management systems, often by removing performance management altogether; but generally to little avail. There is little disagreement that the annual review system of performance management is outdated and archaic with 64% of employees and 62% of employees agreeing that annual performance reviews are an inadequate way to measure performance management. In addition, Adobe found that more than half of office workers feel that performance reviews have no impact on how they do their job (59 percent) and are a needless HR requirement (58 percent).



A number of companies including the software giant Adobe took the drastic step and dropped performance management completely within their organisation. This idea was forged with the belief that employees would take their own initiative; requesting feedback when they needed it and giving feedback to others when it was asked of them. Aside from the tedious and time consuming ways of the traditional performance review process, proponents for the abolition of performance reviews also flouted the negative psychological and neuropsychological effects of performance review as validation for their decision.


Neurological research shows how activity in certain regions of the brain can be diminished when a person feels their status threatened; a common occurrence within the framework of the performance reviews. When that happens, David Rock, the author of “Your Brain at Work” and the director of the Neuroleadership Institute which is aimed at applying neuroscience to leadership issues says that, “people’s fields of view actually constrict, they can take in a narrower stream of data, and there’s a restriction in creativity”.  


Most of us do not need neuroscience to give us the reasons behind the almost universal dislike of performance reviews, their inefficiency, ineffectiveness and general modus operandi are reason enough. While the traditional annual performance review procedures might have been undesirable; they were not entirely without merit and the decision by many companies to drop performance management entirely proved to have been based on flawed logic, as according to CEB research employees became disengaged, the quality of conversations decreased by 14% and managers spent even less time on informal review conversations. After these failed experiments of abandoning performance management most realised the need to reinstate a new breed of performance management; one based on continuous and relevant feedback from peers, managers and direct reports. The solution: 360 degree feedback.


If implemented properly; there are very few disadvantages to 360-degree feedback. However human error can be the difference between a successful and a failed 360-degree feedback system implementation. However, the unfortunate fact is that most organizations use these systems ineffectively. In  Scaling Up Excellence, traditional performance reviews are compared to a drug, one that ‘wouldn’t be approved by the U.S. Food and Drug Administration because it is often so ineffective and has so many vile side effects’. Luckily 360 degree feedback circumvents many of these inadequacies. Below are only a highlight of the benefits that you can expect from a successfully implemented performance management system.


Brings people together


360-degree feedback, is one of the most valuable features of an Agile Performance Management system. As the name suggests, it provides feedback from all angles; from peers, to managers, to direct reports. As this communication comes from a variety of different sources it will contain a multitude of differing opinions and perspectives, which is of vital importance when looking for feedback. In a sense, it can be seen as more valid and objective as it is from such a varied audience.


Identifies development opportunities


As the feedback a person receives is most likely diverse, this provides a unique opportunity to uncover areas that may need development or open up gaps in knowledge that could be valuable. Such feedback can then be incorporated into employee improvement or development plans. This is very useful information that the employee may not have thought of on their own.


Core competencies adhered to


When a company introduces a 360-degree feedback as part of its performance management system, they can do so in a manner that relates to the company’s core competencies. These competencies reflect the organization’s standard for behaviours and interactions. When reinforced on a regular basis, they can have an impact in shaping your company’s culture. Making them a part of the performance management system means that individuals can receive feedback about how they act on and exemplify the organisation’s core competencies in their daily performance, encouraging everyone to live and breath these ideals in everything they do.

Companies are stymied in a number of key areas when they fail to develop or implement an adequate performance management system. Companies can waste time and resources pursuing leads or targets that may no longer fit the market; regular conversations as part of a continuous feedback culture as part of a performance management system can rectify this as the necessary changes in strategy or development can be identified and rectified in a timely manner. Additionally, two hugely important consequences of a properly executed performance management system are the benefits to employees from both a workplace culture (employee experience), and an engagement perspective. A feedback culture is one where employees feel more valued, are happier with their work, are more engaged and consequently work better too. A properly executed performance management system is beneficial to all involved. For more information about how a performance management system can work for you read this article on the benefits and features of 360 degree software systems.



Photo by Samuel Zeller