Naturally, many organizations have sought to rethink performance reviews.
In the past decade or so, GE, Adobe, and Gap are just some of the companies that have experimented with different techniques and transitioned away from traditional performance reviews.
What have they moved toward?
Frequent one-on-one conversations between managers and direct reports
At GE, one-on-one meetings are held that are called “touchpoints” that focus on two questions: What should I keep doing, and what should I change? At Adobe, managers hold quarterly “Check-ins,” that are forward-focused conversations. At Gap, they call their system “GPS” — “Grow. Perform. Succeed.” — which encourages 12 informal conversations throughout the year that focus on three questions: What went well? Where did you get stuck? What would you do differently next time?
Ongoing, real-time requests for feedback by anyone
Many organizations focus on the ability for people to request and invite feedback, at any time, from anyone with the organization. GE, IBM, and Amazon all have internal apps each company has developed to both invite and give feedback to peers — even outside their team or division.
Removal of stack rankings or ratings
Diverging strongly from the original incorporation of ratings in performance reviews by the military, many companies, including GE and Adobe, have completely eliminated any kind of numerical ranking or ratings from their performance review process.
Compensation determined by a separate process
To enable greater focus on team growth and development, a compensation and promotion discussion is often held separate from these coaching conversations. At Gap, compensation conversations are held once a year, and managers are given a detailed model to match compensation with performance. Similarly, at Google, these conversations are separated by a month: In November, a conversation about performance is held, and in December, a conversation about compensation and role changes is held. At Netflix, a completely different approach is taken: Compensation is purely dictated by the market rate, with Netflix paying its staff always top of market instead of allocating bonuses. (More examples can be found here.)
What have the results been?
Outcomes of moving away from traditional performance reviews have been positive for some companies: Adobe reported a 10% increase in people saying that the ongoing feedback they receive helps their performance, and Cargill found “overall, 90 percent of the no-rating pilot participants reported, year after year, that their experience was positive.”
However, results are not entirely uniform nor conclusive across the board. Some companies have tried taking steps to revamp their performance review — only to resort to reinstating them a year two later. Other companies have chosen to retain certain components of their traditional performance reviews.
Why is this? Are there certain aspects of traditional performance reviews that some companies still find useful? I share this in the next chapter.