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Home » Industry News » Business Advisory & Financial Services » Is it time to do away with performance reviews?

Is it time to do away with performance reviews?

Once considered a powerful tool for fostering growth, development and alignment within an organisation, the relevance of employee performance reviews has become a hotly debated topic, with many human resources practitioners arguing that traditional annual performance reviews are outdated.

Employee performance reviews are usually linked to key performance indicators (KPIs), which measure employees’ progress toward achieving strategic organisational goals.

“But while KPIs are geared to driving performance improvements, they are often perceived by employees as a ‘stick’ or form of punishment rather than a ‘carrot’ or motivator,” says Nicol Myburgh, Head: HCM Business Unit at CRS Technologies.

He cites various reasons for this view. “Employees often experience anxiety leading up to their performance evaluation, which tends to focus on past accomplishments rather than future development and growth.

“Additionally, because performance reviews are a time-consuming exercise for both managers and employees, they are often conducted only once or twice a year. This means employees do not receive timely feedback and are thus unable to make immediate improvements or adjustments.”

Myburgh believes that rather than tracking employees’ performance through their input – as KPIs are specifically designed to do – companies should rather focus on their job outcomes.

“These outcomes are directly related to the responsibilities and tasks outlined in an employee’s job description, and refer to the achievements the employee is expected to produce as a result of their work within the organisation.”

Consider a call centre agent, for example, whose job outcomes might include achieving two sales a day. How this target is achieved is up to the agent. KPIs such as the amount of time spent at their desk and the number of calls made during the day are irrelevant, as long as the required outcome of two sales is achieved.

“Defining and assessing job outcomes ensures that employees are aligned with the organisation’s strategic drivers,” Myburgh continues. “This helps them to know what is expected of them, take ownership for clarifying outcomes on projects, and make meaningful contributions to the company’s success.”

But employees are human, after all, and there will invariably be occasions when an employee fails to meet the employer’s work performance standards, for various reasons. And while South Africa’s labour legislation does make provision for the dismissal of employees for poor work performance, this must be done in accordance with a fair and proper procedure.

This is where performance reviews can play an integral role, says Myburgh. “They provide a formal record of the entire underperformance management process, in which employers assess the employee’s work, identify areas where they are falling short of expectations, and discuss strategies for improvement. Should further intervention be required, such as performance warnings or hearings, the documentation gathered during the performance review can be invaluable.”

Ultimately, whether an organisation chooses to utilise performance reviews will depend on its culture, the industry in which it operates and its specific performance management needs. While the current trend is toward more agile feedback systems, performance reviews still have a role to play in many workplaces, Myburgh concludes.

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