Does your business give performance reviews? Maybe it shouldn’t.

By July 2, 2024 No Comments

Performance reviews came into favour after World War II. At that time, the U.S. military used a numerical ranking system to determine which soldiers were eligible for promotion. Businesses then followed suit as a way to categorize their employees. Today, research tells us that performance reviews are unsuitable for knowledge-based workers. People chafe against being labelled numerically or otherwise (e.g. Excellent, Satisfactory, Needs Improvement) and often resent being told months (sometimes a year) after the fact what they did wrong. For these and other reasons, performance reviews frequently de-motivate people. From the manager’s perspective, they often see performance reviews as a bureaucratic, box-checking exercise that doesn’t yield significant, if any, improvement in the performance of their people.

As a result, you may want to consider abandoning performance reviews in favour of performance management. What’s the difference?

Unlike the retrospective nature of performance reviews, a performance management system is forward looking. The first step is to develop a skills checklist or competency model that explicitly describes the skills, behaviours and competencies that the firm expects of its people at the various stages of their career. For example, you might not expect a first-year associate to engage in business development, preferring that they first focus on becoming a technically proficient lawyer. However, strong business development skills might be a precursor to admission to partnership at your firm. People can’t hit a target they can’t see. A checklist or competency model introduces a high element of transparency about the behaviours and skills that you expect your people to exhibit and at what point in their career. 

The next step is to set goals for the individual for the upcoming year. Quarterly “check-in” meetings promote accountability and serve to provide your colleague with the guidance they need to achieve their goals.  

A performance management system addresses an individual’s desire for professional growth and pinpoints how to best support colleagues in achieving both the firm’s and the individuals’ joint goal of acquiring the competencies that encapsulate exceptional performance. Consider whether it’s in your business’ interest to abandon performance reviews in favour a process that meaningfully results in improved performance and profitability.