Innovating the Performance Review

By Rod Collins

 

Like Thanksgiving and the Fourth of July, the ritual of the annual performance review is a longstanding tradition. But unlike these two holidays, few of us look forward to the annual corporate practice. In theory, performance reviews are supposed to acknowledge good performance and encourage underperformers to improve. However, a mountain of anecdotal evidence suggests that far too often performance reviews engender cynicism and mistrust, create bewilderment and discouragement, and unwittingly diminish the morale of high performing teams. Few would disagree that the performance review is a broken process.

Eric Mosley’s new book, The Crowdsourced Performance Review: How to Use the Power of Social Recognition to Transform Employee Performance provides insight into how twenty-first century managers can reengineer and renew the performance evaluation process. According to Mosley, a big problem with the traditional performance review is that it reflects an outdated paradigm of work that assumes jobs and performance are completely identifiable in advance. While that assumption might have been true for industrial workers on the old assembly lines, it doesn’t fit for the vast majority of knowledge workers who apply their evolving skills in rapidly changing markets.

Another problem with the traditional performance system is, while it purports to provide an objective assessment, its execution is often highly subjective because the review presents one manager’s observations at a single point in time. This is problematic in a time of great change where real-time adaptations of workers to dynamic business circumstances are more likely to be observed by one’s peers than one’s manager. Put simply, much of the work that matters most is performed out of the line of sight of the supervisor.  When valuable work goes unrecognized, supervisors unwittingly create low-morale workplaces.

Mosley’s solution for fixing the broken process is the crowdsourced performance review. Based upon the insights contained James Surowiecki’s best-selling book, The Wisdom of Crowds, Mosley outlines a performance approach designed to supplement the traditional performance review with a real-time “social recognition” program that aggregates the opinions of the many peers who actually witness the day-to-day execution of work. Throughout the year employees rate and acknowledge positive performance as they see it happen. When it comes time for the annual review, managers have a rich database that provides “more accurate conclusions than one person could achieve alone.” According to Mosley, the aggregation of many subjective impressions averages out any individual biases, resulting in a more objective assessment from those who are closest to the actual work.

This new model of performance recognition is made possible by three innovations that have emerged from the recent digital revolution. The first is the sudden spread of crowdsourcing applications made popular by the dramatic performance of Wikipedia and Linux. The second innovation is the wide adoption of social media, which makes it easy and practical to gather real-time observations from co-workers. Finally, because we now live in a hyper-connected world, managers are increasingly discovering that a culture of collaboration is often a distinguishing competitive advantage. This third attribute is particularly important because it means, when collaboration is the key ingredient for creating extraordinary results, it is virtually impossible for a single person to accurately assess another’s performance.

In a business world that is continually reshaped by accelerating change, reliance upon an obsolete performance approach is highly problematic. Although it may defy conventional wisdom, peers are often better judges of performance than bosses. This has been the philosophy and the practice for over fifty years at W.L. Gore and Associates, the makers of Gore-Tex. Because there are no supervisors at Gore, they don’t have a traditional review process. The only process Gore has ever used is a peer-based review system. This may explain why Gore is perennially on Fortune’s list of the “Best Companies to Work For.” They understood the value of crowdsourcing long before the term was invented.

For those companies that are ready to update their performance review systems to better meet the challenges of a rapidly changing and more collaborative world, Mosley’s innovative approach is a simple and effective way to get a quick start.

 

Rod Collins is Director of Innovation at Optimity Advisors and author of the upcoming book, Wiki Management: A Revolutionary New Model for a Rapidly Changing and Collaborative World (AMACOM Books, November 1, 2013)