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You're Doing Performance Reviews Wrong and How to Fix It

Ladies and gentlemen, fasten your seatbelts because we're about to take off on a journey to revolutionize the way you think about performance reviews. If you thought this was going to be another snooze-fest webinar recap, think again! We're diving into the heart of the matter with Joe Bast, the VP of People and Operations at Thoropass, who's here to shake things up and sprinkle a little magic dust on our outdated performance review rituals.

hand with pen writing on a paper with checkboxes

A Blast from the Performance Past

Let's get real for a moment: performance reviews are like those awkward family dinners—necessary, but nobody really enjoys them. With origins tracing back to the U.S. military's "merit rating" system from WWI, it's no wonder we're all craving a change.

Manager ratings - the traditional 1-5 rating system - started over a hundred years ago, and it began in the US military after WWI and was brought into the workplace in the 1920s. “Appraisals can be traced back to the U.S. military’s “merit rating” system, created during World War I to identify poor performers for discharge or transfer.” At that time, work was solitary, repetitive…no internet, barely even telephones.

Work has changed a LOT since then. And the way employers view employees should, too. Yet our performance review systems are stuck in the monochrome era. It's time for our evaluation methods to catch up with the times. Remember GE's forced ranking system? Yeah, let's just say it went out of fashion faster than mullets and bell-bottoms.

Enter the Era of 360 Reviews... Or Not

Just when you thought salvation was in sight with 360 reviews, think again! These too are relics of a bygone era, originally military hand-me-downs that promised visibility but often ended up as glorified popularity contests. The time, the effort, the agony—only to find out it's not much of an improvement. Cue the collective eye-roll.

The methodology has been around for a long time, but the actual “branding” of 360 reviews came in the 1990s. Unlike manager-only appraisals, 360 reviews can improve visibility depending on how they’re administered.

In terms of incentive structures - the common scenario today is that an employee’s career growth often depends on their manager’s ability to advocate and influence on their behalf…which has nothing to do with the employee themselves. It’s easy for Performance Reviews to default to popularity contests. Nowadays, employees have more touchpoints than ever, especially on remote and distributed teams. Think Slack or Teams chats and collaboration software. BUT, managers actually have less visibility than before.

The Stark Reality

So how do employees and organizations feel about performance reviews now?

Fewer than one in three employees think performance reviews are “very fair and equitable,” and 64 per cent see them as a “partial or complete waste of time that doesn’t help them perform better”.

Not even 20% of companies rated their process as highly or very effective at providing high quality feedback and coaching

Around 70% of companies are now reconsidering their performance management strategy

Things might seem...a little bleak.

If the thought of performance reviews makes you feel like you're trapped in an episode of "The Office" gone wrong, you're not alone. Fewer than one in three employees find them fair, and let's face it, they're often seen as a bureaucratic checkbox rather than a ladder to professional success.

The Evolution of Performance Reviews: Organizational Network Analysis

But there's hope! Organizational Network Analysis (ONA). This isn't just a fancy term to impress your boss; it's the real deal. ONA shifts the focus from outdated ratings to actual workplace interactions, diving deep into the social fabric of the organization to identify true influencers and contributors.

Forget about the 1-5 ratings that are as useful as a screen door on a submarine. ONA is all about measuring the impact of your work through the interactions you have and going beyond the organization chart. It's like having a workplace GPS that guides you to the stars of your organization, without getting lost in the bureaucratic Bermuda Triangle.

Teams should measure the work the way that you actually do the work. Anyone in the org should be able to review anyone else. That’s where Organizational Network Analysis comes in. Originally used as an academic way to study studying communication networks, it’s an innovative analysis method that “measures and visualizes workplace interactions, analyzing their frequency and strength. When applied to performance management, ONA gives leaders visibility into the true impact of their employees.”

Unlike appraisals, there is no “rating” - and unlike 360 reviews, ONA is open-ended and is far more straightforward to complete (think higher completion rates and higher team value). and it can be both flexible and customized. The more substance and specificity you put behind answers, the more focus you can put on the value of performance.

ONA Results

For Joe Bast's team at Thoropass, ONA was a game-changer that was implement during the challenging pandemic period. Using Confirm to administer ONA-based performance reviews wasn't just new; it was a revolution in how performance and influence within the company were understood and measured.

With this new performance review process, Thoropass shifted the focus from subjective manager evaluations and the dreaded 1-5 rating scale to a more holistic view of an employee's impact within the organization. The ONA approach leveraged real data on workplace interactions, identifying not just who was performing well in isolation but who was truly influencing, energizing, and advising their peers. It was like switching from a black-and-white TV to full HD color overnight—the clarity was breathtaking.

The results?

Thoropass experienced a seismic shift in how performance was recognized and rewarded, leading to a staggering 96% completion rate in performance reviews within just a week of launching the process. But the benefits didn't stop at engagement metrics. By identifying the top performers through ONA, Thoropass was able to engage these key players with outsized rewards, including double-digit raises, equity awards, and personalized 'stay interviews' with senior leadership.

And when it came to retention, they were able to keep 100% of top-performers, with reduced employee attrition of well below 10%.

Conclusion: A New Dawn for Performance Reviews

So, there you have it, folks—a tale of transformation, triumph, and a little bit of HR magic. Performance reviews don't have to be the corporate equivalent of a root canal. With a sprinkle of innovation, a dash of technology, and a tool like Confirm, we can turn this ship around. Let's bid adieu to the performance reviews of yesteryear and welcome a new era where feedback is not just given but cherished.

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Alex Sumner