Traditional year-end performance reviews — as well as forced rankings (such as placing all personnel on a scale of 1 to 5) are becoming a thing of the past.

Companies are realizing that besides the hundreds of managerial hours they eat up, the annual goals often become irrelevant as the year goes by. This is coupled with the growing awareness that what employees really need is “just in time” feedback — managerial reactions and input that gives them time to improve and correct their performance — in an ongoing process and not a onetime judgment delivered at the end of the year. Last year, Accenture announced it was abandoning traditional performance reviews altogether.

Deloitte, one of the world’s largest professional services network by a number of professionals and revenue and one of the largest accounting firms, explained that a system for managing performance continuously needs to be nimble and real time. It also needs to be personalized — give different goals and benchmarks to different people. The focus should be fueling performance rather than an assessment of the past.

If your company isn’t quite ready to abandon employee performance reviews, at least when you do them avoid these three not-insignificant mistakes, and make sure you indeed provide a way to fuel performance rather than threaten an employee with a too-harsh review of their past:    

Mistake #1: Living in the Past

If only done annually, performance reviews actually evaluate employees on stale goals, goals that were established over a year ago. This is problematic as the review can develop into a conversation about a goal that is no longer even relevant, rather than cover the employee’s more recent achievements. Timely feedback is indispensable as it provides employees who have perhaps failed at a task with enough time to get up and fix their act. Innovation Expert Mario Herger says that the beauty of gamification is that you can fail, get up and re-do it. Just as in an actual game, you lose lives repeatedly until you reach a certain level of aptitude. In many ways, that is exactly what gamification is — like a FitBit for work, it tells employees how they’re doing almost immediately based on their actions in enterprise applications, rather than at the end of the year when it’s too late to fix anything.

Mistake #2: Being subjective

We all have prejudices and one manager may perceive an average performer as great and a poor performer as decent. However, employees want impartiality and if they have been rated as average, they will check everyone else’s scores. If they discover they were actually much better performers they will feel that it isn’t fair.
Ratings reflect very little fact, and rating skills are neither an art nor science. Deloitte found that the most comprehensive research on what ratings really measure was by Maynard Goff, Michael Mount and Steven Scullen. In their study of 4,492 managers — who were rated on certain performance dimensions by two bosses, two peers and two subordinates — 62 percent of the discrepancy in the ratings could be attributed to raters’ idiosyncrasies of observation. Actual performance accounted for just 21 percent of the discrepancy. They concluded that ratings actually measure and disclose more about the rater than about the employee.

Performance management has to be seen as transparent, fair and objective. Gamification for employee engagement presents a system where everybody is rated on the same elements in the same way. This fairness removes much of the emotional distress and disengagement linked with a sense of injustice.

Mistake #3: Causing the “Fight or Flight” Response

When employees are reviewed and are aware that their review is tied to compensation, they feel vulnerable and defensive. This, and labeling people via ranking, triggers the fight or flight response and is the exact opposite of what you’d like them to do. Why? Because they won’t be heeding a word you say, definitely won’t be motivated and this certainly won’t be seen as a learning opportunity. You can’t fuel performance this way. One must separate discussions about performance with those on compensation.

The upshot is that when reviewing performance it is essential to be clear and fair. Explain to the employee the source of your understanding of their performance and use applicable objectives and goals that don’t make them feel that they are forcibly being ranked alongside others. Primarily, detach performance discussions — which should be flexible, frank and open — with those about reparation.

Posted By Gal Rimon