3 min read

3 Myths About Measuring Employee Performance

March 14, 2019

In a rising trend, many Fortune 500 companies have bid adieu to employee performance reviews, deeming them an outdated way to check in with employees. Adobe, GE, and many others have instead moved towards a system of more regular one-on-one check-ins with employees, where they examine their work around specific projects and progress towards development goals. “It’s liberating people,” says Donna Morris, senior vice president of global people resources at Adobe. “It has really helped to create teamwork instead of individualism, which is critical in a creative company.”

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Performance reviews reinforce the notion of a tiered system at work, where managers are ranked higher than employees, thereby putting up blocks to effective and trusting communication as peers on a team. We’re glad they’re being replaced by something more useful and less fraught with anxiety for all concerned.

Below are just a few employee performance measurement myths we think have no place in the modern workplace.

Myth #1: The numbers speak for themselves.

Quantitative employee performance metrics aren’t always an indicator of an employee’s value unless there is a direct correlation to work performance. For example, in sales, activity-based measurements are important. How many phone calls a day you make or how many clients you speak with does, in the end, create more coverage for the company and leads to more sales. And in professions where hours are billed, like law, the number of hours you bill is directly related to the firm’s success.

However, for other professions, productivity at work is the culmination of knowledge and creativity, collaboration and determination, not the speed with which an employee churns out a number of projects. For some companies, rather than collecting data on productivity, they’re turning to a new review process called 360-degree feedback. In this new process, feedback is given by employees’ team members, across the organization. Managers then look for trends in how an employee is perceived, both negative and positive. GE found success with this system when they moved away from yearly performance reviews and instead co-opted regular “touchpoints.” During these touchpoints, they spend more time talking about forward-looking development and suggestions can come from anyone in an employee’s network.

Myth #2: Previous successes or failures dictate future performance.

Walt Disney lost a job because he wasn’t creative enough. Steve Jobs was dumped from his own company. JK Rowling was a single mom receiving government assistance before she wrote her world-changing books and became one of the richest women in the world. Missing the mark is not an accurate reflection of someone’s value, as a team of researchers at HBR discovered when they analyzed the employee performance key indicators of a large US corporation over a six-year time period.

Researchers reviewed both the employee performance ratings and the associated employment outcomes at the company. Their findings? Only a third of the high-performing employees maintained their performance year after year. And for those that received a poor review one year, they did not demonstrate consistent poor employee performance. The bottom line is that the majority of employees are continually learning and developing. When a company invests in their growth and development, they’re more likely to retain engaged, high-value employees.

Myth #3: Save it for the review.

There’s an outdated notion that if you have an issue that needs to be addressed with an employee, and there’s a review coming up on the calendar, that you can table the discussion for that later, more formal setting. But, in this way, a laundry list of complaints can pile up and an employee can feel attacked over numerous incidents that happened weeks or months ago. It’s always best to address an issue in the moment so that the context is clear to all concerned and it’s resolved quickly.

And if you’re hoping to wait until the next performance review before giving that deserving employee a raise, guess again: there’s a pretty high chance they will have moved on to another company if you wait too long to reward them. A new generation of employees needs more real-time gratification in the form of feedback and peer-to-peer recognition.

Fostering an open and ongoing dialogue with employees, where time is spent focusing on goals, rather than reviewing past work, is a welcome replacement to the antiquated annual review. The companies at the forefront of this growing movement are building happier, more cohesive, and more productive workplaces.

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Ed Stevens

Written by Ed Stevens

An experienced and serial entrepreneur, Ed Stevens is the Founder and CEO of Preciate.