30 SEP, 2015

Why Performance Reviews Should Be More Like Yelp

I’m an avid user of Yelp; it rarely steers me wrong. I can’t remember the last time I went to a restaurant without checking it. Here’s what makes Yelp such a great evaluation tool:

  • You can read the opinions of a wide variety of people through a long time range, not just for one night (as is the case with restaurant critic reviews). Every restaurant has a bad night; on Yelp that one-star review will get lost among plenty of other great ones if the slip-up is unusual. People can also update their reviews if they have a better or worse experience the next time they visit.
  • You can read the other reviews of the people who rated the restaurant you’re interested in to see if they’re overly picky or usually pretty reasonable.
  • Reviews are free-form and let the reviewer talk about what influenced their overall opinion based on what they thought was important. It’s not scientific, and it’s not treated as such.
  • Restaurant managers can read a bad review from the night before, respond, and immediately make an adjustment to improve service.

If a restaurant has enough reviews on Yelp, their overall rating is usually a pretty fair assessment. In direct contrast, here is how most annual review processes go:

  1. We hold reviews for a one-month period from a few select reviewers (that’s if the company is using a 360 degree assessment)
  2. We don’t take into consideration that these reviewers might be biased by personal feelings about the employee, not to mention what has been going on in the immediate time frame around the review. Yet we trust those responses to apply to an entire year of performance.
  3. We set the criteria being reviewed, and we assume that every reviewer views and rates against those criteria in the same way.
  4. Feedback is held for once per year, which delays the employee’s ability to adjust and improve.

I’m not suggesting that employees should be rated using a Yelp-like system, but this comparison shows some of what’s wrong with most annual review processes. They are a snapshot of a point in time that is supposed to represent an entire year of a person’s work life. Let’s also remember that many times the employee is being judged based on criteria or goals chosen a full year ago. A lot happens in a year—priorities shift, businesses experience ups and downs, and yes, people go through those same changes.

To widen the lens we advise our customers who still do annual performance reviews to look at the stats from their recognition and engagement programs during the review process. Maybe Dave was late on a few projects this year, but he’s got tons of awards on his profile for “putting the customer first,” which might explain why he took a little longer to deliver. Your company WANTS people like Dave, and can possibly learn from him the challenges he’s facing in delivering on time while still satisfying the customer. You can also see from all the peer activity that Dave’s colleagues respect him and like working with him. Force those same people to rate Dave on “on-time project delivery” and you’d get a different picture.

The number of employers that have discontinued the numerical ranking of employees or stopped the performance review process entirely has grown from 4% in 2012 to 12% in 2014, according to a Corporate Executive Board survey of Fortune 1,000 companies. In today’s fast-changing, technology-driven world, rigid feedback systems no longer make sense. Replacing annual reviews with a more frequent and qualitative assessment that includes actionable feedback does.

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