Performance Reviews in the Knowledge Economy

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T’is is the season of Performance Appraisals. It feels like not a day goes by when I am not coming across an article, usually criticising the practice. So here’s my two rupees worth on this contentious topic.

My point of view has been consistent for the past few years now – the system of performance reviews as is currently being practised in many organisations is completely out of place.

It is a system that could possibly have worked at the time of the Second Industrial Revolution that saw the advent of mass production. When there are many people doing very similar work of a repeatable basis, then it is conceivable that they can be ranked on objective measures (the dreaded Bell Curve).

However, the advent of the Digital Revolution (and now Industry 4.0) has led to a significant change in the nature of work itself. Yes, mass production still exists, but robots are being increasingly used to do the routine, repeatable tasks. Meanwhile, in the offices, people are increasingly being confronted with a high degree of variability and uncertainty in the type of work that they are doing or might be required to do. In this environment, it is easy to see that the Bell Curve model of grading employees just does not work. How can you compare across a team where everyone might be working on a different type of problem?

I am not against performance reviews. I believe it is extremely important for everyone (employees, managers, the organisations) to have a fair and transparent view on how they are performing, what their strengths and areas of development are, and what are the specific areas of focus for their improvement.

I also believe strongly that this feedback should not be just between the employee and her manager, but has to incorporate feedback from across the organisation. I am surprised at how few organisations seem to have a formal 360 degree process of providing employee feedback. I have found this extremely useful both to receive as well as deliver feedback.

Finally, of the many articles that I came across recently on this topic, there is one that stood out for providing a viable alternative to Performance Reviews. Please do read it!

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