Performance Review vs. Performance Management

“Anxiety” should be a synonym for “performance review”. The process alone can make you break out in hives. How do you rate yourself? Too high and you could appear arrogant or out of touch. Too low and you could be setting yourself up for a lower rating than you really deserve. Not having the option of rating yourself opens up another set of problems. And then there’s the whole issue of who is rating you. Yet that is the structure that’s been in place forever. I recently wrote about the value of eliminating timesheets and the rise of the virtual office. Well, here’s the trifecta for future forward firms: now is the time to think about moving from annual performance reviews to real-time performance management.

Attracting and retaining talent is a hot topic. In accounting, it may even be boiling, so finding creative ways to deal with staffs’ wants and needs is critical. This is not a generational issue: it is an across-the-board issue. Everyone wants to feel like a valued team member.

Many articles on the topic of performance reviews focus on Millennials, but here’s the real deal: the accounting firm of the future has, and will continue to have, a multigenerational workforce—and a new generation, Gen Z, is about to add its view to the mix. That’s why firms need to consider approaching performance evaluations from a people perspective.

Ongoing Process

Think about it this way: traditional performance reviews measure past performance while performance management is an ongoing process geared toward helping staff become better at their jobs. Big difference. HUGE.

Time Wasted

Another big difference is the way time is spent. Before Deloitte changed its performance evaluation system, it discovered that the firm’s people spent 2 million hours a year on “completing the forms, holding the meetings, and creating the ratings” and the majority of the time was taken up by “leaders’ discussions behind closed doors about the outcomes of the process.”

Two million hours equals 50,000 40-hour work weeks! Think how much more effective that time could be spent focusing on how staff can grow professionally—a benefit to both staff and the firm. When done correctly, performance management can have a tremendous impact on both the team member’s organizational impact, happiness and engagement at work. Angie Grissom, President of Rainmaker Companies, says “This kind of ongoing review creates an opportunity to have dialogue around organizational and personal goals, areas of strength and improvement and allow for a conversation to begin that should be a continuous dialogue.”

And that’s the crux of the matter: people want real time feedback. Filling out your part of a performance evaluation doesn’t do that. In fact, it’s been my experience that even an excellent review doesn’t provide pointers on where improvements are needed or what training would be helpful. It’s a look back at what you accomplished, not a roadmap to what you can do better.

Grissom, who works with Top 100 firms as well as small firms, agrees. She says that the best reviews serve as an opportunity for the team member “to provide upward feedback and speak truth to power.” In other words, it is a two-way conversation. A chance for managers and their reports to exchange viewpoints and ideas.

A Learning Experience

Maybe this era of leadership transition in accounting firms is the right time to shake up another long-standing tradition. Instead of an annual or semi-annual performance reviews, firms can transition to a model where the review is a learning experience.

Performance reviews may always be anxiety-producing, however they are done, because people make mistakes. The difference is that in a traditional review the mistakes take away points, where in a performance management system the measurement is what was learned from the error.