The never-ending performance review

The annual performance review seems to be on its way out at US corporations.

Sounds great! Performance reviews are a pain, right?

But if you think getting rid of them might betoken a kinder, gentler, mellower approach to human resources, check out a recent Wall Street Journal story about household-products maker Kimberly-Clark: “One of the company’s goals now is ‘managing out dead wood’, aided by performance-management software that helps track and evaluate salaried workers’ progress and quickly expose laggards. Turnover is now about twice as high it was a decade ago, with approximately 10 per cent of US employees leaving annually, voluntarily or not, the company said.”

The performance-management software Kimberly-Clark uses is from Workday, a cloud-based HR-software company. Oracle and fellow software giant SAP are also big players in this area, as are lots of upstarts.

Reflektive, for example, offers an evaluation platform. Bloomberg’s Rebecca Greenfield described last year how it was used at grocery-delivery startup Instacart: “Instacart uses a ‘real-time feedback’ tool called Reflektive, which lets anyone working at the San Francisco startup leave real-time messages about any colleague’s accomplishments. Feedback can be entered into a discrete website or proffered on the fly using a special e-mail plug-in.”

The idea of real-time feedback makes sense. Among the complaints about periodic performance reviews are that they’re often perfunctory and almost always backward-looking.

So what’s not to like? Well, the sheer relentlessness of it does seem a little daunting. In theory, frequent substantive feedback ought to be less fraught and more helpful than annual reviews and ratings. But coupled with other tools that enable employers to keep an ever-closer watch on how workers spend every second of their days, it’s easy to see how some workplaces could turn pretty dystopian pretty quickly.

But let’s say large swathes of corporate America really do get much better at both measuring performance and finding, keeping and promoting the most valuable employees. The very best companies will hire the very best people and pay them the most money, and everybody else will be left by the wayside.

This is already happening. As Walter Frick wrote in May in the Harvard Business Review: “The bestperforming companies seem to be pulling away from the rest, according to a growing body of research ... the result, at least in developed nations, is a highly unequal corporate landscape, where some firms are incredibly productive and the amount of money a person makes is tied to the company they work for, not just the job that they do.”

That is both a fascinating and a worrying phenomenon — and maybe it’s only just getting started.