Human Resources Institute New Zealand (HRINZ) chief executive Chris Till says the effectiveness of performance reviews is being questioned worldwide.
He says the reviews were an outworking of a 1970s Chicago School-inspired ideology, which posited employees as financially driven opportunists who needed to be kept in check.
"These appraisals were originally set up to control, monitor and align staff to corporate goals," he says. "They were often also linked to bonus payments and used to identify training gaps."
After the GFC of 2007-08, this highly structured model of performance management was undermined as an ideal.
Internationally, corporate leaders began to embrace the Vuca (volatile, uncertain, complex and ambiguous) model.
This model, originally developed by the US military, acknowledges sudden disruption and distraction as typifying the organisational experience. The traditional performance review, with its strict hierarchy and dependence on order and control, was undermined by this paradigm shift.
This ultimately led to some progressive corporations changing the way in which they structured their evaluation programmes, and moved the emphasis away from an annual "telling off" to ongoing daily communication and two-way feedback between staff and management.
More organisations are now relying on localised, real-time feedback to help increase productivity and staff morale.
Till points to the Kiwi-developed computer program Ask Your Team as an example of how such feedback can work. "Ask Your Team exists at the opposite end of the scale from traditional performance reviews," he says.
Within this system, all the members of a team complete an anonymous survey about all levels of business performance. The data generated is analysed by complex algorithms, which produce reports highlighting areas that need attention.
Management then works with their teams to address these issues; the team is retested to identify whether appropriate changes have occurred, and the cycle continues.
Till believes that the collaborative nature of this review system creates far more satisfying outcomes than the one-on-one performance review.
"I address many conferences, and I often ask attendees 'when was the last time you got anything at work done on your own'," he says. "We all work with other people every day, so why do we single people out for performance reviews?"
Another negative aspect of performance reviews is the bias that can exist towards certain employees. If a manager is going into a review with this (often unconscious) bias, the employee can find themselves in a vulnerable position.
This being said, Till believes it is possible to have positive evaluation sessions given the right conditions.
He says though HRINZ no longer has performance reviews, development and appraisal discussions are a regular occurrence.
"If possible, it is great to have these every few weeks," he says. "It's an opportunity for a two-way conversation around what is happening in the workplace, and gives both parties a forum for sharing how they feel."
In the best case scenario, the annual performance review should work in this way.
"In such a review you'd talk about successes, challenges, learnings, thoughts and possibilities for personal and professional development," he says.
A review of this sort would help staff to grow, develop, and achieve optimal outcomes in their given role.
The use of performance reviews as surrogate disciplinary procedures creates significant stress in the workplace. Till feel that reviews aren't the place to raise such grievances.
"It's much better for issues to be raised by managers on the spot, rather than waiting for an annual review."
Till hopes the changes made to review processes in more progressive companies will eventually become the status quo, but acknowledges that most companies still rely on the traditional review process.
But he believes that in order for organisations to reach their full potential, they need to trust the people who work for them.
"Over the past few years the systems have become more tightly controlled, as profit becomes the biggest focus," he says.
"But everyone wants meaning in their work, and to do this they need freedom to become good at what they do."
