By Fran Metcalf

As the annual task of performance reviews comes to a close for another year, workplace consultants and lawyers are issuing warnings that the practice is out-dated, inefficient and the cause of a growing number of legal claims.

Rather than building on strengths and weaknesses to boost success for the year ahead, workplace coach and management consultant Tony Wilson says conventional annual reviews cause poor performance and low motivation.

“They’re usually a means to validate expenditure, lobby for bonuses and often to justify the review itself,” Wilson says.

“The largely one-sided process of engaging in a prolonged dialogue about too many different KPIs (key performance indicators) simply doesn’t work.

“People don’t like doing them and that goes for both managers and staff.”

But Queensland Teachers’ Credit Union human resources executive manager Steve Eltis says reviews have become an important reference for bonus or incentive decisions and to help employees understand their strengths and weaknesses.

“For many years, reviews were simply performed to tick a box; a way for management to `get HR off our back’ while measuring employee performance,” he says.

“They were also quite often used as a way to deliver bad news to an employee about something they had done wrong in the months previous, which left many employees either surprised at the outcome of their review or disappointed issues had not been previously raised until that time.

“A well-delivered review should be honest, positive and focused, with no unpleasant surprises.”

But Wilson, who has just released a new book Jack and the Team that Couldn’t See, says performance science shows that feedback is the best way to generate improvement.

He says annual reviews should be scrapped and replaced by weekly feedback. “For managers, the trick is not to see it as an extra burden on top of a busy schedule,” he says.

Recent research from the University of Alberta in Canada has found the mere thought of getting immediate constructive feedback encourages performance improvements.

The study, Motivation by Anticipation: Expecting Rapid Performance, examined the performance of students who thought they were going to get feedback from 0-17 days after a project was delivered.

Those who expected to get their feedback immediately did significantly better, whereas performance got steadily worse as the gap between execution and feedback was increased.

Wilson says it’s time managers see annual reviews for what they really are: ineffective and pointless.

But Freehills senior associate Natalie Spark says they’re also creating a legal minefield.

Spark told recruitment magazine HR Daily that legal action arising out of performance management used to be confined to award and EBA-covered workers, but increasingly employers are facing claims from managers and more senior employees. She says the number of cases is expanding with people able to lodge an adverse action claim under the Fair Work regime.

This involves employees who are being performance-managed claiming they are being treated less favourably because of their gender, union membership or other factors.

“It’s a bit more of a legal landmine than it was previously; the provisions are still being tested, and unions are red-hot on it,” Spark warns.

Article from The Courier Mail, September 11, 2010.