Process ≠ Value


What’s the purpose of the much-reviled performance review? Or to put it another way, what’s the value created by a performance review? Most people would say it’s essential for improving individual performance and providing guidance for career development.

But I think that we’re conflating the process (the tool) with the value (the outcome). The annual performance review is no more necessary for improving performance than a pack of dogs is necessary to create a fox. In fact, in many ways it’s antithetical to the value we’re trying to create.

As W. Edwards Deming wrote in Out of the Crisis,

Evaluation of performance, merit rating, or annual review… The idea of a merit rating is alluring. The sound of the words captivates the imagination: pay for what you get; get what you pay for; motivate people to do their best, for their own good. The effect is exactly the opposite of what the words promise.

Or as UCLA professor Samuel Culbert said (somewhat more colorfully), “a one-side-accountable, boss-administered review is little more than a dysfunctional pretense.” The problem, of course, is that the system in which people work accounts for the vast majority of the individual’s performance. (In the Team Handbook, Deming estimated it to be 90 or 95 percent of performance.)

That’s why it’s heartening to read that starting September, Accenture will get rid of their traditional annual performance review. Instead, it will introduce a system in which employees get regular feedback on an ongoing basis from their managers after assignments. Like an increasing number of large firms (Microsoft, Gap, Medtronic, Adobe), the company realized that the enormous investment in time, effort, and energy wasn’t yielding enough value. Management research firm CEB found that nearly 90 per cent of HR leaders say the annual review doesn't even yield accurate information—and this for a process they estimate costs managers about 200 hours per year.

Leaving aside the specifics of the performance review, this move should serve as a reminder that we shouldn’t equate our existing process with the value we’re trying to create. It’s one way to create that value, but not necessarily the best way. (And in the case of performance reviews, quite possibly counterproductive.)

Now, while it’s true that lean thinkers are accustomed to thinking this way about manufacturing or service processes, we often forget that the way we create and share information—which is the primary task of knowledge workers—is also a process, and we should bring the same improvement mindset to this process as well. When you consider how unhappy most people are with the meeting and email culture in their organizations, why don’t we bring a focused improvement mindset to fix it? Do you really need a 60-minute meeting with nine people in the room to disseminate information, or could you use an internal blog? Is dumping an unending stream of tasks via email on a person the best way to distribute work, or might a team-based kanban be better? Is a two-day strategy retreat the most effective and efficient way to set organizational direction for the next year, or is another form—strategy deployment, play-to-win, etc.—better?

Let’s untether the process and the outcome. The value is independent of the process. When we see that our current way of doing something is only one way of creating that value, we’re free to find a different—and better—way. 

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