During the mid-1980’s, United Technologies Corporation (UTC) ran a full-page ad in the Wall Street Journal with the headline: “Let’s get rid of Management.” At the time more and more employees were being classified as “knowledge workers,” a term coined way back in 1959 by visionary business thinker Peter Drucker to describe people whose jobs involved more than routine manual labour.

Since that ad ran, the number of knowledge workers in the US has more than doubled. But even more than 30 years later, most businesses still don’t seem to understand the idea that “people don’t want to be managed.”

Today’s employees want leaders who allow them the flexibility and authority to do things their way and who help them develop their skills. This is especially true of smart, creative talent. You know, the kind of people that all businesses wish they had more of.

Of course, businesses need to ensure they’re getting the best out of their employees, and have a responsibility to nurture talent and help people learn new skills. The problem is that for most organizations this involves adhering to a flawed definition of what “management” should be and, more specifically, a backwards-looking performance review process.

It’s Time to Stop Looking Back at Performance

A recent study of annual performance reviews found that most people found them “outdated, time-consuming and stressful.”

From my perspective as Chief Human Resources Officer, the most damning statistic from the study is that 58 percent of people felt that performance reviews “are a needless HR requirement.” When more than half of the people who the evaluation process is supposed to benefit don’t even believe it’s being done with their best interests in mind, we need to seriously rethink how we manage employee performance.  

Moving From (Mis)management to Development

The easiest way to introduce a meaningful change is to start is with the language we use. Instead of “managing” or “reviewing” performance, talk about “developing” it. Just using the phrase “performance development” instantly shifts the conversation around the process to a more forward-looking, positive and employee-focused stance.

Employee engagement increases when people experience a sense of meaningfulness at work. Your most talented employees want to develop their skills and know their career is going somewhere. Managers also crave development, as according to a Gallup poll only 40 percent of managers in the US believe that their developmental needs are being met.

Focusing on development drives tangible business results. Research shows that when managers spend more time talking about development versus reviewing performance, employee performance increases. When meetings focus on development planning, employees perform 25 percent better.

By making these discussions a two-way conversation where employees are encouraged to provide feedback, you’ll also boost how well their managers perform.  The final key element is to ensure these conversations happen on a continuous and ongoing basis. It’s critical that development is not just a big deal discussion that happens once a year; if conversations are continuous and development goals are tracked and updated on an ongoing basis, performance improves significantly.

Keep Your Business and Employees Moving Forward

A common phrase you may hear a manager say to an employee at the start of a performance review is “there shouldn’t be any surprises”. And it’s true that in any well-run business, performance issues are dealt with as they happen rather than waiting for the end of the year evaluation. So why bother with a performance review at all?

For the two-thirds of businesses still doing backwards-looking annual reviews, the process is an outdated management tool. It does nothing for employees except demotivate them, while wasting a lot of their management’s precious time. It’s time to try another approach.

Changing the focus from management to development, from looking back to moving forward and from a once-a-year event to an ongoing discussion will lead to more engaged employees, better performance and a business that is always looking to the future.