Why One CEO Says The Yearly Performance Review Is Illogical

David Hassell, CEO of 15Five, a continuous performance management software platform, has a go-to analogy as to why businesses rarely make changes to the way employees are reviewed.
David Hassell, CEO of 15Five, says the yearly review doesn’t make sense in an era where employees aren’t staying in jobs as long as they once were and the pace of business changes very quickly.
“Someone once told me about this family where the mom would make this pot roast and the daughter said, ‘Why do you keep cutting the ends off the pot roast when you make the pot roast?’ The mother is like, ‘I don’t know. My mom used to do that. Let’s go ask her.’ And they asked the grandmother. She’s like, “Well, I don’t know. My mom used to do that… tradition gets passed on and passed on without even questioning why are we doing these things.”

That’s how Hassell felt about the yearly performance review, a concept he says doesn’t make sense in an era where employees aren’t staying in jobs as long as they once were and the pace of business changes very quickly.

“We’re not in static roles doing static things for long periods of time. People have to continually learn, evolve, grow, develop, change, respond, innovate,” Hassell says. 15Five’s software platform aims to address this with weekly feedback and objective setting, and built-in rewards that attracts an engaged and satisfied employee base.

He recently spoke with Chief Executive about the problems with traditional corporate culture, how CEOs can build a better culture, and more. Below are excerpts from that conversation.

What are some of the other big challenges and issues that you’re seeing in culture building in general that CEOs might be struggling with? 

It would be hard for you to find a CEO who isn’t at least bought into the idea that culture is important and if they aren’t, they’re getting there quickly. I’m in a few different CEO groups and there’s one in particular who was kind of was just like, “Ah, this culture thing, it’s really kind of fluffy and all this stuff.” And now he’s a couple of years into the business and he’s like, “Yeah, I really got to be focusing on my culture. We’re having all sorts of problems.” So, if they don’t already agree that it’s important, they’re going to agree pretty soon because it’s going to to be bad.

The challenge that most CEOs have in building a really thriving culture is twofold. One, they’re in an already established company that doesn’t have a great culture, right? So that’s more often than not. It’s the easiest time to influence, so it’s important to understand. I’ll take a step back. CEOs are usually in the role of CEO because they’re really good at actually creating vision and strategy and getting people to execute, especially with their leadership team. To also be great at building a great culture, you have to understand human psychology. Not a lot of CEOs went to school and got a degree in psychology or really put a lot thought into human dynamics, social dynamics.

Culture is a natural human phenomenon that happens regardless of whether you influence it or not. So it’s not something that can be controlled, it’s very hard to measure, but it’s real because you can feel it and you can see the results, kind of just like your emotions are real, or pain is real, but you know, even the best of Western medicine can’t attach a little meter to you and tell you how much pain you’re feeling. You have to report on a level of zero to nine. It’s very subjective, but it’s real.

Similarly, culture is real. It’s hard to measure and you can’t control it but you can influence it. And the best, easiest time to influence it is at the start. So it’s kind of two things. One, like I said, one of the challenges is that CEOs are already in a situation where the company is well established, the culture is well established and it’s not what they want. That’s one of the hardest [situations] to influence. Or they’re at the outset and they just haven’t really thought about this stuff and they don’t think it’s important yet. And then they end up in the latter category anyway. So those are the challenges.

What advice do you have to CEOs to build a better culture?

David: I think the first thing you want to do is understand…you have to understand where you are and what the delta is between where you are and what you’d want to create. I think you have to be honest with yourself and do an accurate assessment of the current culture. Another piece of that is to understand your culture is not in your mission, vision, and value, right? Those are things that might point to the culture at best. At worst, they’re just, things that are actually completely counter to what the culture is, more often than not, and that just breeds cynicism. So it’s not those things and you’re assessing the culture, we need to look at, “Okay, is the culture coherent with what we’ve said it is? So, is coherent with our mission, vision, value?” That’s important.

What are the inherent beliefs, values, and ways that we are actually are with each other? What are the kinds of experiences that we have? Do we have a culture of accountability and personal responsibility? Do people show up on time? When there are problems in the organization, how do people address them? How do they solve them? Are they collaborative? Do they hide and protect? How do people show up in the organization? What are the kind of norms and what do we believe in, what do we value? Do an accurate assessment.

The next is to say, “Okay, what are those things we really love that actually make this place wonderful? And what are the things that are actually rewarding our ability to do our best work as an organization?” So you do a list of the positives and the negatives.

The third would be a creative vision of where do we want to go. What does it look like? What does it feel like? What are the types of people that we want on board? But more importantly, how are those people showing up? Right? And then saying, “Okay. Well, how do we create a set of new experiences and practices to drive in that direction?” And the best way we found to influence culture is actually set up routines and rituals, whether they’re things we do in every meeting, things we do once a week, once a month, once a year, once a quarter, etc. And the CEO needs to be the first person to fully embody the new way.

What would say is the key ingredient to kind of adapting and ensuring as CEO you’re really on track to creating the best culture, the best environment for your company to thrive in? 

First and foremost, the thing for me was adopting a growth mindset across the board and being more committed to learning and growing than kind of putting on a front that I know everything and being right. And I think that that any CEO who is going to lead an organization through a lot of change has got to be willing to check their ego at the door and say, “Okay, I know what I know and I know what I don’t know and I don’t know what I don’t know. And I’m willing to kind of step into learning and growth and I want to create that same environment for my peers.”

And then the second piece really is being willing to and taking the time to listen, to ask great questions and listen to people throughout the organization, not just the leadership team.

Read more: The Negative Impact Of An Unaccountable CEO