2. Use a Performance Review to Review the System, not the Person
If you want to really free your workforce to be fearless in the face of challenge, and find reserves of innovation you did not know they had, remove from them the constraints. Performance review is an industrial age concept that doesn’t play well in the Knowledge worker era.
Give or take a few points depending on conditions, W. Edwards Deming found that typically, 95% of performance could be attributed to the system. If this is remotely true, how much are we spending to get knowledge of performance that only contributes 5%? How much is it costing us in lost productivity due to increased cynicism, low morale, and distrust created due to the performance review?
Continue to use the performance review. Just don’t use it to judge a person’s performance. Rather, use the qualitative information you get from one review to create a quantitative review of the system that is creating the performances you are seeing. With this distinction, you’ll create a different culture, which will perpetuate different systems. Will it create a disruption? Perhaps. But if the business is not performing the way you think it should, disruption is what you need. Every system only gets what it is designed to get.