Improvisations

We blogged earlier this month about some companies trying creative responses to the recession, including reducing employees’ hours rather than laying staff off. The New York Times this week reported that there’s a trend: An increasing numbers of organizations are seeking to cut labor costs but avert or limit layoffs – so they are trying measures such as reducing workweeks, offering or requiring unpaid time off, or eliminating bonuses. According to The New York Times,  

Companies seem particularly determined to find alternatives to layoffs in this recession, said Jennifer Chatman, a professor at the Haas School of Business at the University of California, Berkeley. “Organizations are trying to cut costs in the name of avoiding layoffs,” she said. “It’s not just that organizations are saying ‘we’re cutting costs,’ they’re saying: ‘we’re doing this to keep from losing people.’ ”

Also this week, Caterpillar Inc. announced that it will it will cut compensation for executives and managers (but particularly executive compensation, which the company may cut by up to 50% for 2009) and offer a voluntary buyout option to U.S. employees.

While layoffs make headlines, some companies are finding creative ways to respond to the recession:

•  Red Hat, a provider of Linux-based software, recently decided to cancel its big holiday party – and instead donate the money saved to a food bank charity that employees selected. 
• Using technology from a company called ON24, publisher Elsevier is hosting a conference that people can come to either in-person or virtually – with the latter a handy option for attendees looking to save on travel expenses.
• Meanwhile, some companies, such as Hubbardton Forge, have announced decisions to reduce employees’ hours to avoid layoffs.

Are performance reviews passé? At the very least, they are a hot discussion topic  –  judging from reactions to the lead story in this week’s edition of Business Insight, which we at SMR produce in collaboration with The Wall Street Journal.  The article’s author, UCLA management professor Samuel Culbert, opines that performance reviews are  “little more than a dysfunctional pretense,” with bosses out to justify predetermined compensation ranges. Meanwhile, Culbert argues, subordinates become unwilling to admit vulnerabilities because they know such admissions may come back to haunt them at future performance reviews.   

Culbert’s article garnered dozens of comments. Many readers agreed with Culbert that performance reviews need improvement. Wrote one: “As a knowledge worker, performance reviews feel like some anachronistic, industrial-era tool designed to assert dominance in employee relationships… It is hard for me to imagine a motivated professional who benefits from this type of defined periodic review instead of ongoing trusted communication.”  Others disagreed, with some noting that formal performance reviews help managers avoid litigation if they need to later fire a poor performer.

What’s your experience? Are performance reviews worthwhile — or not? How can they be improved?