Annual Performance Reviews Do Not Work!

Chris Goodwin, SHRM-SCP

Annual performance reviews are fast becoming a thing of the past. Not only do they yield very little value, but they just don’t work. In some instances, the annual performance review is received in a way that does far more harm than good. If the employee is expecting praise for a job well-done but instead receives criticism, no matter how constructive, they very well might let others know how undervalued and unappreciated they feel, which could compromise morale and cause many problems going forward.

Those HR professionals in the know have long realized that the traditional annual performance review process doesn't work for a variety of reasons; the process is dated and doesn't encourage innovation or collaboration. Annual performance reviews cause stress for both managers and subordinates. They cause competition and division among team members. And given the current difficulties of retaining even the most content employees, an annual performance review could backfire and leave you with a position to fill. They’re based on subjective data and don’t always convey the “attaboy” for a job well done that we all need to inspire us to continue. The tension and anxiety induced by annual performance reviews impact employee productivity and affect other members of the team. These reviews can be a threat to your company and its culture and even contribute to employee turnover.

So, what’s a company to do? There needs to be a way to measure employee performance and provide constructive feedback so your team moves toward success. That’s why many progressive HR professionals are trying to get out in front of the old-school performance appraisal process and find innovative solutions that build and grow employees and businesses rather than tear them down.

Annual Performance Reviews Do More Harm Than Good

A recent study by the American Psychological Association found that the approach to performance reviews and the feedback they offer do more to make the employee performance worse in one-third of the cases. There are many reasons for these results. Management likely has not provided regular feedback, which makes the timeliness of the criticism or praise awkward and ineffective. In most cases, issues are long resolved and successes are too long ago. The results? A rehash of an embarrassing or painful time or praise that comes far too late to serve any real purpose and may be perceived as an afterthought. 

In many businesses, management often wears many hats. They may have a team of subordinates who require regular engagement and, frankly, managers might not have the time or skill set to offer a worthwhile performance review. Crafting a workable plan to overcome inefficiencies in team members isn’t something they’re trained to do. The entire encounter seems awkward and forced, proving to be ineffectual.

Ideas and Insights to Reimagine Your Performance Reviews

Many businesses and organizations have found successful ways to approach performance reviews that don’t result in the usual stress and anxiety, among other things, and still follow legal protection protocols. 

The idea is to simplify the review, make it less rigid and all-encompassing, and more relevant to the work that’s being done. Introduce more frequent meaningful and supportive conversations between managers and subordinates regarding expectations, progress, and development. This helps develop engagement which in turn improves productivity. 

Ongoing communication is essential when it comes to the developmental aspect of the performance review. Anxiety comes from not knowing how to move forward successfully within the organization. Regular check-ins offer the opportunity for guidance. Employees also need to know what their futures look like. With ongoing communication, you can help them understand what needs to be accomplished to earn raises and bonuses and be promoted. 

There is the opportunity to become a little “micro” in management style so to that end training and guidance are needed before your organization implements this method to replace the annual performance reviews. For regular “check-ins” to be effective there needs to be a protocol across your organization. Teach management how to communicate with their teams in a positive way. Role-playing is one technique that helps.

Remember, for coaching to be effective management must look beyond the performance numbers and standard measurements and instead look at ways to understand the individual. The limited observations between management and employees need to change. Real conversations must be normalized.

How to Have Meaningful and Constructive Conversations with Your Team

Even as businesses strive to connect, it doesn’t always happen. According to a recent Gallup poll, only 19% of millennials say they receive regular feedback and only 17% declare that feedback to be meaningful.  So, should the annual performance review go the way of other outdated business models? Maybe not. By providing frequent and honest feedback throughout the year, management can take a more relaxed approach to that yearly progress review. Keep the annual review consistent with what your employee has heard throughout the prior months and you will both find the meeting more motivating, affirming and any constructive guidance received more readily. The review is certainly less awkward and anxiety-inducing.

The most successful performance management system is one that maintains communication in line with a work culture that’s based on honest feedback, a shared definition of excellence, and supervisors and managers who model great managerial skills.

Business leaders need to reimagine their performance management system and develop strategies that are effective, inclusive, empowering, supportive, and positive.  Anything less is detrimental to your organization.

HR Support is Critical to Successful Reviews

Don’t be overwhelmed by reimagining your annual performance reviews. Cornerstone Coaching & Consulting offers support to guide you through performance management and additional top-tier HR solutions tailored to your business and workforce. Our expert consultants are HR professionals who know how to help you take care of your greatest asset; your people. Contact Cornerstone Coaching & Consulting today.