Re-Evaluating the Annual Performance Review Process

Re-Evaluating the Annual Performance Review Process

September 16, 2015
Human Resources

By RDBA Executive Director, Annette Maggi, MS, RDN, LD, FAND

You know the performance review drill: At the start of the year the employee and manager set annual goals. At the end of the year, the manager rates the employee on how well he or she met the stated objectives. The manager also provides feedback on where the person did or didn’t excel. The evaluations are factored into a “score,” arrived at in lengthy meetings of managers and leaders who discuss groups of people as compared to their peers. Then raises are assigned for each person.

This review process is increasingly criticized as a negative, time-consuming and outdated way to provide feedback to staff. The once-a-year review doesn’t align with real timing in industries that are constantly evolving. Additionally, a survey of 3,000 companies in 100 countries by Bersin by Deloitte found that only 10% of companies found the annual review process a valuable use of their time.  

What’s replacing this antiquated model is still a work in progress, but elements of the new performance management approach include:

  • Focus on strengths.  Society's relentless focus on people's shortcomings has turned into a global obsession. The Strength Finders work has made it clear that people have several times more potential for growth when they invest energy in developing their strengths instead of correcting their deficiencies. This approach drives towards the future instead of focuses on the past.  
  • Define reachable goals tied to achievable benefits. Some argue that the annual review process provides a clear timing for raises and salary adjustments. But defining clear goals and tying benefits (salary or other) directly to them is more effective at driving employee engagement and performance. 
  • Define short- and long-term goals. Both are important in the work setting, and flexibility is essential. A variety of tech tools, such as Small Improvements, exist to help both employees and managers track progress against goals.  
  • Provide real-time feedback.  Ongoing feedback makes staff feel valued and can improve employee retention. Feedback should be provided on a quarterly basis if not more frequently. During these meetings, highlight significant incidents, provide clear examples of positive and negative behavior, and target the feedback on things employees can change vs. personality traits or characteristics.  

In a survey by Deloitte, 58% of executives who responded indicated their current performance management approach drives neither employee engagement nor high performance.  In today’s workplace, a nimbler approach including elements discussed here is needed.