It’s Time to Evaluate Your Annual Performance Reviews
The annual performance review is a common ritual. While these reviews can add value when done right, they are often done in a way that does more harm than good.
The nominal purpose of an annual review is to look back on the past year with an eye toward some combination of recognizing success and identifying areas for improvement. Ideally, the feedback is two-way, with the employee and the employer working together. More typically, review feedback is directed at the employee’s performance only and refers to a small subset of the events that happened over the prior year.
In many cases, annual reviews are the main (or only) opportunity for feedback, which makes incremental improvement difficult. Confusing matters, often the performance review is connected implicitly or explicitly to compensation, mixing feedback—which is supposed to be about improvement—with evaluation.
Given all the meaning attached to annual reviews, it’s not surprising that many employees don’t look forward to them. These reviews frequently create a high level of stress for workers and end up making everybody—bosses and subordinates—less effective at their jobs, says Samuel A. Culbert, a clinical psychologist who argues for ditching performance reviews altogether.
But instead of doing that, a helpful alternative to an annual review is more frequent feedback. After all, if an employee isn’t doing something the most productive way and you wait until the end of the year to tell him, you run the risk of embarrassment, a struggle to remember the circumstances of months ago, and continued unproductivity.
However, feedback will also be more beneficial to employees if it focuses on successes in addition to areas for improvement. Joseph Grenny, coauthor of Crucial Conversations: Tools for Talking When Stakes Are High, says that before offering feedback, you should ask yourself three questions: What do I want for me? What do I want for the other person? What do I want for the relationship? The answers will remind you that feedback should be motivational and constructive.
While an annual review makes sense in that it is tied to compensation review cycles and it seems to provide an opportunity to view situations in perspective, it may not be a useful way to help people identify how they can work more effectively. By offering feedback opportunities frequently throughout the year, you can help your team be more effective, and you avoid a situation where the annual review is the first time an employee is notified about an area that needs improvement.
If you must do annual reviews for some bureaucratic reason, hold those frequent sessions anyway—they will be an opportunity to collect data. Then, at annual review time, you can summarize previous discussions, talk about big-picture goals, and make plans for taking the employee’s performance to the next level.