Herb Dew

Rethink the Annual Performance Review

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A constant conversation in HR circles is how to effectively maintain communication between managers and their employees; specifically, surrounding performance and development.

Many companies tackle this challenge via annual performance reviews.

In this scenario, the evaluation ends up being a onetime sit down, walking through a series of questions. This allows a static exchange of information between a manager and associate. Largely ineffective, this often creates more frustration than productivity strictly due to the fact the communication is limited to this single annual performance review. The tension building leading up to the event becomes a bone of contention between employee and leadership.

Companies with great cultures have largely turned to an ongoing conversation between managers and employees.

Performance and development should be a real time discourse. If an employee is doing well, they should hear about it immediately. If an employee is struggling, they should also hear about that immediately. The key is to deliver it in a positive way that assists the employee in understanding what they have done and how to fix it. Vice versa, frequently reinforcing what they are doing well and how to continue doing that as well. By focusing on development the employee should understand that what they’re being asked to do correlates to their goals or objectives. When those conversations continue throughout the year, there’s no necessity for a static, single annual performance review, in most cases.

This requires a commitment on HR’s part to train leaders to understand the importance of staying in contact with their employees.

Although there is no “formal” review process, establishing a process for maintaining regular “touches” regarding how employees are doing is critical. This ongoing conversation creates effective communication within the organization and allows for the exchange of ideas, innovation, and ongoing development. Take Adobe, for example. In 2012, long before moving away from annual performance reviews was a trend, Adobe did away with their formal process. As a result, they’ve seen increases in employees who would recommend Adobe as a great place to work. Additionally, employees that say they receive ongoing feedback that improves their performance.

While more companies are steering toward a more frequent check-in model, still 91% of organizations conduct a formal annual performance review. Furthermore, 80% are issuing some sort of formal performance rating. The consequences this model has on morale and productivity is clear, so why the hesitation to make the switch?

Companies must keep their finger on the pulse of the generations beginning to enter the workforce.

Millenials and subsequent generations have grown up in a constant communication environment, and they’ll be even more focused on ongoing communication. The upcoming workforce will continue putting emphasis on being connected, knowing how they’re doing, and where they’re going. Now is the time for organizations to adjust their ongoing development communication so they position themselves well for the next 10-20 years. Being kept in the dark all year until a performance review is no longer acceptable. There is a paradigm shift that must occur with companies. They must recognize generations entering the workforce are all about connectivity. Those that can’t create connections and foster relationships, are going to have a disengaged workforce.

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