From the pages of In Business magazine.
Many of you reading this may have just had your annual performance review last month, a ritual both workers and management look forward to about as much as a colonoscopy.
That near universal review resignation is enough to make you wonder why companies still do them, though the answer may be as simple as, “Because we’ve always done it that way.” Always every employee’s favorite thing to hear, right?
The annual review is increasingly outdated, and some companies have, indeed, made strides in implementing more frequent performance appraisals to address problem areas or recognize positive achievements in a timelier manner. Still, as recently as 2015, a Society for Human Resource Management (SHRM) survey found that 95 percent of employees say they are dissatisfied with their employer’s appraisal process.
A more recent study conducted in 2018 by Wakefield Research found that while 94 percent of executives are confident that employees are satisfied with their company’s performance review process, the reality is most employees feel the process is outdated (61 percent) because it’s too generic (22 percent) or too infrequent (6 percent), and often incomplete (62 percent).
In fact, while nearly 70 percent of companies still cling to an annual or biannual performance review schedule, more than half of office professionals say that’s not nearly enough — they want performance check-ins at least once a month. Even more (94 percent) actually would prefer their manager address mistakes and development opportunities in real time, which enables more agility through coaching and behavior changes to address skills gaps and shifting strategies.
I’ve had jobs at opposite ends of the review spectrum throughout my career. One employer conducted annual reviews in which I was told by my manager that he was required to find something that needed improvement in everyone’s performance. Rather than praising employees for doing their jobs well, managers were tasked with nitpicking things that often came down to personality differences and not actual performance, an uncomfortable process for everyone involved.
Another employer left reviews up to the discretion of individual managers, which basically meant we never had a review unless something was really wrong. Instead of addressing any performance issues early on, managers often waited until things were so bad that fixing them seemed all but impossible.
The once-a-year approach typically doesn’t work well with millennial and Generation Z workers who prefer real-time feedback, especially if they’re executed in arbitrary or inconsistent ways that can lead to bias and discrimination. Conversations that provide guidance for the future, rather than focus on detailing the past year, may be more helpful.
Effective leaders already know that regular feedback and ongoing checkups during the course of the year are better for correcting problems before they become too big and improving employee motivation and morale.
Still, if many managers already put off annual reviews because they’re inconvenient — 58 percent of managers surveyed in the Wakefield Research study said they frequently reschedule or delay employee reviews because they didn’t have enough time to prepare and end up spending an average of 15 hours of personal time preparing for an annual review — getting them to find the time for more frequent conversations is an uphill battle.
It’s clear that something has to give. Annual performance reviews may be how we’ve always done things, but they’re no longer working (if they ever did in the first place). I’d love to hear more about what local companies are doing to reinvent the review wheel. Email me at jason@ibmadison.com with your innovative review approaches and we just might feature them in a future IB article.
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