Annual employee performance reviews have had their day in the sun for decades. But it may be time for the sun to set on that tired, old workplace staple.
Employee performance reviews lack true value to companies because:
When performance reviews only happen once a year, work product from 10 or more months ago is a distant memory. So, reviews end up focusing on recent activity alone. Employees don’t get a broad view of what they could have been doing better throughout the year. The company hasn’t benefited, either, from improved work quality, behaviors and productivity employees could have been delivering for months if they had known what management wanted them to do differently.
If there are details a manager does remember from months before, they likely involve a situation in which an employee made a major misstep – something that put a customer relationship at risk or required others to jump in and fix the problem, for example. But if the situation wasn’t addressed with the employee when it happened and the employee has performed well since then, the employee may have the sense that the gaffe has essentially been forgotten or that recent work has made up for it. Then, when it’s brought up in the annual review, the employee may feel sucker-punched, that the “old news” is still being held against him and that more recent, improved performance hasn’t been recognized.
If an employee gets key feedback only through an annual review, it does little to enhance his or her career and personal growth. It also means that managers may be consistently annoyed by behaviors the employee doesn’t even recognize as detrimental or that the company is missing a chance to build loyalty by regularly expressing how much the employee’s contributions are appreciated.
We all like and need feedback, but getting it only once a year puts a lot of pressure on that one meeting and on the people who prepare for and participate in it.
Consider sending annual performance reviews off into the sunset and instead beginning the practice of managers meeting with associates regularly throughout the year. Regular performance discussions:
Performance dialogues that happen regularly are far more comfortable and less fraught with anxiety. They dramatically reduce the potential for surprise. Done correctly, they can become natural, two-way conversations that build trust and align employees with company goals.
Annual reviews have also become synonymous with annual pay increases at many companies. While you may wish to continue providing employees with increased compensation each year, regular performance discussions allow you to tie a pay bump to specific performance goals. Rather than viewing an increase as an annual expectation, consistent conversations about performance will help employees understand how their work product is being evaluated and how their progress toward agreed-upon goals moves them toward increased pay.
Annual performance reviews have long been a standard practice in many organizations. However, their effectiveness is increasingly being questioned. These infrequent evaluations often fail to provide timely feedback, leaving employees unaware of areas needing improvement until it's too late. Moreover, they can create unnecessary stress and may not accurately reflect an employee's performance over the entire year. In today's fast-paced work environment, where continuous development and real-time feedback are valued, it's essential to reassess traditional performance management practices.
Is your organization ready to move beyond outdated performance reviews? Axcet HR Solutions offers expert guidance to help you implement modern performance management strategies that foster growth and engagement. Visit axcethr.com to learn how we can support your transition to a more effective performance evaluation system.