Annual Performance Reviews: Are They Still Useful?

Annual performance reviews have long been a staple of the corporate world, but, increasingly, it looks like they may be going the way of the dinosaurs. After so many years of being the go-to evaluation method for employee performance, why are annual performance reviews falling out of favour now?

They Don't Motivate

Perhaps because they happen just once a year, workers tend to focus almost exclusively on negative feedback given during annual performance reviews. In fact, many employees tend to misconstrue even positive feedback given during their reviews. If an organisation is having trouble with motivation and retention, rethinking annual performance reviews might be very helpful.

They're Too Infrequent

Rapidly changing technology has forced us to be flexible and ever-learning. In the days of typewriters and snail mail, jobs didn't change very quickly, so annual performance reviews could be scheduled just once a year without any problems. Today, however, workers need more frequent training and feedback in order to keep up with changes in their jobs and companies. Without these frequent reviews and coaching, employees can become frustrated and stagnant. 

They Don't Meet Workers' Needs

Today's workers know they probably won't stay with one company for their entire careers. Because of this, they are as concerned about their personal career development as they are about the success of the organisation they work for. A once-a-year review doesn't offer much in the way of career development.

What's the Solution?

We know that annual performance reviews are not very motivating, that they're too infrequent, and that they don't meet workers' needs, but what's the alternative?

Turn Managers Into Coaches

Organisations like GE, Adobe, and Netflix are abandoning the practice of annual performance reviews since the practice isn't meeting the needs of the modern workplace. In its place, they're instituting a new practice: coaching. Managers dislike the old annual performance review model as much as employees, but coaching gives them a chance to help each employee in a personalised, effective way.

With coaching as a focus, managers are encouraged to check in with employees on a frequent basis - quarterly, monthly, or even weekly, this allows managers to discuss challenges and successes, help employees set goals, and provide essential follow-up to help them achieve their goals.

Making the Transition

Making the transition from annual performance reviews to coaching can be difficult. The following suggestions can help your organisation to make the switch:

• Eliminate or reduce check boxes, review forms, and numeric scales.
• Provide feedback on things employees can change.
• Be specific when discussing negative issues.
• Reduce competition among employees.
• Focus on strengths, but don't entirely neglect weaknesses.
• Keep the mood positive and hopeful.

If you're facing a decision about whether or not to scrap annual performance reviews, think about your business, employees, and managers. If you feel they could benefit from regular feedback, training, and motivation, consider adopting a coaching approach. Remember that your HR department will likely still need some reports in writing, but it's possible to incorporate these requirements into an effective coaching program.