Blog Performance

Why you should ditch the annual performance review

Annual employee 'Professional Development Reviews' (or PDRs for short) are well established in most organisations. Characterised by a rush of activity at the beginning of the year to align to company and individual performance goals and then hastily completed or fudged at the year-end. A 2016 CEB survey found that 9 out of 10 HR Leaders felt that annual reviews did not accurately reflect the performance of employees. Some prominent organisations have already decided to ditch the forced ranking system and yearly overhead which have come to be associated with PDRs.

Annual PDR's set up an uncomfortable dynamic between managers and employees in which one person is judge and jury for the other

Rose Mueller-Hanson, HR Practice Leader - CEB

So, What's The Problem With PDRs?

Firstly, PDRs clearly serve an intended purpose. They should help link high-level company and department objectives to individual long term goals. Allow both employees and managers to assess progress and provide a focal point for guidance and support. And give employees a means to provide feedback and help influence their workplace. These are all noble aims, but studies indicate they don't foster productivity or improvement and actually incite antagonism between managers and employees. There are a number of central issues to why annual reviews are not fit for purpose:

  • Forced Rating Scales: Managers tend to lump employees centrally on a rating scale, which limits the impact of feedback on both high and low performers. Rating employees once a year often lends itself to subjective assessment that is based more on perception than actual performance or improvement during the year.
  • Recency Bias: It is difficult at the end of the year for both the employee and manager to recall achievements from the past 12 months, so managers often rate employees based on recent performance rather than the entire year. This can be de-motivating for employees as previous achievements may be ignored.
  • Outdated Goals: Businesses change quickly - goals and objectives set at the beginning of the year can often become irrelevant during the year. As goals are not regularly reviewed or updated they essentially become pointless placeholders that add no value for the employee or organisation.
  • Ineffective Feedback Mechanism: An annual process misses so many opportunities to provide feedback at the right time during the year. Feedback is best received and acted upon soon after the event to ensure it has a lasting impact.

The Alternatives

So how do we achieve the well-intended aims of the annual PDR without the drawbacks? Well, over the last few years a different approach has started to emerge within a number of progressive organisations. A shift in process from annual reviews to a shorter-term feedback loop which is designed to keep goals relevant and feedback fresh. There have been a number of approaches adopted, including simply encouraging managers to have informal 1 to 1s with employees on a weekly basis or shifting to a lightweight formal process that asks employees some simple quick questions every one or two weeks.

The lightweight formal process can take the form of a weekly employee check-in which asks 3 key questions:

  • What has gone well this week?
  • What has gone NOT well this week?
  • What do you have planned for next week?

The manager can then provide timely feedback on each area highlighted, strike up a dialogue or help remove blockers. There are a number of clear advantages to this approach regular, simple approach:

  • Simplicity Of Approach: Employees will know (or at least will start thinking) about these key questions often. It helps them reflect on their role and provide input or ask for support in a clear consistent way.
  • Find Problems Early: Whether its friction with another team member or a concern about a project - issues are more likely to surface before they are forgotten or kicked into the long grass.
  • Encourage A Feedback Based Culture: Receiving feedback on a regular basis normalises this positive tool for change across your organisation.

Are SMART Goals Dead?

Specific, Measurable, Achievable, Realistic and Timebound (or SMART) Goals are the bread and butter of the traditional PDR. So, does a move to a regular feedback based model deem them redundant? Not necessarily so - a small number of SMART goals can still be a productive tool especially in sales or KPI driven environments - but should be used sparingly and aimed towards shorter timeframes (i.e. less than 3 months). The SMART goals should also be reviewed as part of the weekly process to ensure they are relevant and the 3 important questions above can be asked of them too!

How Do I Make The Change?

There are an increasing number of tools available to take advantage of this shift in PDR culture. The UK's leading cloud based solution is Weekly10, which allows managers to set up fixed cadence online check-ins to facilitate the process around key questions. It also supports flexible SMART goals and pulse surveys to help measure employee engagement in an informal but objective way. You ca contact us for a demo today or try out the platform for free with our 21 day trial.