Why you should ditch the annual performance review
Updated 14th January 2023
Annual reviews for employees are a long-standing tradition in organisations across many business sectors. But, despite being a supposedly time-tested tool, they're characterised by a hectic rush of activity at the beginning of the year. It's a madcap dash to align to company and individual performance goals. Not to mention that the review itself ends up being hasty. And that's if it's not just totally fudged. All this to say, it's past time for employers to ditch the annual performance review.
Annual performance reviews, also known as Professional Development Reviews (PDR). Practically everyone is sick of them at this point. And that's hardly a new development. A CEB survey from all the way back in 2016 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. This runs contrary to the fact that people learn best from regular, timely feedback. Waiting months to offer a critique will get you nowhere.
Annual PDR's set up an uncomfortable dynamic between managers and employees in which one person is judge and jury for the otherRose Mueller-Hanson, HR Practice Leader - CEB
Why ditch annual performance reviews?
It would be one thing if annual reviews served their intended aims: Improving productivity, helping employees to grow, and establishing what support your people need. These are all noble aims. But studies show they don't foster productivity or improvement and actually incite antagonism between managers and employees. In fact, according to Gallup, only 14% of employees strongly agree their annual reviews inspire them to improve. Here are the central issues behind why you should ditch the annual performance review:
- 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 is de-motivating for employees as previous achievements end up ignored.
- Outdated Goals: Businesses change quickly - goals and objectives set at the beginning of the year can often become irrelevant during the year. Goals that aren't regularly reviewed or updated essentially become pointless placeholders. They 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. It's best to give feedback while the inciting incident is fresh in the employee's mind. You know what they say, strike while the iron is hot.
So how do we ditch the annual performance review while achieving its well-intentioned aims?
The answer is a shorter-term feedback loop. Regular, ongoing feedback keeps goals relevant and critique fresh. Different businesses have adopted a number of approaches. These range from simply encouraging managers to have informal 1 to 1s with employees on a weekly basis, to shifting to a lightweight formal process that asks employees some simple quick questions every one or two weeks.
These shorter feedback loops are exactly what Weekly10 was founded to do. The lightweight formal process can take the form of a weekly employee check-in which comes in two sections. First, employees answer a set of personalised questions which aim to address:
- What has gone well this week.
- What difficulties they've encountered.
- The state of their wellbeing.
Second, employees update their goal-tracking, which uses either SMART Goals or OKRs. 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, if you ditch the annual performance review, will that make this approach redundant?
Not in the slightest. SMART Goals are great for breaking down complex projects into manageable milestones. Hitting these milestones helps keep employees engaged, and spurs them onto the next goal. And, if they're tracking those goals as part of a weekly update, that means you'll be getting a steady stream of progress reports without having to nag your people. So, if you're big on SMART Goals, don't worry. You can ditch the annual performance review without having to throw out your approach to goal-setting.
How Do I Make The Change?
You have plenty available to take advantage of this shift in feedback priorities. But, while you can run regular feedback informally, a proper system removes a lot of the headache. For instance, the employee check-in system we at Weekly10 provide is incredibly light-touch and user-friendly.
A typical performance review is a black hole for your time and energy. But our check-ins only take a few minutes, whether you're reviewing an update or submitting your own. But be sure to take advantage of their personalised nature, and pay attention to what your people tell you.