Annual Performance Reviews: A Dying Breed

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By Susan E. West, SPHR, SHRM-SCP
QuadWest Associates, LLC – Detroit SHRM Resource Partner

May 9, 2016

For decades, annual performance reviews have been a fact of life in human resources and business. They have been seen as an important tool in evaluating employee work and identifying both strengths and areas of improvement. The latest theories, however, are moving away from these frankly painful processes in favor of a new method that substitutes regular and open communication in its stead. Here is a look at the death of annual performance reviews and the rise of a new way of evaluating employee work.

Why Lose Annual Performance Reviews?

Annual performance reviews, long considered a standard means of employee performance evaluation, carry with them many disadvantages. They are exceptionally stressful, both for management and staff, who dread this time of year. Management have to compile a year’s worth of the good and the bad, and even the best employees dread the potential laundry list of complaints.

Closed Communication

Worse, the use of once-a-year evaluations leads to a closed line of communication. By the time the review period comes around, minor problems that should have been dealt with months before may have exacerbated into major issues. It can be demeaning and morale-busting for workers and supervisors alike.

Inaccurate Information

What’s more, annual performance reviews are increasingly seen to yield inaccurate information, according to a recent SHRM article. Employees are rarely 100% honest on their self-evaluations. Additionally, managers may be either overly harsh about old issues that no longer apply, or too lenient on current ones for fear of losing otherwise good employees.

The New Way

The new approach to employee evaluation involves a much more open and constant line of communication and evaluation. Using incremental meetings throughout the year and relying on four simple questions (two in a basic “yes” or “no” format) allows staff members and supervisors to remain on the same page constantly.

More frequent check-ins not only reduce stress by keeping information current and eliminating the, “Am I doing okay?” concern many workers face, but they allow for more timely raises and promotions. Rewards based on current hard work have an immediate effect of increasing worker morale and productivity across the board.

Adjusting Your Business

Recent human resources theory offers up a number of ideas about how businesses can adjust their evaluation process to improve the environment and culture of your office, while also increasing worker effectiveness and productivity:

  • Get rid of number scales and check boxes on evaluations.
  • Give timely feedback on areas of improvement, but stay focused on work performance, rather than on personality issues.
  • Focus feedback on specific examples, rather than general behavior trends.
  • Avoid creating competition in the office. Work towards a team-building environment.
  • Offer as much feedback, if not more, on strengths as you do on weaknesses.
  • Be holistic and take teamwork and morale-boosting behaviors into account.