Why Annual Reviews SUCK

by | May 13, 2021 | Thrivner ThoughtCast

Thrivner ThoughtCast | Why Annual Reviews SUCK

 

Purpose: To examine the pros and cons of the annual review process and provide alternate methods of job performance evaluations.

There is a memorable scene in the movie Jurassic Park when three scientists barely escape being devoured by a very upset T-Rex. Anticipating the worst, the audience’s hands clenched, eyes widened, expressions froze, breaths held, and hearts raced in classic response to terror. This same reaction is induced when your manager sends a notice regarding your annual job performance review.

The Annual Review

The traditional appraisal of an employee’s job performance is commonly known as the annual review. An annual review is a manager’s formal assessment or evaluation of your work within the past year, identifying specific strengths and weaknesses and offering feedback on overall job performance. An employee typically has an opportunity to interact, ask questions, and discuss setting future goals and gauging career trajectory within the organization. Although intended as a beneficial process for both supervisors and subordinates, the annual review is despised and dreaded by everyone. 

The annual review gets a bad rap despite being a reliable way to schedule and organize critical and uninterrupted workplace conversations between a manager and an employee. It is considered the benchmark for measuring employee performance and is very often tied to salary increases (or decreases), promotions (or demotions), and opportunities for interesting (or ordinary) team assignments. With so much at stake at this one meeting, it is no wonder that both managers and employees loathe annual reviews. 

One major downside to the annual review is the long wait – 364 days – between evaluations. Long gaps between reviews can create employee complacency, bad habits, and poor attitudes. Another drawback is that the emphasis is on holding people accountable for what they did the previous year rather than improving current job performance and setting the employee up for future success. When yearly reviews are conducted, they can be awkward unless employees also feel they have a voice, biased unless a manager has been trained in recognizing and minimizing prejudices, and intimidating unless there is an established workplace manager/employee relationship. Nervousness, uncertainty, and anxiety may also affect individuals and create tension among colleagues, especially when reviews result in raises, rankings, or scores that aim to compare performance against peers. When employees are developing and acquiring new skills, they are often left feeling frustrated about whether they are doing it right or whether there’s a better way to go about it without steady guidance. One Washington Post business writer expressed that annual reviews “restrict creativity, generate mountains of paperwork, and serve no real purpose.”1 

According to the management research firm CEB (formerly the Corporate Executive Board), 95% of managers are dissatisfied with formal performance appraisals, and 90% of Human Resource leaders do not believe these appraisals yield accurate information.2 When employees feel that their performance evaluations do not reflect their hard work, they become disillusioned and eventually disengage. Dissatisfied employees become less productive, absenteeism or tardiness increases, and apathetic attitudes develop as they search for a new job, someplace that will appreciate their contributions. 

Real-Time Feedback

Now, imagine a team of happy, motivated, inspired, and uniquely talented professionals working in harmony towards a common organizational goal without the use of annual reviews. More and more top-performing organizations are abandoning the “antiquated” annual review in favor of the “modern” method of Real-Time Feedback (RTF.) RTF is being utilized by more than one-third of U.S. companies, including powerhouses such as Adobe, Dell, Deloitte, Gap, GE, IBM, Microsoft, and Netflix.3 This revolution in performance management is based on having regular (weekly, monthly, quarterly) manager check-ins and one-on-ones with employees.  When RTF is done correctly, these casual developmental conversations help all employees at every level achieve their true workplace potential. A few other reasons that a growing number of companies favor RTF are: 

    • It delivers a more immediate, agile, and adaptive response necessary with rapidly changing trends and technology. 
    • Employee retention has improved in many organizations because the modern workforce favors this method. 
    • The accuracy and easy accessibility of recorded data for managers and organizations help gain keener and current insights to assist decision-making processes.

“85% of millennials reported they would feel more confident if they could have more frequent performance conversations with their manager.”4

“63% of Gen Z said they want to hear timely, constructive performance feedback throughout the year.”5

“68% of employees who receive accurate and consistent feedback feel fulfilled in their jobs.”6

“82% of employees appreciate receiving feedback regardless if it is positive or negative.”7

Although RTF has several benefits over the annual review, it is not without its downsides. It takes sustained commitment from top management down, as well as continuous manager training in order to succeed. Managers must lead with enthusiasm and create an “all-in” attitude and energy among the team. There may be too much talk leaving people overwhelmed and unable to distinguish priorities. Steps to improvement may not be easily identifiable, and often, employees are left with no idea of their overall performance. Transforming from the annual review process to an RTF system consumes a significant amount of time and resources initially, especially if supported by new software. Still, organizations that have made the switch viewed it to be in their long-term best interest.

The Effective Manager

Managers provide a crucial link to inspiring solid performances from employees and attracting and retaining talent. Yet, these managers often do not receive enough training on conducting a comprehensive appraisal that includes helping employees learn their key strengths and what areas they should focus on to further their development. Therefore, investing in manager training is in the long-term best interest of any organization. Elevating managers with training in bias and situational awareness, communication skills (especially active listening), and recordkeeping will help motivate, maximize and measure employee job performance.

In interactions and informal appraisals, managers should strive to:

    • Be visible and approachable to sustain engagement and create a connected workplace environment.
    • Get to know your people and focus on their strengths.
    • Share what success looks like in a specific role.
    • Stimulate REAL engagement and invite questions.
    • Communicate expectations and set specific objectives.
    • Ask, “What do you need from me?”
    • Give clear and honest feedback.
    • Spot and correct issues before they become problematic or insurmountable.
    • Deliver tough feedback when necessary, do it privately, and sandwich it with positive reinforcement.
    • Acknowledge, encourage, and praise with sincerity.
    • Recognize high-performing employees.
    • Foster teamwork and celebrate achievements as a team.
    • Intervene when required and reach out for additional support.
    • Facilitate conversations between other managers, employees, and their peers.
    • Explain how an employee’s work relates to the organization’s values and goals.
    • Document data and progress (Performance management software available).

Current Plight

Another reason to reexamine the annual review process is that the work environment has changed dramatically over the past year due to the COVID-19 global pandemic. Uncertainty and anxiety have affected job performance and morale as employees have had to abruptly adapt to new methods to optimize their productivity while working remotely. Given the unprecedented circumstances of 2020, employees are seeking timelier guidance, information, and encouragement while managers navigating this unchartered territory are searching to accurately and fairly reframe the job performance conversation. Even as offices reopen, hybrid working schedules will also be a part of the future, merging visual and in-person interactions; now would be an opportune time for organizations to strengthen their culture with improved performance management systems. Consider these transition principles when assessing an employee’s performance with respect to the current world dilemma:

    1. Adjust Approach: Add a little more emotion, flexibility, and compassion. Some individuals may be caring for children or elderly relatives, while others may be struggling with loneliness.
    2. Suspend Ratings: Temporarily hold off numerical ratings and deliver a narrative assessment.
    3. Concentrate on the Individual: Focus on what the individual has done well, suggest ways to improve the quality of work, and introduce steps to maximize productivity depending on an individual’s current situation.
    4. Probe and Pinpoint: Determine precisely the cause of an employee’s most frustrating obstacle. Refrain from vague questions such as, “How’s it going?” and instead focus more on direct questions that could help reveal an individual’s current creative block.
    5. Provide Feedback: Avoid critical statements and frame constructive input in a sincere and empathetic manner to create trust and build a  connection.
    6. Institute a Grace Period: Give those struggling time to turn things around and consider pairing them with an accountability partner.
    7. Recognize: Appreciate the effort and work of each individual and the value they provide to the team.
    8. Communicate: Review updated post-pandemic organizational goals to assure employees that top-down management stands behind its workforce.

“The primary objective, when evaluating job performance, is to help employees become as strong as possible.” 

-Mark Mortensen, Associate Professor of Organizational Behavior at INSEAD

Hybrid Approach

Organizations that are reluctant to ditch the annual review are making efforts to blend regular development feedback into their performance management systems. While annual reviews are still scheduled, they are also supplemented throughout the year with regular, informal conversations to gather information to be used during a more thorough evaluation.  Standard review formats are also being revised to steer conversations towards prioritizing development rather than accountability for past performance. Asking open-ended questions exacts more pertinent information than surveys to make the best decisions for the employee and the organization moving forward.

Strength-Based Questions: Identifying Strengths

✅  What do you believe are the top strengths that you bring to the organization?
✅  How are you using these strengths in your current role?
✅  Since the last time we talked, what achievements brought you the most pride? Why?
✅  Which parts of your role bring you the most energy?
✅  Which parts of your role are the most draining?
✅  Which of our current processes need to be expanded, reformed, or retired?
✅  Which of your strengths would you like to focus on and develop over the next few months?

Goals Questions: Creating Connections and Aligning Goals

✅  What are your aspirations outside of work?
✅  What inspires you to give your best each day?
✅  In what areas of the company are you most passionate?
✅  In the following year, what accomplishment or impact would you like to make at this organization?
✅  What obstacles are preventing you from reaching your goals?

 

Career Goal Questions: Exploring the Future

✅  What particular skills do you want to develop in the following months?
✅  What is your dream job title, and what responsibilities do you envision falling into that job description?
✅  What is one area that you could concentrate on in the following months to help you get closer to achieving your dream job at this organization?
✅  How can our organization assist you with your short-term and long-term career goals?

Invite Dialogue

✅  Share with me your thoughts on how our team can be better managed.
✅  Share with me your thoughts on how we can improve our team culture.
✅  Do you have any concerns or questions?8

Beware of Bias

One of the most challenging responsibilities for a manager, delivering verbal feedback or writing a formal evaluation, is awareness and commitment to overcoming conscious and unconscious bias. Bias is defined as “prejudice in favor of or against one person, thing, or group compared with another, usually in a way considered to be unfair.”9  Societal discrimination can come out in many forms (gender, race, sexuality, age, appearance, etc.) during a performance review; therefore, training programs are vital to give managers the tools, processes, and approaches necessary to conduct unbiased performance evaluations.

An ideal performance appraisal system recognizes top performers, who are then given opportunities to advance their skills, while low performers are given advice and support to improve their performance. While objectivity is necessary for an effective appraisal, there are common biases that could derail the process.

Common Performance Appraisal Biases10

    • Contrast Bias: This happens when a manager compares an employee’s performance to other employees instead of the company performance standard.
    • Halo Bias: This happens when an employee is rated highly in all performance areas because of one thing they do well.
    • Horn Bias: This happens when an employee is rated poorly in all performance areas because of one thing they do not do well.
    • Leniency Bias: This happens when a manager gives everyone on their team a “satisfactory” rating.
    • Recency Bias: This happens when an employee’s most recent behavior becomes the review’s primary focus.
Leadership teams owe it to their employees to be willing to put in the effort to overcome these pitfalls and hold one another accountable for their processes and decisions.

Supervisors should always be on the alert for unique soft skills and strengths in their subordinates. These skills should be recognized and encouraged; however, there is a hidden danger of bias when evaluating abstract concepts. How does one measure a positive attitude? Or work-ethic? Beware of the Idiosyncratic Rater Effect11 when rating another on an abstract quality: it is up to 61% more a reflection of the reviewer than the reviewee. The reviewer’s idiosyncrasies, personal opinions, and values determine how high or low these concepts are rated and then applied to the reviewee. To mitigate this rater effect, invite employee peer reviews and also meet with a colleague or panel of managers to analyze and discuss your feedback aiming for transparency and fairness. Assessments based on multiple factors, also known as a 360-degree review12, can help factor bias out of the equation and provide a balanced view of a team member’s skills, contributions, and performance.

Examples of Workplace Strengths13

  1. Work ethic: Employers value employees who work hard by completing their work efficiently, make the best use of available resources, exceed expectations, show initiative, and at times contribute that little something extra.
  2. Dependable: Employers value employees who show up to work on time, are prepared, and demonstrate accountability by delivering on commitments and taking responsibility for their actions.
  3. Positive: Employers value employees who keep setbacks in proper perspective, persevere through challenges, find joy in their work, and spread positivity throughout the workplace environment.
  4. Self-motivated: Employers value employees who demonstrate “can-do” confidence and ability to get the job done requiring little supervision, exhibited with creativity, resilience, and respect for resources and deadlines.
  5. Team Player: Employers value employees who “manage up” and embrace and promote project objectives and goals while rallying teammates.
  6. Flexible: Employers value employees who “go with the flow,” readily adapt to change, and let minor irritations slide.

Traditional annual reviews produce prolonged periods of silence which create assumptions and breed mistrust. The execution is usually an elaborate stress-inducing charade that generates more harm than good. If rankings and raises are dependent on the outcome, reviews stir up unproductive team discord rather than collaboration. Annual reviews are hated by every tier in an organizational hierarchy indicating there is something fundamentally wrong with the practice. A performance management revolution is necessary to provide more immediate, fruitful, and beneficial feedback. 

An excellent beginning to any performance management reform would be to reframe meeting titles that focus on looking ahead to future development. Titles such as “Performance Futures,” “Developing & Thriving,” or “Progress Reviews” state that an organization has a positive learning environment where people use their creativity, grow, enjoy themselves, and succeed.  Regular evaluations with real-time feedback (RTF) are casual conversations promoted by supervisors that stimulate subordinate engagement to increase timely, achievement-oriented, fair, and accurate development. A fluid and flexible performance management system such as RTF allows an organization to empower a workforce with appraisals that put them more in control of their careers. Once employees trust a system that makes them feel seen, heard, and valued in an organization, they are driven to deliver an authentic performance and become their professional best selves. Informal conversations that turn managers into coaches instead of judges eliminate all the terror of the performance review process so all can thrive.

Notes

  1. Cappelli , P., & Tavis, A. (2018, March 6). The Future of Performance Reviews. Harvard Business Review. https://hbr.org/2016/10/the-performance-management-revolution
  2. Allen Smith, J. D. (2019, October 29). More Employers Ditch Performance Appraisals. SHRM. https://www.shrm.org/ResourcesAndTools/legal-and-compliance/employment-law/Pages/more-employers-ditch-performance-appraisals.aspx
  3. Cappelli , P., & Tavis, A. (2018, March 6). The Future of Performance Reviews. Harvard Business Review. https://hbr.org/2016/10/the-performance-management-revolution
  4. 6 reasons why your company needs real-time feedback. Impraise. (n.d.). https://www.impraise.com/blog/6-reasons-why-your-company-needs-real-time-feedback
  5. Failure Drives Innovation, According to EY Survey on Gen Z. (2018, September 18). https://www.prnewswire.com/news-releases/failure-drives-innovation-according-to-ey-survey-on-gen-z-300714436.html
  6. Wholley, M. (2020, November 2). Mind-blowing Statistics on Performance Reviews and Employee Engagement. Talent Management Blog by ClearCompany. https://blog.clearcompany.com/mind-blowing-statistics-performance-reviews-employee-engagement
  7. Nordstrom, D. S. and T. (2019, March 20). How Employees Really Feel About Performance Reviews: The Answer Is Ironic. Forbes. https://www.forbes.com/sites/davidsturt/2019/03/20/how-employees-really-feel-about-performance-reviews-the-answer-is-ironic/
  8. Bigham, B. (2021, March 25). Top Questions To Ask Employees During Performance Reviews. 15Five. https://www.15five.com/blog/employee-performance-review-questions/
  9. Oxford Languages and Google – English. Oxford Languages. (n.d.). https://languages.oup.com/google-dictionary-en/
  10. Sharlyn LaubyOn December 7, 2020 0 comments. (2020, December 7). 5 Common Performance Review Biases That Managers Need to Overcome. Blog.SHRM.org. https://blog.shrm.org/blog/5-common-performance-review-biases-that-managers-need-to-overcome
  11. Buckingham, M. (2015, February 11). Most HR Data Is Bad Data. Harvard Business Review. https://hbr.org/2015/02/most-hr-data-is-bad-data
  12. Heathfield, S. M. (2020, July 15). What Is a 360 Review? The Balance Careers. https://www.thebalancecareers.com/what-is-a-360-review-1917541
  13. Wroblewski, M. T. (2020, January 21). Examples of Strengths in the Workplace. Small Business – Chron.com. https://smallbusiness.chron.com/examples-strengths-workplace-18568.html