The Annual Performance Review: #FAIL

By David Hassell

We are habit-forming and habit-abiding creatures. It’s part of human nature. And, it’s as true of our personal lives as it is of our work lives.

Every day at work, we engage in certain processes and behaviors without understanding where they came from and why. It’s just the way things have always been and so we keep doing them. The annual review is a perfect example. What began as a staple of corporate process persists decades later as a rather unexamined policy. Why do we still use this antiquated method of collecting information and evaluating employee performance?

Tradition for tradition’s sake

There is an old story about a girl who is learning to cook meatloaf with her mother for the first time. After careful preparation and shaping, the mother cuts off the ends of the loaf and places it into the pan. Curious about this seemingly nonsensical behavior, her daughter inquires as to why the ends are removed.

Bonus: Read why and how companies are rethinking their annual performance review process. Complete with stats, case studies and links to resources.

Her mother thinks for a minute and says, “Well, that’s what my mother always did.” At the daughter’s insistence, they call the girl’s grandmother. Grandma says that she always did it because that’s what her mother did.

Curiosity gets the better of them, and they travel together to visit the girl’s 90 year old great-grandmother. After hearing the question from her inquisitive descendants, she laughs and replies, “Why are you cutting the ends off? I only did that because my pan was too small!”

The good old days

Today we have a bigger pan, but we are still cutting the ends off of the meatloaf. By that I mean that business models have changed dramatically. For most previous generations, an employee worked for the entire length of their career in the same field, often for just one company. The annual review made sense to evaluate someone who was working within one realm of expertise for 30-40 years.

Baby boomers were generally more static than today’s generational workforce. They worked in a world of clearly-defined roles and hierarchies. People began at entry level and headed up a ladder. Promotions and raises were given along the way. Performance was recounted and rewarded (or otherwise) by sitting down with one’s boss every twelve months.

A new age

The new generation of talented youngsters doesn’t stick around for thirty years. You’re lucky if they stay for three. With all that job-hopping, a yearly review means 2-3 in the lifetime of their employment with you.

The pace of modern business is lightning fast. If you wait to do a review once every year, you miss a huge opportunity to have your team operating at its peak potential. Priorities and shifts in the market occur all the time, not just every December. By neglecting regular check-ins with talent, leaders are unable to collect valuable information that could be keeping the company on its toes.

Employees are expensive and risky. Why weed out bad apples once a year? And conversely, why risk losing your A-players because they haven’t gotten the feedback or support at the moment they needed it?

The business world needs a better way to get more regular feedback from employees. Checking in quarterly, monthly, and weekly will provide valuable information that can be acted upon in time to make a difference. Then we can replace the annual review.

Recency dictates reality

Another facet of human nature is that we tend to keep recent history at the forefront of our memory. Even in the span of 24 hours this holds true. Imagine you’ve had the best day since the moment you woke up on the right side of the bed. But on your way home from work, you get jumped and your wallet is stolen. How do you think you’re going to respond to your wife when she asks you how your day was?

Applied to workplace management, how can we be expected to give an assessment of performance for an entire year when we are hard-wired to judge based on the most recent memories? Two scenarios are possible here:

Scenario 1: You have an employee who is an average or below-average performer all year. In the last two or three months leading up to the review, the employee starts to step it up. Recent memory colors our judgment and we’ll likely tend to rate that person highly. What we fail to account for is accuracy in assessment over time at the moment we sit down to write their report.

Scenario 2: The employee is a solid performer who is suddenly encountering challenges. Perhaps these are job related or maybe they are personal. Trouble with a relationship, children, finances, health problems…there are a multitude of reasons for diminished performance. These recent issues have tainted an otherwise stellar work record. Again, we run the risk of seeing through too narrow of a lens.

Shifting the paradigm

I founded 15five on the idea that success is built on a framework of information. Since memory is inherently unreliable, regular pulse checks can supplement recent history with an objective historical record of performance that is more complete, comprehensive, and qualitative. Every team member gets a voice, leadership is able to monitor and archive real-time performance to form objective historical records, and offer support when it’s needed.

Evaluations are not just about bonuses and promotions. In fact, these extrinsic motivators are not what drive the modern workforce. Generations X and Y are driven by purpose and are highly motivated by feedback. When people are in the right environment, whether an employee at work or an athlete on the basketball court, people always want to improve. We allow them to tap into that desire by responding to their questions and guiding their performance.

Not only does feedback provide the proper context for team members to understand their roles, but the conversations spawned by this regular feedback loop supply the data I need to make timely organizational decisions.

Is 2013 the year that you ditch your annual performance review? Please leave a comment below.

Photo Credit: Jennifer E Smith

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