Annual reviews are stupid

Salina Wuttke

Salina Wuttke

Senior Director of Marketing North America

August 16, 2016

Annual reviews are stupid

Salina Wuttke, Senior Director of Marketing North America
August 16, 2016

The annual performance review has been ubiquitous in just about every workplace for as long as most can remember. It’s as common as a well-pressed suit or break room coffee maker, though even more outdated.

Research from just about any reliable source now points to one conclusion: annual reviews suck.

Major companies like Netflix and Google have already replaced the old performance review model with smarter alternatives — read on to find out how you can too.

Why the performance review is disappearing

Much of the criticism boils down to this: when you can contact your employees instantly over a variety of platforms, why schedule a review only once a year?

Employers have realized their employees would rather find out what they’re doing right and wrong immediately, instead of waiting until an arbitrary date.

It seems so obvious and yet it still makes the news when big-names like GE, Adobe and Motorola go public about changing how they manage employee reviews.

These companies are just catching up to decades of research asserting that annual reviews do little to create better employees. Though in their defence, apparently many organisations only do annual reviews “to protect themselves when they want to discipline or fire someone,” explained business consultant Rick Maurer.

Maurer also noted that some organisations have only just realized they’re simply ineffective at giving their employees clear feedback.  They’ve run review programs that rely on points and scores so employees have an objective idea of how well they’re doing, but Maurer said that lets employers off the hook.

“Something about saying, ‘Bob, you got a 3.4279 on this key objective’ sounds so specific, measured, and true,” he said. “Many are afraid of giving feedback, so these seemingly objective categories and numbers give the leader a place to hide.”

Millennials and frequent feedback

One of the other main reasons annual reviews are disappearing is because of the influx of millennials into the workplace. These twenty and thirtysomethings want to hear from their supervisors frequently; remember, this is a generation that grew up on participation trophies.

So for millennial employees at least, constant feedback contributes to higher morale. They want to know they did a good job on a project when it’s completed – not three months after the fact.

But the revolving door of communication goes both ways.

Make sure employees know your door is always open if they want to ask about a project or get your feedback. By staying in the loop, you’ll have a better grasp of each employee’s performance, work ethic and strengths and weaknesses.

Best alternatives to annual reviews?
Whether you manage a team of two or 20, you can find a way for everyone to get the kind of review they need and want. Ask your employees what works best for them:

  • Keep some kind of formal process, but do it every quarter?
  • Switch to biweekly sessions that are more casual?
  • Start a continuous feedback loop using a mix of online tools and informal conversations
  • Ask your employees to create a list of annual goals broken up by quarters and months

If you have a large team, it may be hard getting agreement on one kind of review. Consider creating an online survey to get anonymous feedback or simply send around an email asking for their thoughts.

While many companies grade their employees based on a certain set of skills, like a report card, that style is losing traction.

Business coach Josh Denton said that scores are fine, but only if the numbers are actually used to grade an employee’s progress in the role.

“The goal is for employees to change behavior and gain knowledge,” he said. “There must be a way to measure goals, objectives, and progress. Without some type of measurement (using qualitative or quantitative data) we are simply going about without an idea.”

Having your employees involved in their own review process will make it more effective than grading them by the same qualities you’d grade a coworker doing an entirely different job.

As cliched as it may sound, asking your employees to grade themselves may also be an effective tool. Encourage them to be unafraid to share their mistakes with you. In turn, be ready to offer advice and suggestions on what they can do better.

An employee who’s willing to share his or her struggles is more likely to come to you in the middle of a failing project instead of waiting until the deadline.

While the employee-employer relationship should always remain professional, closing some of that distance can lead to a more productive and more communicative workplace.
The annual review has potential. It can evolve into a useful tool for guiding employees forward, or it can remain, as business processes and systems expert Jayne Heggen said, “a line item on a checklist that is simply checked off once a year.”

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Salina Wuttke
Salina is the Senior Director of Marketing in North America and has 15+ years experience in delivering proven growth marketing strategies to software companies.

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