Annual performance reviews used to be the bread and butter of learning and development (L&D). These reviews can determine employee benefits, from salary raises to promotions and everything in-between.
But over the years, annual performance reviews have become a practice of the past. Employees nowadays crave more useful and frequent feedback. In fact, according to widely reported research by Corporate Executive Board (CEB) 95% of employees say they are dissatisfied with their companies’ appraisal systems.
Still, performance reviews are often the only channels of feedback. Implementing an effective, alternate approach to giving feedback is vital to promoting a future-ready work environment that meets modern employee expectations.
Why the Annual Performance Review Is Outdated
Annual performance reviews aren’t effective in the first place. The intent is good, but the inconsistent feedback can leave room for error. In some instances, employee reviews are operational check boxes for organizations that clearly lack value for both supervisors and their employees.
Supervisors can often find themselves scrambling to think about how to rate their employees, as well as give examples of good or bad behavior. Thanks to recency bias, the employee’s last few months of performance are usually reflected in the review rather than an entire year of productivity. And countless times, leaders can take a “copy and paste” approach to their reviews, sometimes even forgetting to remove another employee’s name.
From the employee’s perspective, performance reviews can seem even worse. Many employees have to wait for one meeting every year to receive formal feedback that can determine their next raise or promotion. And when these annual performance reviews are scheduled late, it can insinuate that the employee’s performance is not a priority. Many annual reviews can take on a generic framework, also suggesting a lack of importance to that employee’s contributions.
Although these real-life examples may sound like extreme cases, they happen far more frequently than they should. Annual reviews weren’t effective for supervisors or employees in the past, and they’ve become even less effective as technology and societal expectations continue to improve and change in today’s world of work.
Adapting for New Generations
Generational differences can play a massive role in the perception of annual performance reviews. Baby Boomers may accept the practice as a traditional approach to providing feedback. On the other hand, Millennials and Gen Z employees may expect more frequent and meaningful feedback and coaching rather than annual reviews.
As the workforce continues to expand in age range and work styles, leaders must adapt their internal practices — for instance, offering more flexibility and digital communication options for younger generations. And one of the most critical practices to change is the annual performance review.
Productive Alternatives to Annual Performance Reviews
So without annual performance reviews, how should managers share employee feedback? It all comes down to building relationships. Take the time to get to know each team member, including what motivates them, how they like to communicate and what they want out of their career. You can start with these four tips:
1. Put relationships first.
Establishing and strengthening relationships should be your first priority. When you bring someone on to your team, sit down with them to talk about expectations. Include the expectations you have of them and the expectations they have of you. Discuss how they like to get feedback. This will send the message from day one that you value their development and want to support them in a way that works best for their work style.
2. Tailor your frequency and style of feedback.
A one-size-fits-all strategy doesn’t work. People are different; some employees may prefer more frequent feedback than others. Some might also just need a quick comment to completely change their behavior, while others might require more frequent and direct reminders. By tailoring your strategy to the individual, you’ll bolster your relationship with them and inspire them to continue doing their best work.
3. Nix the ratings.
If your organization shares written reviews, refrain from using ratings in the process. They can get in the way of people receiving real, meaningful feedback, which is what performance reviews are all about. Instead, provide continuous feedback throughout the year to address issues as they arise, as well as to emphasize jobs well done. You might also consider a 360-degree feedback method, which allows you to hear from an employee’s manager, peers, subordinates and vendors. This can keep feedback more objective and well rounded.
4. Tweak the process as you go.
Check in frequently on your new review process. Ask employees for anonymous feedback about how it’s working, what’s working about it and what would make it more meaningful. Then, be sure to communicate the changes you’ve made to your process, so employees know their voices are being heard.
Just because annual performance reviews are “the way it’s always been done” doesn’t mean they’re the best option for the modern employee (or past employees, for that matter). People crave real-time, relevant feedback that they can learn from and apply on an ongoing basis. This benefits employees and the company, as employees can develop incrementally over time rather than in baby steps at each annual review.
By setting expectations with employees from day one and creating open lines of communication, you can develop a feedback system that keeps employees motivated, encouraged and ready to bring their best selves to work. No annual reviews necessary.