Do Annual Performance Reviews Kill Productivity?

ProjectManager.com

Most people like to get feedback. Whether it’s praise or constructive feedback, knowing how you are doing boosts productivity and keeps your work on track.

But annual performance reviews? Yawn.

Nearly 60% of companies report that annual performance reviews are not a good use of time, according to research published by Deloitte University Press. Over half reported that their existing performance management processes don’t drive staff performance or engagement.

RELATED: The 10 Best Performance Review Questions (with Examples)

recent New Yorker story supports a growing trend of companies rethinking the annual performance review in favor of continuous feedback and coaching models instead. Annual performance reviews have been the staple of managers for years, but there is good ground to believe that they are in need of a major rethink. 

Why Performance Reviews Are Broken

Based on recent research, there are four reasons why annual reviews are not working.

1. They’re subjective

You might end up with a score out of five, or ten, or a letter, but it’s still based on the opinion of one manager. If you get on well with your manager, then you can be confident in a good score. If you clash, however good your work, there’s a chance that their opinion of you will influence the outcome. Then if they have to rank their team members, the results get muddied even further.

To further complicate matters, you have to rely on that manager’s memory of your performance throughout the year. Depending on the manager’s memory or attention to detail, you might be only as good as the last task or project the two of you chatted about.

2. They don’t happen often enough

Do you even remember what you were doing 11 months ago? Canny team members will spend time each month noting down what they’ve achieved or filing away emails of thanks. Then they can pull out their evidence at the end of the year as a way to back up their request for a high rating.

If someone did a good job, you should be thanking them in a timely manner, not finding out about it six months later. If someone performed poorly then you need to deal with it when it happens, not weeks down the line.

An annual review isn’t good enough to keep your top talent on the right track, especially when business priorities change so frequently.

3. They take a lot of time

End-of-year review time is busy for managers. They have to schedule in at least an hour (according to best practice) with everyone on the team. They have to dig out the paperwork from early in the year when objectives were set for individuals and the team, or work out how to score you if you don’t have objectives. Then they have to type it all up, submit it to HR, plus find the time to prepare and attend their own review with their manager.

It’s a rush, and it doesn’t need to be. Why do we align performance reviews with the end of the calendar year when we have holidays to think about instead? All this time spent reminding yourself what you did and gathering evidence could be better spent on doing actual project work instead.

4. They’re not about the team

Project work, knowledge work: it’s the core of what we’re doing today. Your office might have a brainy genius tucked away in the corner, but it’s more likely that you get your work done as a team. Performance reviews focus on individual contributions and leave out something really critical: how you collaborate to achieve more together than you could alone.

performance management is broken

Alternatives to Performance Reviews

I’m not suggesting that you move to a culture where you give no formal feedback at all. There’s a huge leap between going from formal evaluations to a pat on the back when someone’s hit a project milestone, and that’s neither practical nor performance-boosting.

Here are some suggestions for pragmatic ways to switch it up.

More regular feedback: You will probably have heard that a defining characteristic of your millennial workforce is their desire for regular feedback. You can replace the annual review with regular monthly or quarterly sessions where you get give and get feedback. This has the added advantage of the team member being able to act on it more quickly.

Tip: If you can’t ditch annual reviews totally, add shorter, more regular reviews in as well. It will make the end of year session easier and faster!

Forward-looking planning: Performance reviews typically involve sitting down and reviewing the past work period. You don’t have to do that. Use the time to plan the coming year. Talk about how you can help them develop their skills and careers, upcoming projects, training programs and so on.

Tip: If you can’t avoid talking about the past, at least make this part of the review short. Spend the majority of time discussing how you are going to move forward.

Person-centric feedback: Many performance review models, especially those built up over time in large companies, use the Jack Welch approach to ranking employees against each other. There’s little value in doing this when jobs are diverse and everyone brings something unique to the team. I’d go as far as to say it’s objectively impossible in knowledge work. So focus on what you can influence: the individual’s performance and how they contribute overall.

Tip: Ditch performance curves and look at each individual on their own merit.

Jennifer Bridges, PMP, also has some practical tips for running better performance reviews for your team members in the video embedded below.

The Future of Productivity

The most productive teams are the ones engaged in meaningful work, with the tools and systems designed to support them and their projects. If your performance review process doesn’t help your team be more productive, then it is probably holding them back.

What are you going to do differently to give feedback in a meaningful way that doesn’t drain everyone’s energy?

One way to keep track of the performances of your resources is with ProjectManager.com. This software suite has the tools to monitor and report on every aspect of your project, including reviewing how your team members are doing. See for yourself by checking out our free 30-day trial.

 

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