“Comeback Kid” of 2017? … The Annual Performance Review Could Reaffirm as Critical HR Tool

To paraphrase a quote from Mark Twain, reports of the annual performance review’s death have been greatly exaggerated.

It wasn’t long ago that both major news outlets and HR specialty pubs were reporting that the performance review was going the way of 8-track tapes and mullets. That “big business is falling out of love with the annual performance review” (Washington Post) and that it was “time to kill the performance appraisal process” (ChiefHRO.com). That respected companies were abandoning the review – often dreaded by managers and employees alike because of the questionable usefulness of a ritual that only happened once a year – in favor of ongoing, two-way feedback discussions. Through a continuous conversation, the experts said, performance improves in real time with better worker engagement.

Well, don’t write the obituary for the annual review; apparently, it’s not dead yet. To wit, Brian Kropp, who leads the HR practice at CEB, an esteemed research and advisory firm, recently told the Washington Post that some of the earliest companies which dropped the grades-based tradition could reinstate it this year. Why? Because in surveying more than 9,000 global managers and employees, CEB found that those who worked for organizations which had scrapped grades from the review process actually rated the performance-based conversations they had with their bosses 14 percent lower than before. Among other issues, the link between performance and pay raises had grown too fuzzy. In focus groups, for example, Kropp said staffers “tended to say ‘my manager’s just going to give more money to the person he likes.’ ”

So does this mean “goodbye” to the ongoing feedback conversation and “welcome back” to the “Here’s your grade … See ya next year!” scoring session? Not at all. I believe that many organizations will find value in both exercises, and come up with a “hybrid” system which incorporates the formality of the traditional review along with the “coaching” aspects of regular feedback. With constant, two-way interactions, managers and their team members address weaknesses/shortcomings as they materialize, and nimbly apply developing strengths to new challenges and strategic objectives as they emerge. And, because there will still be an annual review, employees always know where they stand and why they’re getting (or not getting) the raises and promotions they seek.

The best solutions to address this new reality will be those that help organizations go in whichever direction they’d like, should it be strictly performance reviews or continuous feedback, or a mix of both. People analytics should be the foundation of any approach and be able to adapt to an organization’s shifting needs. If measurable goals are set yearly and/or year-round, it’s best for managers to be able to track them via a cloud-based platform so they can assess whether workers are hitting agreed-upon targets.

Whether once a year or “all the time,” evaluations should align with the strategic objectives of the organization. With data presented with “single-view/enterprise-wide” availability, executive leadership can examine which individual departments are exceeding in various areas of performance assessment and individual goal achievement (as tied to those strategic objectives), and which are falling short. With this, they can identify best practices of successful departments and apply those to the departments which are struggling.

Annual, semi-annual, or “all the time” – embrace manager-employee conversations, your way.

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