No one likes annual performance reviews—Here’s how to get rid of them

Viewed in Bloomberg

In an era where the divide within organizations between employers and employees has seemingly never been greater with divisions over where work should be done, how much employees should be compensated for their work in an inflationary economy, and other significant questions that have largely emerged over the past year, there might at last be at least one area where both parties are finally in sync: Annual performance reviews.

Turns out, as Bloomberg reports in this article, neither employees nor employers seem to like them too much—and several large companies, including Adobe and Accenture, are acting on the sentiment, ending their own long-standing use of them as a basis for employee evaluation.

Long tradition

The annual performance review, of course, has been a long-standing tradition at most large companies. They date back to the early 20th century when General Electric, whose managerial trends were trend setting throughout the private sector economy, launched them primarily as a means for easing out low performers from the organization.

But like every major company initiative fueled by sentiment of the moment, getting rid of the annual performance review is proving a tad bit more complex than predicted.

Not easy to skip

The biggest issue is that replacing the primary means of employee performance evaluation leaves a huge vacancy in employee management that needs to be replaced by something that fills the intent behind the annual review.

In fact, some companies, such as technology consulting giant Gartner, abandoned the annual performance review only to conclude later that discontinuing it was a premature decision, and later reinstated it.

Unpopular

But none of these complexities alter the underlying reality that the annual performance review has become a tiresome and, in the minds of many managers and employees, somewhat antiquated and burdensome exercise no longer serving its stated purpose of giving employees an actionable assessment of their performance.

Companies are looking to move on from it, Bloomberg observes, and the good news is that they have options.

#1 On-going communications

First, since one of the frustrations of the annual review is its infrequency, one option in replacing the annual review is to replace it with more regular communication between managers and employees, especially immediately following completion of a project when an employee’s performance is still fresh and timely to the project being reviewed.

This necessarily means vastly expanded communication between managers and employees and turning the performance review into a year-round exercise. But that appears likely positive and responsive to many of the current concerns about annual reviews that they are too infrequent to prove meaningful.

#2 Center on skills, behaviors and competencies to run the work

Second, the nature of communicative performance assessments between managers and employees can be augmented to include not just performance but assessments on how work is actually done.  “Just 4% of HR leaders say performance reviews accurately assess employee performance, according to Gartner.

Discussions should center more on how people work—their skills, behaviors, and competencies—rather than what they worked on, which inevitably turns into a rote recital of tasks and goals,” Bloomberg reports in this article on the trend away from the annual review.

Like many of the challenges emerging in the 2022 business environment, the annual performance review appears to be another long-standing company tradition poised for the dustbin of corporate history.

#3 Identifying ways to do it better

But like other workplace challenges emerging of late, what managers and employees may agree on replacing still leaves the bigger question of how the underlying intent of workplace programs go fulfilled when the program itself gets discarded.  

Between getting rid of an antiquated or unpopular program and finding one that works better, the former appears the vastly easier of the two undertakings. So what should replace the increasingly unpopular annual performance review ?

Answering that question in a studious way appears to be the next necessary step for companies looking to act on the emerging consensus that the time has come to ditch the annual performance review.

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