It’s Time To Break Up With Your Annual Review

Despite the potential business benefits of providing feedback, the current format of feedback delivery is failing, both businesses and their employees. The current format for most performance management efforts is annual reviews.

Feedback, feedback, feedback. It’s crucial to the workplace, no matter what industry you’re a part of. Since the beginning of the traditional workforce, performance management by way of feedback and reviews has been part of the job description. Enforcing positive behaviors and correcting unfavorable ones must be a wildly productive means of managing employee efforts…right? Despite the potential business benefits of providing feedback, the current format of feedback delivery is failing, both businesses and their employees. The current format for most performance management efforts is annual reviews. Annual reviews, if you’re not familiar, are generally a 1-on-1 structured method of delivering employee feedback that occurs only once yearly.

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Let’s tak
e a look at the timeline of performance reviews: 

Appraisals can be tracked all the way back to World War I, where they were used for identifying those who were performing poorly to determine if they were in need of discharge or transfer. Following the Second World War, 60% of companies were using the same method for evaluating their employees. Over time, a system of annually reviewing performance based on development and accountability has become the norm, and it has been around for as long as anyone still in the workforce can remember. About 60% of Americans make up the labor force (adjusted to pre-pandemic statistics), and none of them remember a time before annual reviews were standard practice.

Unfortunately, just the fact that they’ve been around awhile doesn’t mean that they’re productive or favored by employees. Business today is fast-paced and constant, so a yearly meeting to go over an individual’s progress within the company just isn’t cutting it anymore. For one, these meetings pose as a huge source of anxiety for many people. Imagine, you’ve gone a whole year, chugging along through your daily tasks and quarterly projects, just hoping you’re handling everything up to par. As the annual review meeting approaches, you’re stuck wondering if everything you’ve accomplished throughout the year meets your manager’s expectations. So, when the scheduled 1-on-1 occurs, and you’re told that all the hard work you’ve put in was not what your manager was hoping for, that hurts, and it builds on your annual-review-related anxiety for next year. A lack of communication in any aspect of a person’s life is enough to cause stress, but a lack of communication on such a massive scale at someone’s job, their means to make a living for themselves—it’s no wonder why these meetings are nerve-wracking for so many. 

 Annual Reviews are Inaccurate and Inflexible

Some other struggles we see with annual reviews is that they tend to present inaccurately on workers, and they leave no room for flexibility regarding personal, developmental goals. 

 After a year’s worth of work, it’s nearly impossible to remember every event worth addressing, and it’s important to discuss every detail for the most productive feedback. Sure, pulling data or writing down significant observations may be helpful with combatting this challenge, but without the smallest, most frequent details, a full picture of the employee’s performance is unattainable. Without that, feedback given to the employee is almost worthless. 

 Additionally, a year is a really long time to go without re-evaluating goals. It’s natural for us to begin working on something and have the goal or the metric shift. Yearly performance evaluations don’t give workers a lot of wiggle room to ebb and flow with their goals. 

 The labor force is unhappy with the current setup of performance management.

 Research by Gallup tells us that employees say they need this from their managers:

  •     Job clarity and priorities
  •     Ongoing feedback and communication
  •     Opportunities to learn and grow
  •     Accountability

 It’s unfortunate that Gallup’s research also tells us that only 30% of employees feel that their manager involves them in goal setting, 27% feel that the feedback they receive actually helps them do their work better, and 22% feel that their performance is managed in a way that motivates them. These are dishearteningly low percentages, especially given that the whole purpose of these appraisals is to motivate workers and help them improve in the workplace. 

Today, even the higher-ups are feeling the weight of the failure of annual reviews. One statistic shows that 88% of managers believe that the time they invest in these performance reviews is not valuable, and 58% of executives say that reviews do not drive success. 

These aren’t even the only studies that show frustration amid both workers and managers towards formal appraisals. Management research firm, CEB, conducted a study that tells us the 95% of managers are dissatisfied with the way their companies conduct performance reviews, and 90% of HR professionals say that the process doesn’t even give us accurate information on employee performance. The data is clear, individuals at every level within an organization are unhappy with the annual review method of performance management. 

The point is this: annual performance reviews need a serious overhaul. The good news? There is an already existing and far better solution for performance management. 

What is continuous feedback?

 The concept behind a continuous feedback model is creating an ongoing conversation between managers and employees that includes praise as well as constructive feedback. For those few who have already embraced this method, it takes the form of more frequent 1-on-1 meetings, or regular manager “check-ins” that provide real-time feedback. 

For Blaast, “check-ins” are called “huddles,” where a one-on-one meeting between an employee and their manager occurs on a weekly basis. Blaast suggests they last about 20 minutes on average and cover a synopsis of several things such as: 

  • An employee’s progress towards existing objectives
  • Personal goals and development
  • Feedback on the employee’s “will and skill”
  • Any roadblocks or rerouting that needs to be addressed
  • Clear action points or necessary course corrections

 When implemented correctly, continuous reviews should close the gap between manager expectations and employee accomplishments. Additionally, employees feel more productive and more on task knowing that they’re on track with their employer’s expectations, which lends itself to higher levels of motivation and greater passion for projects. Frequent feedback meetings cause less anxiety since it was only a month to three months ago that the manager last checked in. As well, this level of consistency leaves less room for error on the employees’ part because the manager is always keeping a close eye on their progress. 

To some, this might sound suffocating, however, continuous feedback reviews do not equate to breathing down the necks of workers. Rather, regular check-ins provide the best opportunity for individuals to maintain maximum job position flexibility while managers and executives experience peace of mind, knowing that their workers are on task, and their business is flowing properly.

Recently, I spoke with a good friend of mine about his experience with performance reviews during his 20 years and counting in the corporate workplace. When asked his opinion between annual reviews and continuous feedback, he explained his own preference for continuous feedback, because “it’s easier to course correct with real-time feedback.”  Throughout his years working for various companies in corporate America, he has been to several annual review meetings, as well as noticed a shift into more continuous feedback from his employers in recent years. In his experience, annual reviews come off as an afterthought, rather than providing productive, actionable remarks. 

My acquaintance notes that in the past, annual reviews certainly held an important role because jobs were far simpler and more limited in scope. Employees had little autonomy, so they just didn’t have the wiggle room necessary to stray off course too much. Because of this, annual reviews were all that were necessary to keep workers on the right path of productivity in the workplace. Where there used to be guard rails around job positions, now, the types of jobs that exist today are more complex, requiring more decision-making on the part of the employees. For this reason, constant course correction is needed. Optimal performance comes from real-time commentary. Workers want to be successful and productive, if not for the passion of the position or project, then for self-service—this job keeps their lights on, it keeps food on their family’s table. Knowing this desire for success, it stands to reason that managers ought to be jumping at the opportunity to deliver regular, constructive feedback in order to provide maximum value to their company. 

Another thing you might consider: the younger part of the workforce is accustomed to having information immediately available. A generation who has grown up with search engines at their fingertips and news headlines on their social media timelines are now making up a quickly increasing percentage of the labor force. Without continuous feedback, young workers just entering their careers may find themselves lost or overwhelmed. These young professionals are a prime example of the need for businesses to keep up with the fast pace of the world around us. 

Several companies have already opted to kick the annual review method of performance management to the curb and adopt a more continuous method, and they are already showing significant benefits. According to the State of Continuous Performance Management Survey, companies that have switched to the ongoing method are seeing impressive reductions in challenges that are typically associated with the traditional annual review format. For example:

  •     Reviews being too subjective—reduced by 34%
  •     Reviews failing to improve performance—reduced by 32%
  •     Manager not providing quality feedback—reduced by 39%
  •     Review process doesn’t help in retaining top talent—reduced by 27%

These statistics give us tangible evidence that continuous performance reviews are improving the workplace, fixing problems, and combatting complaints after decades of insufficient and counterproductive yearly feedback. There is obviously a shift in employee, manager, and business needs, and continuous feedback is filling major gaps for all parties. 

This shift is not coincidental. The workplace has changed over time. Today, workers in every position are granted far more flexibility to make decisions than workers in the same position had 20 years ago. The business world is incredibly fast-paced and there is now a great demand for the conversation between employer and employee to match that level of speed and consistency. The brave and strong have already put continuous feedback to the test and showcased impressive results. It’s time for the rest of the business world to follow suit—the evidence is there: continuous feedback closes gaps left by annual reviews and provides benefits even beyond that. Annual reviews are dead, but you know what they say—when one door closes, another door opens. The death of annual reviews brings the birth of real-time, continuous feedback in the workplace. So, sorry annual performance reviews, I think it’s time to break up, it’s not us—it’s you. Plus, we found a better alternative.

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