The Evolution of Annual Performance Reviews

The Evolution of Annual Performance Reviews

It’s back to school time and, for many of us, this means getting back to our regular schedules after vacations or kids being home during the summer. Routines are comfortable and help to provide structure; they are predictable and familiar. Even so, sometimes routines can be limiting. During the past month SSO continued to reevaluate a familiar routine…the annual performance review. This year we have been moving away from the annual review, and there continues to be strong evidence in support of this. In a Fall 2019 Harvard Business Review (HBR) Special Issue, an article entitled Reinventing Performance Management indicates, “… more than half the executives questioned (58%) believe that their current performance management approach drives neither employee engagement nor high performance.”

If tens of millions of workers are being ineffectively evaluated, it would seem time to develop a new approach. There are a few clear themes that arise when discussing what’s not working including, “cascading objectives, once-a-year reviews, and 360-degree-feedback tools.” When it comes to what is working, the following tends to pop up over and over again: “Speed, agility, one-size-fits-one, and constant learning…underpinned by a new way of collecting reliable performance data.”

So how do organizations evaluate talent instead of conducting an annual review? The key is asking the right questions on a regular basis. In the recent HBR article, the frequency was quarterly (as we have been moving towards in SSO) and asking four questions that cover the following:

·       Overall performance/unique value to the organization,

·       Ability to work well with others,

·       Performance issues, and

·       Career potential.

On a quarterly basis leaders can use this data to review a targeted subset of employees to debate which actions might better develop that particular group. This method avoids some current performance management frailties such as the “idiosyncratic rater effect” and the need to “ask more people for their opinion of a team member.”  It also allows leaders to become more “in sync” with their team and understand their strengths as well as ares where there are opportunities for improvement.

With the traditional performance review being the standard for so long, shifting away from the comfortable and familiar annual review process is not easy. Responding to an employee’s expectations to get more timely and actionable feedback can be a challenge, and touching base with employees weekly (as the highest performing leaders tend to do) takes time. However, as the article points out, “We now have the technology to go from a small data version of our people (single rating) to a big data version of them.” Moving from reviewing performance to fueling performance can be the difference between attracting/retaining key talent and high turnover. We will keep you updated on how our metamorphosis of our performance management process is progressing during the coming months.  Stay tuned!

How does your organization currently review employee performance and what’s working for your team?  What’s not working?  We would like to know!