The Annual Performance Review: Antiquated or Necessary?

Posted: Updated:

As people head back to work after the holidays, many business leaders are setting plans and strategies for the rest of the new year. The yearly performance review for your employees is likely one of the key items on the list. Most large corporations make managers do performance-based meetings with subordinates on a yearly basis to ensure goals are being met and to give merit-based raises. As many organizations are moving toward a more communicative and open working environment, I wonder if this traditional process is still relevant to the way the workforce is set up?

Here are my thoughts on the annual performance review and how we can improve on them.

Train managers on best practices

A lot of companies are doing away with performance reviews because they are often done poorly. Among employees who believe they have benefited from an annual review, by far the biggest reason was that their boss had the skills to do it right. If a poorly executed performance review is the driving factor for employee dissatisfaction, then why do we keep putting people in these situations without the proper training? By spending a small amount of time and money on creating a set procedure and implementing a training process for those in management positions, you can save yourself from major headaches down the line.

Switch up the timing

A big argument against performance reviews is the amount of time elapsed between touch points. Although an annual meeting is an easy way to keep track of performance looking back over the past year, research suggests that without frequent feedback throughout the review cycle and being given meaningful performance standards, employees are not likely motivated by the review meeting. I recommend scheduling several short conversations throughout the year - monthly or quarterly - instead of one long conversation that will mostly be forgotten.

Create discussion, not a lecture

The reason many employees dread annual check-ins is because it's less a conversation, and more a lengthy speech from a manager's soapbox. By creating more of a two-way discussion between manager and subordinate, it becomes a more holistic conversation about goals and strengths, not just about past performance. By moving toward an informal system with constant feedback, you can address issues in real time and take advantage of valuable teaching moments throughout the year.

Consider who makes up your workforce

Employees from different generations or cultures can vary greatly in their views on the frequency of feedback. One survey found that baby boomers prefer less frequent feedback, while Millennials prefer more. Do you have a mixture of employees from different age groups? If so, find your sweet spot. Where monthly check-ins could work really well for one group, it could overwhelm another. Perhaps quarterly reviews could be a happy medium between yearly and monthly. You will need to have open conversations with your employees to figure out what will work best for your office.

Follow the leader

More than one-third of U.S. companies are abandoning the traditional review process. Not surprisingly, technology companies like Adobe, Dell and Microsoft are leading the way in this movement away from tradition. Business researcher Josh Bersin estimates that about 70 percent of multinational companies are moving toward this model, as well. This shows a major shift in workplace culture across the board, and if it's working for well-known, successful companies like that, more are likely to follow.

If that's not enough, ultimately you just need to figure out what works best for your employee base. The annual review hasn’t completely fallen off the radar just yet. Make sure your managers are equipped to perform the most effective reviews on a consistent basis, then your employee success and retention will surely follow.

Jason Carney is HR Director at WorkSmart Systems.

  • Perspectives

    • What Do Customers Really Think of You?

      Ask a business owner how her customers think about the services they receive or the products they use, and you’ll hear comments like "they love us." But when a third party asks those customers the same question, the results can be eye-opening. I recently shared the story about developing a customer profile for a professional services firm that was eager to grow but lacked useful marketing intelligence about the business it was already handling. We helped them...



Company Name:
Confirm Email:
INside Edge
Morning Briefing
BigWigs & New Gigs
Life Sciences Indiana
Indiana Connections


  • Most Popular Stories

    • Scotty's Brewhouse Files For Bankruptcy

      Indianapolis-based Scotty's Brewhouse has filed for Chapter 11 bankruptcy protection. The company says the decision was "driven largely by the challenges of some specific locations and was necessary because of the way the company was structured corporately." As a result of the deal, Scotty's will close four of its restaurants by the end of the year. In a news release provided to Inside INdiana Business...

    • Churubusco Company Acquired

      Cleveland-based Lincoln Electric Holdings Inc. (Nasdaq: LECO) has announced the acquisitions of two companies, one of which is located in Whitley County. Financial terms of the deal for Churubusco-based Pro Systems LLC and Coldwater Machine Company LLC in Ohio are not being disclosed.

    • Indy Airport to Introduce New Airline

      Indianapolis International Airport will today host an event to welcome a new airline. Airport officials say the provider will add more routes to IND's growing roster of options. Earlier this month, the airport reported record-breaking traffic in the third quarter. IND said the more than 2.4 million passengers that passed through the airport in the third quarter of 2018 marked an 8 percent year-to-date increase over last year and the best third quarter in the facility's history.

    • Indy Chamber Unveils Legislative Priorities

      The Indy Chamber has released its legislative agenda ahead of the 2019 Indiana General Assembly. Priorities include early childhood education, hate crimes legislation and an increase to the state's cigarette tax.

    • Shelbyville to Debut Giant Sculpture

      Officials in Shelbyville will this evening unveil a new art installation in the city's downtown. The city says the four-story, $150,000 sculpture known as Blue River - Wind, Rain and Water anchors its ongoing commitment to public art.