The world of work has changed dramatically over the past few years, even before the pandemic and the rise in remote work cemented new ways of working. But while many historic business processes and practices have long since fallen along the wayside in favour of more effective and efficient ones, there is one that obstinately remains in place: the annual performance review.
Heading into the latter part of the year, many companies will once again start preparing for performance review season. But now would be a good time to carefully review the relevance and value of this practice and consider whether it remains a useful tool or whether it should be discarded in favour of new approaches to measuring performance, a leadership expert says.
“The annual performance review has arguably become little more than another item on the yearly to-do list of most companies, and one which most people – leaders and teams alike – dread and can do without,” says Advaita Naidoo, Africa MD at Jack Hammer, Africa’s largest executive search firm.
“Every year, millions of employees and managers across the world go through this unpleasant ritual, which was intended to measure and improve employee performance, but which ends up having a little positive impact and rather more negative ones, including the fact that it is time-consuming, demotivating, subjective and often based on outdated or irrelevant criteria.”
Naidoo says most organisations don’t do annual performance reviews well and derive little benefit from the process. For it to be of value, a performance evaluation would need constant feedback on a weekly and monthly basis, cumulatively and systematically, benchmarked against very clearly outlined outcomes and behaviours to not be subjective, she says.
“The growing obsolescence of the annual performance review does not mean that employee assessment falls by the wayside, particularly not where performance is linked to incentives such as increases, bonuses, and promotions. But there are better, less stressful, more fair and balanced approaches to performance management, which should be embraced sooner rather than later.”
Alternative approaches to the dreaded annual assessment include:
- Constant feedback and evaluation based on actual behaviours and outcomes
- Using automated tools and platforms that make the process easier and more objective
- Providing training for managers on how to give and receive feedback effectively and in a non-confrontational and supportive way
- Ongoing and open two-way communication and input from employees on their performance; and Drawing up of customised and flexible criteria and metrics that suit different roles and situations.
“If the original objective of the historical annual performance review was to assess and boost performance, and evaluate performance in determination of incentives and awards, it’s a no-brainer that all of this can happen much more easily and in a more frictionless manner if done on an ongoing basis to develop and support in real-time instead of as a once-off judgment day somewhere towards the end of the year,” says Naidoo.
“This approach much better serves the aims of building culture and performance on an ongoing basis and eliminates the rushed flurry of unpleasant activity at an arbitrary point in the year. Organisations are therefore well-advised to consider whether they can do away with the annual performance review dinosaur and, if they can, to do it.”