RVB Associates Blog

Is the Annual Performance Review Really Dead?

[fa icon="calendar"] May 15, 2017 11:23:10 AM / by Dr. Rob Bogosian

Dr. Rob Bogosian

Annual Review Picture.jpg

The dreaded Annual Performance Review is getting a much-needed facelift but the practice is very much alive. The latest upgrade trend is centered around three review components:

  1. The annual frequency
  2. The cut and dump elimination process
  3. Preview vs. Review

Many companies are moving from the annual time frame to a monthly or quarterly performance frequency. The rationale is that more workers, especially millennials, expect more frequent performance feedback from their immediate manager. Employees tell me that one thing they want more from their manager is “honest and timely feedback.” However, managers typically tell me that their employees don’t always want to hear the truth. This misunderstanding is problematic. If employees want the truth but managers think they do not want to hear it, we end up with a feedback starved employee population.

A Mercer study showed that approximately 95% of companies conduct annual performance reviews and approximately 90% link pay to the performance review process. Basically, the manager who keeps good records of each employees performance high and low points for 11 months has a better chance of crafting a detailed performance dossier than one who does not keep good records. History can work against performance improvement because the data from January is hardly helpful news in November. Is a historical performance perspective helpful for your employee moving forward? In my view, this historical, archaic process invites defensiveness and tension rather than hope and encouragement. And then there is the time crunched performance review issue.

 

Time Cruch.jpg 

Managers rarely have extra time and as far as I can see, put performance reviews at the bottom of their “To Do” list. The worst case scenario is the performance review that goes like this, “You’re doing a great job, just keep doing what you’re doing.” Are these the same managers who rank, “motivating employees” as their greatest challenge?

Cut and Dump

This process was well known in the 1980’s and 90’s. Basically, it aimed to purge the low or non-performers annually based on a predetermined rating cutoff point. It actually backfired at one major global IT organization. Managers quickly learned to work around this policy by hiring low performers so that they had an inventory of expendable staff when cut time came around every year. Most companies have done away with this process. It invited unhealthy competition and a destructive work environment.

 

Mirror Never_look_back.jpg

The Move Forward: Preview versus Review

The next generation of performance reviews is off and running. IBM, Adobe, Deloitte, Cargill and GE are moving from the annual review process to a quarterly preview process that focuses on opportunity for growth and upgrades, versus a review of what went well and not so well in the past. A Cornell University study reports that Cargill showed a 9% increase in personal value perception among the employee population and Adobe reported a 25% reduction in voluntary turnover. At Cargill, 38% of employees reported improved conversation quality with their managers.

Performance Review.png

The case for more frequent and feed forward performance conversations may be obvious. Are leaders prepared to make the move? Are they prepared to facilitate a collaborative performance upgrade conversation? Here are few things managers can do to prepare for this new methodology:

  1. REFRAME your thinking from “Judge” to “Learner”

  • The Judge thinks they know everything. The Learner thinks they have everything to know.
    • Prepare to ASK more than you TELL. For example, ask:
      1. “In the last 3 months, what are the 3-5 projects/ accomplishments that make you most proud”?
      2. “What are the specific things (skills, knowledge, competencies) you want to upgrade in the next few months”?
      3. What specifically will you do upgrade – Try and Track™ – to measure your success?
  1. LISTEN

    • Turn off the internal chatterbox in your head.
      1. Listen to your employees work through their performance assessments. Give them the time and space they need to make sense out specific improvements before you jump in with your thoughts.
  1. Create a CULTURE OF VOICE in the One:One interaction.

    • Do not discount your employees’ ideas or hopes.
      1. Be totally honest and when you hear something that sounds unreasonable to you, ask before you tell.
      2. Observe the 20/80 Rule. You should talk and tell about 20% of the interaction time and listen and learn about 80% of the interaction time.
The most important thing you can do for your employees is to offer support, guidance, appropriate challenge and most importantly, your time. Try to turn every direct report into one of your “Go To” people. Performance previews are critically important to your employees. Your view is important because you have the power in the relationship. Treat every employee as though they are royalty. You will reap hefty dividends; chief among them is commitment.

Learn More About Cultures of Voice

Topics: Best leadership practices, Performance Management, Annual Reviews, Performance Reviews, Review Process, Management Reviews, Feedback, Coaching and Feedback

Dr. Rob Bogosian

Written by Dr. Rob Bogosian

Dr. Rob Bogosian is founder and principal consultant at RVB Associates, Inc. also featured in Business Insider, CNN Money, Fortune Magazine, CEO Magazine, Entrepreneur Magazine and co-author of Breaking Corporate Silence.

Subscribe to Email Updates