Stop Doing Annual Reviews

Something has gotten into management. Everywhere I turn – meetings, discussion groups and blogs – managers are talking about performance reviews. That’s good news for the many organizations that are finally realizing how ineffective the annual employee review really is. In nearly all cases, the annual review has little to do with performance but a lot to do with salary. The review meeting has become little more than a ritual. It’s the once a year sit-down where an entire year of success and failures are boiled down into a few minutes conversation.

These so-called performance meetings are carved out of (or maybe more appropriately squeezed into) a busy schedule to chat a bit about the last 12 months. The manager is often rushed and distracted and the employee defensive and anxious.

And let’s be honest. If it wasn’t for HR’s mandate that every employee must have this meeting in order to create a piece of paper and collect a signature, annual reviews would never get done. The review has become no more than a veiled attempt to justify paltry pay increases and to produce the legally defensible documentation in case the employee ever needs to be disciplined, counseled, or terminated. For most organizations, it has little if anything to do with performance – past or future. And during these difficult times, I’ve heard about several companies cancelling reviews this year because salaries are frozen. What else would a manager discuss at the annual review if it isn’t money?

The bad news is that many organizations still see the once-a-year review as their attempt at performance management. The most common questions I hear being asked is “what can we do to improve our annual review?” or “how can we get all our managers to do their annual reviews?”

My response might surprise you. Stop doing annual reviews!

Yes, you read that correctly. Attempting to fix the annual review is somewhat the equivalent of tying down the chairs on the Titanic. It’s an exercise in futility, a diversion at best. But it does little if anything to change the outcome.

The alternative solution requires a change in attitude. Performance management isn’t something that is done. It’s not an event like an annual holiday party or family picnic. While these events might be enjoyed, neither make the culture family-friendly or fun for the other 363 days each year.

Performance management is something that happens transparently yet uneventfully. It doesn’t happen once a year, it happens every day, every week, every month. Performance management is embedded in a company’s culture and values, not in a function of HR. Managing performance effectively focuses on outcomes. It’s not a task on a manager’s checklist because it’s never done and can never be turned off. It’s a process that must take place continuously, effortlessly, seamlessly and spontaneously.

Where do you start? A cure for overcoming performance review drudgery begins with aligning every employee’s individual performance to organizational goals. Weekly, monthly and even spontaneous conversations can now become focused on behaviors and attitudes that are productive or non-productive.

Rarely should a manager or employee be at a loss for words and conversations because the talk revolves around what you’ve done last week or month and how can you do it better going forward.