by Matt Boltz
Is there anything that Corporate America loves more than the Annual Performance Review? This is the time-honored tradition where an employee sits down with his/her manager to discuss how their performance was over the past year, what they did well, what needs to be improved, and what goals they have for the upcoming year. There is probably an online component to the review where you get to rank yourself against a number of statements and your manager gets to rank you as well. Then you get to sit in a room together and discuss these results. Annual Performance Reviews are one of the most unnatural and awkward aspects to any job and may be the worst way to judge an employee's contributions to the company.
One issue with Annual Performance Reviews is the time horizon. You set goals at the beginning of the year and at the end of that year you get to assess how your performance aligned with those goals. Some companies have attempted to solve this problem by completing semi-annual performance reviews where you get to do this process twice a year instead of once. That approach helps some but it is much more realistic to achieve goals that are set and reviewed with a shorter time frame when it comes to work. If you wait until December to review your performance you may not remember the goals you set back in January and those goals may not even be relevant to your current position. It is fine to have longer term goals but in the majority of cases people are better off setting small, short term goals to work toward. You can try to align these short term goals as part of a strategy to achieve the long term goal.
Another issue with Annual Performance Reviews is the coercive nature of the review. An employee sits down with their manager and most of the communication is from the top down. Even if you have a good relationship with your manager there can still be an element of trying to justify your job to them. A common technique a manager may use is the "compliment sandwich" where they tell the employee what they do well, followed by what they need to improve upon, and end with another positive. The perception to a lot of employees is that these annual reviews are a way for your manager to document to Human Resources why they may need to fire you in the upcoming fiscal year.
Does it really take us a year to determine if someone is adding value to the organization? Of course it doesn't. Managers and coworkers know from every day interactions who is doing a good job. The same goes for the way employees view managers. Employees know from the day in and day out operations who the effective leaders are in the organization. If this isn't the case then there may be bigger issues at hand.
So what can be done to improve the Annual Performance Review process? The answers are going to be unique to the organization and the culture that has been created. It may be beneficial to have an honest 360 degree feedback process. Why is it just the manager and the employee reviewing the employee's performance? Feedback from fellow team members and employees in other departments that the employee works with on a regular basis should be welcomed. This goes for the review of your direct manager as well. Say you manage an IT team that has 10 employees and you report to the Vice President of IT. Wouldn't the VP want feedback from the 10 employees on the team when completing the manager's annual review? Maybe the manager can cover up the fact that 8 out of the 10 team members find the manager ineffective or unethical but in the VP's eyes the manager is doing a great job. This is an example of my argument that a lot of decisions in organizations get made with imperfect information.
Performance Reviews don't have to be a formal process either. Depending on the nature of the work it may be preferable to have ongoing discussions regarding goals, what is working, and what needs to be improved. You can adjust and correct when things are addressed in the moment instead of waiting for some official review process. Organizations can even have a system where this feedback can get documented at the time so it isn't forgotten down the road.
It is critical to ensure people are completing their work accurately and on time for an organization to function in a healthy manner. Addressing the bad and rewarding the good in the moment also has its advantages. It is important to create a culture that welcomes ideas, feedback, and constructive criticism. This communication of the pros and cons should flow from the top of the organizational chart down as well as from the bottom up and should be done in a respectful manner with good intentions. Communication should also occur between teams that interact on a regular basis to complete tasks. In general, members of the organization know who is doing a good job, who the best leaders are, and where the weak links are in the organization. If you build a culture that promotes communication, values people's perspectives, and resolves issues in a timely manner then there is no need for the antiquated Annual Review.