The annual performance review is a time-consuming task that many companies undertake as each year comes to a close. However, as workplaces continue to grow more dynamic, this annual staple is losing popularity among employers. Below, we offer insight from Anne Fisher, Fortune magazine senior writer and career advice columnist on the new direction of this old tradition.
“Only about one quarter (26%) of managers and employees think the traditional process works”
Anne tells us, citing a Towers Watson study of 169 American companies. This low number is a clear indicator that many out there are in search of a new solution. What has led so many to believe that this system doesn’t work?
The Problem with Annual Performance Reviews
- Annual performance reviews tend to inspire motivation only at key times of the year when performance is being monitored in anticipation of the review. Regardless of whether the review recognizes year-long performance, the most recent month’s activity is fresh on the minds of both the manager and the employee.
- The annual performance review only recognizes documented employee achievements, rather than accounting for more abstract employee growth outside of their regular job duties or personal achievements that resulted in company improvement.
- Finally, Anne cites Robert Ferguson, author of Finally! Performance Assessment That Works, stating “business moves much too quickly today for annual reviews to be effective”.
However, doing away with annual performance reviews in lieu of more fluid evaluation that includes a broader spectrum of employee accomplishment does not mean that documentation should be done away with once and for all.
Documentation of Employee Performance
It is necessary to document the performance of each employee for company records and protection should litigation arise about the nature of an employee’s treatment. However, this documentation is not best achieved through a yearly performance review, but serves its purpose better when maintained with regular notes about the employee’s accomplishments and shortcomings throughout the week or month. This type of review gives a far more accurate evaluation of how the employee functions regularly rather than focusing on the highest awards and most miserable failures throughout the year.
“Big 5 Performance Management”
In order to implement these periodic updates, Anne suggests implementing Ferguson’s approach, what he calls “Big 5 performance management”. This strategy proposes holding regular meetings, either monthly or weekly, focused on two questions:
- What are your five most significant accomplishments since our last meeting?
- And what are your five biggest goals until next time?
This not only holds employees accountable to making forward progress, but also intrinsically creates self-set guidelines for employees to stick to. Team member accomplishments should ideally align with the goals that are set at each meeting. Ferguson believes this keeps employees “nimble and focused, creating a sense of urgency”. What’s more, when employees see the concrete gains that they make, it can inspire more hard work. Who doesn’t love reporting positive accomplishments to their supervisor?
Conclusion
Overall, the proper functioning of any successful business relies on a certain documentation of what is being accomplished, so that progress can be tracked and evaluated. However, we’re inclined to propose that annual performance reviews are not the best method of going about doing so.
Why not try Big 5 performance management in 2016 and see what kind of positive results it brings?