Are Performance Reviews A Thing of the Past?

Are Performance Reviews Still Necessary or Relevant?

 It’s one of those meetings that employees tend to dread every year. Even when they are aware of their accomplishments and what they have achieved for the business, there is a level of uncertainty that washes over people entering that room. A lot can happen during a working year, and a lot can change – so what exactly does the performance review set out to achieve?

What Is The Point of a Performance Review?

Performance reviews happen under two different circumstances:

1. New employee performance review: this is usually a condition made when hired, setting out a probation period (of generally three to six months), after which performance is then reviewed.
2. Yearly performance review: these reviews are held annually and are a chance for employers to discuss an employee’s accomplishments or shortcomings for the year, and the possibility of a raise.

 But do they actually work… or are performance reviews a waste of time? In fact, almost 10 percent of Fortune 500 companies have done away with annual ratings already, and many more are planning to follow this trend.

 We specifically take a look at the second example, the yearly performance review, and will look at whether it is even required and what alternatives can be used instead.

Are Performance Reviews Required?

 While a performance review may sound great in theory – do they actually work. According to Gallup Research, only 50% of employees actually know what is expected of them in a role. This is a huge gap that suggests companies are missing the mark at some point. After all, how can objectives get achieved when employees have no idea what is expected of them?

 It’s no secret that feedback is necessary in the workplace, as it’s a great way to learn and grow in a role. But what advantages are there to doing this annually?

 In short, none.

There are a few problems that come with performance reviews.

1. Firstly, they create unnecessary anxiety for an employee. Even when they know they have performed well, it is the unknown of what is about to be discussed and brought up at the meeting.
2.  On top of this, it is a lot to take in. A year is a long time to build up feedback. This can prove extremely overwhelming, and will mean the employee is unable to take much in.
3. Technology also changes so quickly, which means jobs can completely change in a year. By waiting this long to carry out a performance review, there are plenty of missed opportunities that occur in the process.
4. It’s also not very productive in terms of actually improving performance. We can thinking about this two ways: positive and negative.

Negative: humans make mistakes. There is no doubt that at some point in an employee will make a mistake. Instead of providing immediate feedback, this is noted down for a performance review. What exactly does this achieve? You have missed the opportunity to help the employee learn from their mistake straight away, which means the possibility of more mistakes being made before the annual performance review.

Positive: on the flip side, if an employee achieves something in the workplace and it goes unnoticed (or simply marked down to bring up on a performance review), this is going to affect company morale. Waiting until the moment has passed can mean missing the opportunity to celebrate good work and encourage others to step up as well. If the works goes unnoticed, the incentive to achieve disappears.

 It’s clear that performance reviews don’t deliver what they set out to achieve, but at the same time it is still important to provide that essential feedback to employees. So what are the alternatives?

Alternatives to Performance Reviews

Many workplaces get stuck in the belief that this is what they have always done, so why change it? A workplace needs to be offering feedback to employees, as it is how a team can learn and grow and sets out clear expectations. This can come at times of positive achievements, as well as mistakes – nothing should go unnoticed.

 Here are some alternatives to the annual performance reviews:

More frequent informal check-ins

No need to have a set time for these to occur, but rather focus on development and use them as needed. You can choose to do them after a specific job, using the check-in as a debrief, or when something (good or bad) happens that needs to be addressed. By having them frequently, your employee won’t experience the same level of anxiety that comes with an annual review, and it allows you to discuss matters that are still fresh in both your minds without overloading them.

Weekly one-on-one meetings

Some companies are choosing to step things up a notch with weekly meeting. These can be very handy for two reasons:

1. A regular check-in keeps you both on the same page about what is going on and being achieved workwise.
2. It makes you more accessible as a manager, meaning your employee is more likely to find you approachable when any problems occur.

There is another type of review referred to as the Real-time 360 Review. As the name implies, it is intended to provide 360 degrees of feedback. It is very different to the traditional performance review, in terms of offering very raw and unfiltered feedback. So, how does it work?

Instead of one person determining how well an employee has performed once a year, the 360 method relies on the feedback of everyone who works with this employee. There are plenty of apps out there to put this in place, which involves answering standard questions and criteria and ratings. People have the ability to rate each other whenever they desire, which means regular feedback is offered.

 Of course, if you choose this method, you need to do your research before implementing it. Take a look at how you plan to implement it, whether it will be anonymous or not, what criteria you are going to set and who will be reviewing it. These are usually carried out alongside regular reviews with managers as well.

MBWA Technique

This is a simple yet effective method – Management by Wandering Around. All it involves is walking around the office and chatting with your team. It’s informal, and a great way to see that everyone is on the same page in the workplace. It’s amazing how much difference can be made by making yourself available and seen in the office as a manager. It makes you approachable and likeable and can help build a cohesive team. 

What about the pay rise?

Having more frequent reviews begs the question: what about the pay rise discussion?

Firstly, separating the pay rise from the review is a positive. It takes away the expectation of doing good work equates to be paid more. Instead, employees will feel rewarded from good work through positive praise, getting them in the mindset of enjoying the work and wanting to achieve. A pay rise is simply an added bonus offered in return.

 When feedback is tied to compensation, it becomes a negotiation. And if your employee walks away from it without a pay rise, then everything discussed in the meeting is tuned out, as they take on a feeling of worthlessness.

These pay rise discussions can still happen, but leave it up to your employee to approach you (and make this clear that this is the expectation). They can choose whether to do this yearly, or more frequently, and it puts the discussion on the table. It allows them to sell what they have achieved (which feedback has already been provided on) and takes away the anxiety of this type of meeting.

Where does this leave us?

It’s time to take a look at your systems and processes and evaluate what is working and what simply isn’t. Just because it is the way it has always been done, doesn’t mean it is the way it should be done. As humans, we really are creatures of habit, but these habits can actually be detrimental to the company.

If you aren’t quite ready to step away from the yearly performance reviews, maybe consider adding more reviews (or informal check-ins) in throughout the year in the lead-up. This will avoid the overwhelming information overload brought on through the annual review, and also any anxiety associated with it. Slow and steady wins the race, it is just about putting in the actions to create a more productive workplace.