Why Annual Performance Reviews Don’t Work & How You Can Fix It

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It is that time of the year again, where you need to discuss with your employees all the things they have accomplished over the year. While some employees might look forward to this time period, a study reports that 98% of people think that annual performance reviews are a complete waste of time. It is not only the employees that hate this period, but managers report that this is their second most hated task too.

Another report states that only three of every ten companies using annual or semi-annual performance reviews believed that they work well. In addition, neuroscience research states that performance rating systems have the potential to negatively impact on employee’s motivation and productivity.

Here are a few facts about performance reviews that will make you think why to do them at all:

1. 44% of employees think their bosses aren’t honest during the process
2. 90% of appraisals are painful and they produce an extremely low percentage of performers
3. 45% of HR managers don’t think that annual performance review is the right way to appraise an employee
4. 58% of managers believe it is not an effective use of time
5. 30% of reviews resulted in decreased employee performance

If the performance reviews rarely work for anyone, why do it all?

One of the reasons for reviews is to provide feedback to your team. Moreover, it is a tool for you to identify employees who are unproductive or the ones that simply are a misfit. If the feedback is delivered in the right way, it can motivate employees to improve their performance.
Instead of completely going against performance reviews, you can consider a few ways that can help you turn these sessions into something productive. This would not only be beneficial for you but also your team members.
This is because; performance reviews when done properly, can be an amazing tool to align your employees around their goals in your organization. iTMunch brings you a list of unconventional; methods that can help you improve your annual performance evaluation for the better.

iTMunch's latest HR blog tells you about how to enhance your performance appraisal process.

1. Introduce peer reviews just like Google

Out of the wide range of amazing things Google does for its employees, one of it is the emphasis its places on peer reviews. Instead of evaluating your employees strictly based on their evaluation form and performance throughout the year; consider implementing peer reviews. Take a step back, and let your employees review their immediate team members.

2. Tie it to your core values like Zappos

One thing you can learn from Zappos is how they link their performance reviews to their company culture. The CEO of Zappos, Tony Hsieh explained in an interview that even if a person is great at their job, and bad for their company culture, that individual will be fired. The performance reviews for this company are 50% dependent whether one is living and inspiring the Zappos culture in others.

3. Implement ongoing feedback like Adobe

This design tech company does not do the usual annual appraisal process. In fact, it believes in offering employees ongoing feedback that will help their team to improve their performance. You should consider providing ongoing feedback which can help your employees fix their mistakes immediately and perform better.

4. Get accurate like Accenture

Accenture has decided to completely move on from the annual performance review process and decided to focus more on immediate development. In order to do this, this company started to focus on measuring and tracking interactions between managers and employees.

5. Motivate employees like GE

General Electric has not completely given up on the traditional appraisal process. GE managers and employees still meet once in a year, but now it is a meeting with a purpose than just critiquing. The company has launched its own performance app where managers provide regular feedback to their team members. In the annual meeting, GE focuses on discussing the future of their employees and a pathway to achieve it.

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Tips for Effective Performance Reviews

  • Set clear goals from the beginning to fairly and accurately measure employee performance
  • Start the meeting on a positive note to remove any kind of fear
  • Use multiple data points to get a more accurate picture
  • Create an action plan with employees for the rest of the year
  • Identify areas for improvement and discuss means of improving these problem areas
  • Close by re-emphasizing the positive points and discuss how the employee has made a positive contribution to the company

These are a few things you can learn from renowned companies and fix the performance appraisal process. Keep reading iTMunch for more such blogs, updates and news from the HR world!